Case-Shiller: Seattle home price gains below average in January

It’s been a while since we posted our Case-Shiller charts and dashboards, so let’s have a look at the latest data from the Case-Shiller Home Price Index. According to January data that was released yesterday, Seattle-area home prices were:

Down 0.3 percent December to January
Up 4.1 percent YOY.
Up 26.7 percent from the July 2007 peak

Last year at this time prices were up 0.7 percent month-over-month and year-over-year prices were up 12.8 percent.

Seattle’s streak of dead last for month-over-month price changes lasted five months between July and November, and has since climbed slightly to #13 of 20 in the mont-over-month charts.

Seattle has fallen from #1 in year-over-year price growth back in May all the way down to #11 as of January, falling below the overall national rate.

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.

There were two metro areas that hit new all-time highs in January: Charlotte and Dallas.

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


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 138 months since the 2007 price peak in Seattle prices are up 26.7 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

This is by far the biggest decline in prices that we’ve seen since the previous bubble burst. Will it continue into 2019? I personally doubt it, but we’ll see.

Here’s the Seattle Times’ story about this month’s numbers: Seattle-area home price cool-down stands out among U.S. cities

(Home Price Indices, Standard & Poor’s, 2019-03-26)

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About The Tim

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

239 comments:

  1. 1
    Joe says:

    It’s interesting how every chart is pointing down, and the downward angle is rather steep. That’s really all people need to know, as the yield curve indicates we will be entering a recession.

    Of course, many home buyers lacking financial saavy will be caught up in details and unable to identify the key issues that plague this market. Buyers of $1M homes last summer are already down over $150,000 in less than a year. This is on top of the mortgage payments and real estate tax they paid.

    It was a long move up, so expect an elongated move down. About three years of price drops is what I expect, with a few small dead cat bounces in between.

  2. 2
    House Humper says:

    I’ve been a fulltime RE investor for 16 years and before that was an apartment broker (sold multi-family) with Marcus and Millichap.

    This global asset bubble is nastier than anything I’ve ever seen. The unraveling will be of biblical proportions in my opinion. Guess that’s what $13 trillion of QE and a decade of near-zero interest rates does.

    The issue is not to create “affordable housing.” The issue is that housing in general is no longer affordable. The affordable housing crisis will be solved the second interest rates go to a normal level and the mania dies. I think we could see RE prices get halved in most markets. And I’m not a bearish or paranoid person. I’m a numbers guy. Prices anchored to median household income means massive price hacks. It will happen. Always has. Don’t fight the mean reversion.

  3. 3
    Rentin’ says:

    Tim, thank you for the data once again. I’m caught up on your closing lines of “This is by far the biggest decline in prices that we’ve seen since the previous bubble burst. Will it continue into 2019? I personally doubt it, but we’ll see.”

    I’m very curious about why you doubt it will continue into 2019? Any additional insight into your opinion here would be very appreciated!

  4. 5
    redmondjp says:

    RE: Rentin’ @ 3 – Why might prices stabilize? For me, continued local tech sector job growth is the biggest reason that I would argue for. But I agree with Tim – I’m waiting to see what happens.

    I can’t believe that my (now-renting) neighbor from Pakistan (who works for Customs & Border Protection – riddle that one out amongst yourselves) who moved here from Canada could afford to buy a house in Redmond recently, but he did. Remember that strawberry pickers in CA were buying $750K houses with stated-income loans during HB 1.0. So I see things happening that I never would have believed, which makes me doubt any predictions that I might have. I never would have predicted 20 years ago, when I purchased my house for $160K, that new homes in my neighborhood would be selling for close to $2M either.

    We do certainly live in interesting times. And precious metals are priced really low right now. Do you like having diversity in your investment portfolio? A heavy, sealed piece of PCV pipe buried in the back yard is a nice insurance policy. Will you ever need it? Just like with other forms of insurance, one hopes not!

    ** The above may contain forward-looking statements that are for entertainment purposes only and not to be construed as investment advice or guidance. Consult your local financial planning professional for expert advice.

  5. 6
    whatsmyname says:

    By House Humper @ 2:

    I’ve been a fulltime RE investor for 16 years and before that was an apartment broker (sold multi-family) with Marcus and Millichap.

    This global asset bubble is nastier than anything I’ve ever seen. The unraveling will be of biblical proportions in my opinion. Guess that’s what $13 trillion of QE and a decade of near-zero interest rates does.

    The issue is not to create “affordable housing.” The issue is that housing in general is no longer affordable. The affordable housing crisis will be solved the second interest rates go to a normal level and the mania dies. I think we could see RE prices get halved in most markets. And I’m not a bearish or paranoid person. I’m a numbers guy. Prices anchored to median household income means massive price hacks. It will happen. Always has. Don’t fight the mean reversion.

    Have you sold your real estate yet?

  6. 7
    Rentin’ says:

    RE: redmondjp @ 5 – I’m actually not very surprised about your neighbor’s home purchase. My mortgage broker recently told me that I qualify for a loan that’s 60% more than I personally believe I can afford, or would be comfortable with. I doubt I’m the only one.

    I also have to keep reminding myself that not everyone is as analytical as I am, and are deciding to purchase homes in this market without much consideration for what is actually happening in the market. I met someone recently who was celebrating after he just bought his first home. I asked him what made him decide to buy now and he said “isn’t it always a good time to own your own home? Isn’t that the American dream.” He was too young to remember the housing bust the way that I do.

    I think that there are some good arguments for shorter-term housing price growth (albeit slower than the last several years), but there are so many risks for downside in the next few years.

    I nearly made an offer on a fixer last week, but the asking price was crazy. The open house was empty. There was one other interested buyer who was planning to make an equally low offer, but I didn’t want it bad enough to compete for it. It took two weeks to go pending and I’m curious how low below asking it sold for.

    Waiting out this market is so frustrating. Here’s hoping we have another May-December like 2018.

  7. 8
    Sfrz says:

    RE: House Humper @ 2 – Thank you for your insight. It is critical to hear voices of caution in this sea of REIC/central bank propaganda. This crash is going to be catastrophic.

  8. 9
    House Humper says:

    I have, with the exception of one apartment complex I still own. Otherwise 100% in cash. RE: whatsmyname @ 6

  9. 10
    Eastsider says:

    Both German and Japanese 10yr bond yields turned negative recently. We are heading into a global recession and may already be in one. Just understand that both JCB and ECB will be helpless because their current policies are already extra accommodative. So don’t get too excited about a 1% drop in mortgage interest rate in 4 months just yet.

  10. 11
    Justme says:

    The real question is, why are the bubble-mongers out in force again this spring (as always), trying to get YOU to buy overpriced property so soon after the peak of the bubble, when they are not buying themselves? Sure, one or two of them have bought a teardown that is in terrible shape and plan to, you guessed it, tear it down. But of course, none of them are buying the resulting new construction. Guess why? Answer: Because these Teardown Taj Mahal McMossBoxes are vanity purchases and a godawful TERRIBLE value. Just say no. If the last 10 months proved anything, it is that the buyer strike is working.

  11. 12
    House Humper says:

    Obviously you know this, but most agents simply want to close escrows so they can bank enough dough to get on the other side of the phone. Unfortunately that normally means doing whatever it takes to facilitate closings. It’s good to be skeptical of agents and their intentions. Sorry to the angelic agents amongst us, present company excluded. RE: Sfrz @ 8

  12. 13
    Macro Investor says:

    I don’t understand the gloom and doom attitude that has taken over these comments. Recessions happen every few years. They rarely turn into a major crash.

    Perhaps because people have lived to see a crash, they reason that must be what happens all the time. Is this some sort of weird normalcy bias at work?

    In 2009, there was rampant fraud in the mortgage and bond industries. We had homeless people approved for loans and the bonds were rated AAA. There is nothing like that ready to explode now… or is there?

  13. 14
    Justme says:

    Midweek update: Buyer strike going strong

    King County SFH stats for the last 3 weeks, as of 8-ish tonight

    product = King County SFH only
    all inventory: 3265
    new listings : 1678=552+586+540
    new pendings : 1251
    product uptake from NEW product inventory within 3 weeks: 42.7% (1251/(1678+1251))
    product uptake from ALL product inventory in last 3 weeks: 27.7% (1251/(3265+1251))

    Right now is PEAK season for property sales and purchases, but the buyers are only engaging 42.7% of the best and *newest* inventory, and they are taking their time negotiating. Engagement/uptake is a dismal 27.7% when considering ALL inventory.

    The buyers are definitely striking. Recalcitrant sellers need to get a grip on reducing their prices or else they will be stuck when the recession comes. FONGO, anyone?

  14. 15
    Eastsider says:

    Amazon to Expand Tech Hub in Austin
    Company plans 800 new tech jobs and will move to a larger facility
    https://www.wsj.com/articles/amazon-to-expand-tech-hub-in-austin-11553779224
    “The new jobs will be in areas such as software and hardware engineering, research science and cloud computing. The company said it has hired 1,000 people in Austin in the last four years. “

  15. 16
    Joe says:

    RE: Justme @ 14

    I was driving by an open house last Sunday for a $1M+ property on the Eastside. Decided to walk through for kicks. Checked it out for about 30 minutes. Very desirable house in nice neighborhood. However, there were zero visitors apart from me. The buyers strike is going strong for good reason. When you save your hard earned money for a 20% deposit, then stretch your purchase price for a loan that is 5X your income or more, you don’t want to see your 20% deposit vanish into thin air within a year. The sensible option is to rent while waiting things out. Let the risk subside. Enjoy your life without fear of financial armageddon.

  16. 17
    Eric B says:

    Tim, it looks like you highlighted Los Angeles instead of Seattle in the “Case-Shiller HPI December-January MoM Change” chart. Not a huge deal since the values are identical.

  17. 18

    RE: Webinator @ 4
    To Support Tim’s Negative Prediction

    Is a simple fact, no more Quantitative Easing welfare to the banksters anymore. Its a new history and its making old prediction models a joke too…

    Time for an update on economic prediction training too.

  18. 19

    RE: Joe @ 16
    After the News Lately

    I don’t trust hardly anyone unless I can analyze raw data…too many “blatant” liars out there.

  19. 20
    Joe says:

    RE: Macro Investor @ 13

    Try and put yourself in the shoes of somebody that bought a $1M house last summer, and you’ll understand the change of sentiment. Your 20% deposit largely evaporated in less than a year. You are sitting on a 5% loan you can’t refinance to a lower rate because you’ve lost the majority of your equity. Should you be happy?

    More likely, you are probably thinking of unloading the shack before you lose a lot more of your future earnings when the recession hits. Who wants to be stuck for a decade in an underwater home you likely “settled for” and don’t like that much.

  20. 21
    Joe says:

    RE: Eastsider @ 10

    Yes, it’s panic time for the financial community. Is it any coincidence that Janet Yellen was floating the idea of extraordinary measures last week? She’s not talking QE, which has been proven ineffective in helping the economy. She’s talking about the Fed buying stocks and bonds of public companies, which of course will never happen for good reasons.

    You can smell the panic in the air regarding the oncoming recession. It’s only a matter of time before well-staffed Seattle companies start announcing restructurings and layoffs. I’ve heard from a couple sources within large companies that quiet smaller-scale layoffs are already occurring. The big ones should be hitting soon as the economy slows and Europe/China growth comes to a standstill.

  21. 22
    The Tim says:

    RE: Eric B @ 17 – Oops, good catch. Fixed. Although your browser may have cached the old version of the image.

  22. 23
    Eastsider says:

    By Webinator @ 4:

    My best guess is that, barring an immediate decline in business investment, we will see renewed interest in houses now that cash is cheap again, which leads to increased prices.

    I agree with the renewed interest part but I doubt it will lead to increased prices. Much of the price gains has already materialized. 30yr mortgage interest rates were under 4% in 2016 and hovered around 4% in 2017. So returning back to 4% will not increase prices. Perhaps prices will go back to 2017 level. Note that DJIA’s gain of 25% in 2017 might have been an important factor too.

  23. 24
    Deerhawke says:

    RE: redmondjp @ 5

    “I can’t believe that my (now-renting) neighbor from Pakistan (who works for Customs & Border Protection – riddle that one out amongst yourselves) who moved here from Canada could afford to buy a house in Redmond recently, but he did.”

    Would you make this statement if the person were a white person? Do you not see that this statement is incredibly racist? Do you not care?

    Look if you don’t like being surrounded by people from other countries, just… move.

  24. 25
    ohnotmuch says:

    RE: Deerhawke @ 24 – redmondjp please self-report to the Department of Correct Thought otherwise you’ll be tracked down and charged with a felony for Thoughtcrime. Don’t worry we’re sure one of your ‘cooperative’ neighbors will be more than willing to point *you* in the right direction :)

    Commendable response fellow citizen DeerHawk!

  25. 26
    Redon says:

    Hey sellers and RE Propagandists! List your property now for sale, or you will be priced out for next 5 years. Your choice is loose a little now, or lot more later.

  26. 27
    Deerhawke says:

    RE: Macro Investor @ 13RE: Macro Investor @ 13

    You might want to Google the phrase “Recency Bias”.

    The 2008 – 2011 real estate crash was our most recent downward market event. So therefore many people (especially younger people) see any downturn or potential downturn as the second coming of 2008. There is no thought that this might be the second coming of just another recession.

    Most people do not know that a recession is two successive quarters of falling GDP growth. In the past, we had what was called a V-shaped recession (down and up quickly) so that by the time the economists had the data to proclaim that it was a recession, we were already out of it. But because of a lag effect this was around the time that the real estate market would reflect the recession.

    Might we be getting primed for a crash? Absolutely. Given the history of crashes vs. recessions over the past 100 years, is it more likely that we will have a recession than a crash? Clearly.

    But the terms are not identical. If you are saying that we can only have a crash because the last downturn we had was a crash, you might be missing the bigger picture.

    If you were looking at the situation in mid-2007 and because of recency bias were only thinking of the mild 1991 and 2001 recessions, then you would have gotten completely blind-sided.

  27. 28
    Eastsider says:

    RE: Deerhawke @ 24 – I am not sure why everything has to do with race. Debate the point instead of calling names.

    Seattle median household income is $100,630 in 2017. Now this –

    Pakistan’s Annual Household Income per Capita reached 649.972 USD in Jun 2016. CEIC calculates Annual Household Income per Capita from annual Monthly Average Household Income multiplied by 12 and annual Average Household Size and converts it into USD.

    https://www.ceicdata.com/en/indicator/pakistan/annual-household-income-per-capita

  28. 29
    uwp says:

    By Joe @ 20:

    More likely, you are probably thinking of unloading the shack before you lose a lot more of your future earnings when the recession hits. Who wants to be stuck for a decade in an underwater home you likely “settled for” and don’t like that much.

    lol
    Yes, Joe. The hypothetical buyer from last year is thinking about locking in a hypothetical multi-hundred thousand dollar loss (plus commission!) just so they can rent instead. You really know those buyers!

    More likely, if someone was buying a million-dollar home, it was a place they felt they could live for quite a while (it’s not a starter home). It’s unlikely they’ve been laid off in the last 6+ months since the local economy has been fine. They might have even got raises!

    So, they are probably bummed that they bought when they did, but it’s hard to time things perfectly. On the bright side, they don’t have to wonder whether they should buy now, or wait yet another year. They are probably settled into the house, and aren’t worried about their landlord. They’ve paid down about 10k in principal on the loan. They are looking forward to a full year of tax savings from being a homeowner (4-5k for this hypothetical owner). Maybe they met their neighbors and made some new friends.

  29. 30
    ess says:

    RE: Deerhawke @ 26

    It is the same story for stocks – many individuals, starting to invest in the stock market a few years before the great recession, and they took a pretty hard hit when the market went down some 40%. Their experience was only the great pull back in stocks from that one time – without viewing the greater long term picture of the ups and downs in a general upward direction the stock market has always taken. And many panicked – and sold at the bottom of the market – exacerbating their loses, vowing never to return. Of course – the stock market recovered, and made significant gains, without many of those individual investors.

  30. 31
    Matt P says:

    By Deerhawke @ 24:

    RE: redmondjp @ 5

    “I can’t believe that my (now-renting) neighbor from Pakistan (who works for Customs & Border Protection – riddle that one out amongst yourselves) who moved here from Canada could afford to buy a house in Redmond recently, but he did.”

    Would you make this statement if the person were a white person? Do you not see that this statement is incredibly racist? Do you not care?

    Look if you don’t like being surrounded by people from other countries, just… move.

    You brought up skin color, not him. In terms of being able to buy a house, you need either income to qualify for a loan or cash to cover the price and since he has a low paying job and comes from a poor country, it is curious how he can do so.

    Still, it’s all anecdotal and doesn’t prove we are back to liar loans.

  31. 32
    Deerhawke says:

    RE: Eastsider @ 27

    Canadians have enough money to buy houses here and that seldom raises eyebrows. People who work for the US government sometimes have accrued equity or inheritances and can buy houses, but that seldom raises eyebrows.

    If this is not about race or ethnicity, why mention that the buyer is from Pakistan? Otherwise, what is the point?

  32. 33
    Eastsider says:

    RE: Deerhawke @ 31 – I saw that Canadian part. But even so, Rentin’ @7 wrote

    I’m actually not very surprised about your neighbor’s home purchase. My mortgage broker recently told me that I qualify for a loan that’s 60% more than I personally believe I can afford, or would be comfortable with. I doubt I’m the only one.

    My takeaway from redmondjp’s post was mortgage lending might have become loose again. Can we even have legitimate debate without being called racist? I mean if you look hard enough, everyone is a racist, including you. But that does not help to promote exchange of ideas.

    P.s. Think about it – “neighbor from Pakistan” could have been white! Now who is racist by assuming that individual is brown? Same thing can be said about that deplorable American from Midwest. See what I mean…

  33. 34
    Joe says:

    RE: uwp @ 28

    So which is your advice? Learn to enjoy losing money, or lose money now so you can break even in 10 years, or both.

    Sorry, but those aren’t viable option for rational people.

    The market is a falling knife right now. Inventory is rising fast, whole buyers are dropping off. Simple laws of supply and demand have taken over. Common sense says to wait until things level out. and that will take a while.

  34. 35
    uwp says:

    By Joe @ 33:

    RE: uwp @ 28
    So which is your advice? Learn to enjoy losing money, or lose money now so you can break even in 10 years, or both.

    The market is a falling knife right now. Inventory is rising fast, whole buyers are dropping off. Simple laws of supply and demand have taken over. Common sense says to wait until things level out. and that will take a while.

    The same as my advice has been for the last decade: Buy what you can afford and plan to live there for 7+ years.

    Case Shiller shows price drops moderating a few months ago, and “The market” went up last month per NWMLS. SFH Inventory is roughly in-line with the 2013-2015 time-frame – a time when many people on this very website complained about the lack of inventory. And “months of supply” is pretty low (historically).

    I don’t know what will happen this Spring/Summer. No one has a crystal ball. I do know Justme doesn’t talk about the 10 year treasury rate anymore. Nor is he quoting us Amazon’s stock price.

  35. 36
    ronp says:

    RE: House Humper @ 2

    Did you cash out of real estate in 2006? If you did, then I give you credit for your current outlook.

    I think you are wrong. Yes a recession will hit next year or the following year, but in no way will real estate or other assets be diminished like 2007-2010.

  36. 37
    sfrz says:

    RE: uwp @ 34 – In the tech industry you CANNOT plan to live there 7+ years. You maybe can plan 2 years. My neighbor has been in Atlanta, Boston, Maine, Ft. Lauderdale, Dallas, and now here in the last 12 years. How can you purchase in this economy with that type of movement?!

  37. 38
    BacktoBasics says:

    Even during recession, house won’t drop a lot. Lending standard are much tighter now than 2006,7. People have to have a place to live. Sell the house and live under the bridge? No.

  38. 39
    sfrz says:

    RE: BacktoBasics @ 37 – My other neighbor bought right at the last peak. His dream home’s price in the Grass Lawn area dropped by half in one year. He asked the bank for assistance. He asked his HUGE corporation to assist him with refinancing. NOPE. He struggled with this gawd awful mortgage debt. He just recently was able to say that he was not underwater. It took him 10 years. Very difficult times. If he would have had to transfer during that time, he would have be even more screwed. Be very cautious when buying at the peak. Learn not to catch falling knives.

  39. 40
    richard says:

    RE: BacktoBasics @ 37 – you can sell the house and rent.
    Or a person forecloses on his house. bank take the house back and rent it back to the same person assuming bank can not sell the house without taking a bigger loss.

  40. 41
    kenmorem says:

    By sfrz @ 38:

    RE: BacktoBasics @ 37 – My other neighbor bought right at the last peak. His dream home’s price in the Grass Lawn area dropped by half in one year. He asked the bank for assistance. He asked his HUGE corporation to assist him with refinancing. NOPE. He struggled with this gawd awful mortgage debt. He just recently was able to say that he was not underwater. It took him 10 years. Very difficult times. If he would have had to transfer during that time, he would have be even more screwed. Be very cautious when buying at the peak. Learn not to catch falling knives.

    BS.

    did his mortgage rate change during that period? what caused him to struggle with his loan that he sought a refi?

    there is no way he “just wasn’t underwater”. i bought at the last peak and sold last year for 2.5x my previous purchase price. i was years’ removed from being underwater on my loan, and that was with 0% down.

  41. 42
    N says:

    @Kenmorem – Congrats. 2.5x from the last peak is WAY above the averages. That is awesome. Last I checked we were up less than 50% from the last peak,

    There was a lot of pain after the bust. I sold two properties bought during peak in 2014 and 2015, both for losses and was just happy the losses were smaller than they had been in the prior years. Our other property bought in 2005 is probably up ~30% today (14 years later). No, these were not in the Seattle metro but still, a lot of pain out there.

  42. 43
    dariakus says:

    By kenmorem @ 39:

    By sfrz @ 38:

    RE: BacktoBasics @ 37 – My other neighbor bought right at the last peak. His dream home’s price in the Grass Lawn area dropped by half in one year. He asked the bank for assistance. He asked his HUGE corporation to assist him with refinancing. NOPE. He struggled with this gawd awful mortgage debt. He just recently was able to say that he was not underwater. It took him 10 years. Very difficult times. If he would have had to transfer during that time, he would have be even more screwed. Be very cautious when buying at the peak. Learn not to catch falling knives.

    BS.

    did his mortgage rate change during that period? what caused him to struggle with his loan that he sought a refi?

    there is no way he “just wasn’t underwater”. i bought at the last peak and sold last year for 2.5x my previous purchase price. i was years’ removed from being underwater on my loan, and that was with 0% down.

    This happened to me. Bought at the peak in Florida. Job transferred me to Utah. House had dropped to a third of what we’d paid for it, and we’d done everything right (20% down, etc). With the price drop that steep we couldn’t rent it out and make ends meet. Also there was a huge economic collapse at that time so when my job say d “you’re moving”, I said “yes sir” and didn’t quit to try and stay local. There weren’t any jobs to be had.

    So we had to let the house go in a short sale.

    It still isn’t worth what we paid for it back then over a decade later….

  43. 44
    kenmorem says:

    By dariakus @ 41:

    By kenmorem @ 39:

    By sfrz @ 38:

    RE: BacktoBasics @ 37 – My other neighbor bought right at the last peak. His dream home’s price in the Grass Lawn area dropped by half in one year. He asked the bank for assistance. He asked his HUGE corporation to assist him with refinancing. NOPE. He struggled with this gawd awful mortgage debt. He just recently was able to say that he was not underwater. It took him 10 years. Very difficult times. If he would have had to transfer during that time, he would have be even more screwed. Be very cautious when buying at the peak. Learn not to catch falling knives.

    BS.

    did his mortgage rate change during that period? what caused him to struggle with his loan that he sought a refi?

    there is no way he “just wasn’t underwater”. i bought at the last peak and sold last year for 2.5x my previous purchase price. i was years’ removed from being underwater on my loan, and that was with 0% down.

    This happened to me. Bought at the peak in Florida. Job transferred me to Utah. House had dropped to a third of what we’d paid for it, and we’d done everything right (20% down, etc). With the price drop that steep we couldn’t rent it out and make ends meet. Also there was a huge economic collapse at that time so when my job say d “you’re moving”, I said “yes sir” and didn’t quit to try and stay local. There weren’t any jobs to be had.

    So we had to let the house go in a short sale.

    It still isn’t worth what we paid for it back then over a decade later….

    we’re not talking about FL. we’re talking about seattle – the biggest RE boom in the past 5+ years.

  44. 45
    House Humper says:

    I’m actually from Pakistan and I too find that very ironic. Deerhawke you seem race obsessed in all of your comments. Almost as you if you feel the need to constantly virtue signal. It’s ok to observe the racial makeup of others, it is natural and not a micro aggression. Please, a deep breath, now slowly exhale. RE: Deerhawke @ 24

  45. 46
    BacktoBasics says:

    By sfrz @ 38:

    RE: BacktoBasics @ 37 – My other neighbor bought right at the last peak. His dream home’s price in the Grass Lawn area dropped by half in one year. He asked the bank for assistance. He asked his HUGE corporation to assist him with refinancing. NOPE. He struggled with this gawd awful mortgage debt. He just recently was able to say that he was not underwater. It took him 10 years. Very difficult times. If he would have had to transfer during that time, he would have be even more screwed. Be very cautious when buying at the peak. Learn not to catch falling knives.

    Even during the deep recession in 2008, Seattle housing didn’t drop by 50%. It is more or less 30% off the peak. But, mortgage doped from 7% to 2.5% and 1st time buyer get a check of $10000. I bought mine in 2009, not the absolute bottom but a fantastic deal and a very good location. Of course, rebate check and low low mortgage. The property value has more than doubled. (2.5X more likely). Then in 2014 I bought my 2nd property at a very good location, the value has doubled also, also at a bottom 3% interest. All this thanks to Mr Bezos of Amazon. Then in 2017, I bought my 3rd property. It has more than 20% gain since then. All my propertie are just 5 miles to Seattle and Bellevue where all these high paying job located. I am from Mid-west, I bought my very 1st house 20 years ago and then sold it 10 year s later when I move here. Barely break it even (or loss). My only regret is not to buy Seattle earlier (after 2008 of course) and buy more. I was renting between 2006-2009. Sorry renters, you would be regret not buying Seattle earlier. That’s what I said today. Let’s look it back 10 years later. Thanks Fed, thanks Ben. And thanks Seattle. I cann’t believe I could do this well in Mid-west. Location, Location and always location. I would draw a circle of 10 miles in Seattle and buy. I know I know Seattle traffic is the worst. That’s why the 10 miles is coming from. Good luck to every house hunters in Seattle. Now is the best time: soft market and cheap reversion of 10 year treasure.

  46. 47
    LuLu says:

    RE: House Humper @ 42
    I agree with you. Many racist actually are losers. they didn’t see hardworking immigrants. they can’t believe they can afford a nice house. Have you ever see homeless 1st generation immigrants? If person can’t afford a house, it means that person doesn’t work hard enough.

  47. 48
    Erik says:

    RE: Deerhawke @ 26
    Macroinvestor’s comments are that of a microinvestor that doesn’t have a broad view of the market. Funny he gave himself that name.

  48. 49
    House Humper says:

    You are correct. As some from Lahore Pakistan myself, I have met many racists in my life (from my home country, yes.) Every group of people has ‘racist’ leanings to a degree, it is a liberal American fantasy that only white people are racist. It is really a limited perspective. My wife is Japanese, she and I both know many Japanese with extremely ‘racist’ opinions about people of color. This is a fact. Are the Japanese racist people in your opinion Deerhawke?

    Deerhawke, are you a white man? It seems like the people obsessed with race in America are white Americans. I have always been fascinated by this truism. Why is this so? Some guilt? As a longtime reader of this forum you always seem to tie your politics and love for liberal tech workers and diversity into your real estate commentary. It is odd, surely you have enough self-awareness to acknowledge this? It is very confusing to understand this American white guilt syndrome. But for me it is ok, many in cities see me as a ‘holy man’ because I am from Pakistan and not a lowly bland white American. It is really bizarre but it’s true. Now surely after reading this someone who does not like what I am saying will accuse me of not being from Pakistan and a white Trump man in disguise. But if you care for me to type this in Urdu for verification I am glad to do so. RE: Eastsider @ 32

  49. 50
    House Humper says:

    I sold in 2007 yes, but I also stopped selling commercial real estate in 07 because the signs of a protracted massive downturn were so obvious. I switched to fulltime investing at that point. As for this last cycle, I liquidated most of my assets last summer. But I was way early in calling a bubble– I’ve been selling since 2015 because I thought the market was really overvalued. Yes I missed some gains there. But I would rather be early when leaving a burning building than late. However in all fairness I do a lot of buying and selling always. I don’t think there is every a ‘bad’ time to do real estate, just good and bad deals. However of course good deals are easier to source during bad times. Nothing everyone on this blog doesn’t know. I haven’t seen a good multifamily opportunity for purchase in the past 6 years and I search many hours per day in several different states I invest in. It is just my opinion that the market is in for massive price declines, not a correction and not a soft landing. I cannot say with absolutely certainty of course and I know that the powers that be will do everything in their power to push the bubble. Those forces may be stronger than the economic factors I believe will decimate values. I admit and acknowledge that I may be wrong in thinking a massive crash is coming and is currently underway. RE: ronp @ 35

  50. 51
    whatsmyname says:

    By House Humper @ 2:

    The issue is not to create “affordable housing.” The issue is that housing in general is no longer affordable. The affordable housing crisis will be solved the second interest rates go to a normal level and the mania dies. I think we could see RE prices get halved in most markets. And I’m not a bearish or paranoid person. I’m a numbers guy. Prices anchored to median household income means massive price hacks. It will happen. Always has. Don’t fight the mean reversion.

    This sure brings up a lot of questions. Are your apartments not housing? Are they not affordable to your tenants? When you talk of normal interest rates, do you think of nominal rates or real rates? What is the mechanism for halving RE prices in an upward rate environment? Is it the payment that an SFR buyer can afford? Would holding that payment steady change the dynamics for apartment rents? You think house prices are anchored to median household income? As an apartment owner?

    Also, relative to recently selling most of your assets: After sales costs, capital gains, and depreciation recapture, about what percentage haircut do you think took on your assets?

    Thanks in advance.

  51. 52
    House Humper says:

    So many questions, I don’t have the thumb strength to answer them all. Seems like your last question was intended to be snarky, which seems typical for all of your replies I’ve read on this forum over the 4 months or so I’ve followed it.

    But if you saw my banks account(s) I don’t think you would ever use the descriptor ‘haircut’ to describe the contents. I’m maxed out at many many institutions to stay under FDIC limits, I’ll put it that way. I’m sorry you are so offended by my opinion that the market will be crashing hard. I cannot help you there. But you shouldn’t be offended by that, why does it bother you so much that someone based on their professional experience thinks this market is going to crater on a Biblical level? All the best to you! RE: whatsmyname @ 47

  52. 53
    whatsmyname says:

    RE: House Humper @ 48 – Super easy questions that could have been answered with less verbiage than you used to answer none of them.

    The last question was not snarky; it’s a real question. I sense from your response that you didn’t understand it. I thought you said you were a numbers guy.

  53. 54
    Eastsider says:

    RE: uwp @ 28 – A housing crash has real consequences. In the next downturn, some homeowners are going to lose their shirts. Here is a repost –

    Opinion: Why out-of-control bubble-era mortgages still threaten to smash major U.S. housing markets
    https://www.marketwatch.com/story/this-bubble-era-mortgage-trick-could-smash-major-us-housing-markets-2019-03-18

    Here is the real shocker: Lauffer found that of those homeowners who defaulted by 2009, 40% of them had purchased their home in 2003 or earlier.

  54. 55
    House Humper says:

    JustMe has more energy to banter with you than I do. I have two young children, having a third on the internet sounds exhausting. Have a great night!!. RE: whatsmyname @ 49

  55. 56
    JWoods says:

    RE: House Humper @ 2

    How high do you think the interest rate could get to? In what time frame?

    Housing price getting halved means it’s a bigger crisis than the Great Recession, it would be like Great Depression. Is that what you are preparing for?

    US has one of the highest interest rate among developed countries, if you are truly convinced interest rate will go way up (a big IF), US has a lot more dry powder left than almost all other developed countries, you will make more money, much earlier by shorting housing in Germany, UK, or Canada.

  56. 57
    whatsmyname says:

    By House Humper @ 55:

    JustMe has more energy to banter with you than I do. I have two young children, having a third on the internet sounds exhausting. Have a great night!!. RE: whatsmyname @ 49

    I will, but please daddy, say one thing that wouldn’t be a not-too-bright poor man’s fantasy of what a rich real estate guy might say. Btw, did you enjoy Justme’s redefinition of population growth as being the same as net migration? Fantastic.

  57. 58
    JWoods says:

    You can get 30 yr fixed mortgage with 1.5% interest in Germany, UK or Denmark nowadays.

    How high do you think the housing price will go when that happens in US?

  58. 59
    House Humper says:

    I actually tuned out of that spat you guys had over population numbers. You would argue with a paper bag if you could, so I generally ignore your posts. As I’m sure most people do.

    RE: whatsmyname @ 56

  59. 60
    Voight-kampff says:

    RE: House Humper @ 52

    No offense, but to immediately brag about your hefty bank account to establish your bona-fides sounds dubious at best, or at least very unnecessary.

  60. 61
    whatsmyname says:

    By House Humper @ 57:

    I actually tuned out of that spat you guys had over population numbers. You would argue with a paper bag if you could, so I generally ignore your posts. As I’m sure most people do.

    RE: whatsmyname @ 56

    To catch you up, Justme was excoriating posters for not sharing his gross misunderstanding of the term population growth. Really just as simple as that.

    I think you’ve spent more posts answering my posts than any other purpose. Poor job of ignoring. In any case, I probed a number of your real estate statements, some of which were very questionable. This gives you numerous opportunities to defend your views, or challenge mine – on the basis of real estate; something a knowledgeable person would relish in this type of forum. Instead, you consistently dodge any real estate detail to respond with personal criticism or other distraction. Really lends to the idea that you know you are a fraud.

  61. 62
    Marc says:

    RE: whatsmyname @ 59 – Whatsmyname, I believe you are an intelligent and passionate person and for a while I read your posts. I feel the same way about Justme. Unfortunately, I also agree with House Humper that the frequency of pedantic bickering and ad hominem attacks in your comments make them not worth reading so I now skip over most of your comments entirely. I am responding in this instance because I found House Humper’s comments particularly interesting as I am also in real estate full time (residential) and have liquidated most of my assets so that I am largely cash.

    The same thing applies to Justme except that his weekly nominal SFH/Condo graphs have some value even if his overdone commentary does not. It’s unfortunate, because I think your opposing view points could point readers to the likely direction of the current real estate market, i.e., the likely outcome lies somewhere between your respective extreme views. But, your unwillingness to have a respectful conversation means some (and I suspect many) people don’t bother to listen.

  62. 63
    Sfrz says:

    RE: House Humper @ 45 – the Rudyard Kipling of the blog. These immigrants serve him well. He makes his living from their hard work or their vulnerability and nievite.

  63. 64
    Justme says:

    RE: House Humper @ 57
    RE: whatsmyname @ 59

    Rather, what happened was that whatsmyname was promoting the gross misunderstanding that newborn children should be counted as potential buyers, after he and many others over the years had spouted about supposed big migration from California and other places, When the fake migration data was busted with real census ACS migration data (by myself mostly), WMN switched back to promoting “population growth” numbers instead, but skipping over the fact that the newborn children do not buy property, and dead people free up property. But I made one minor mistake while trying to correct the numbers, and of course WMN will never shut up about it.

    Whatsmyname posts more nonsense, pedantic bickering and outright lies than anyone. It is not worth in general to keep up with it. I am happy that many readers recognize the situation. Too bad not everyone does.

  64. 65
    randomseattledummie says:

    RE: Justme @ 62

    “Justme posts more nonsense and outright lies than anyone. It is not worth in general to keep up with it. I am happy that many readers recognize the situation. Too bad not everyone does.”

    FTFY

  65. 66
    JWoods says:

    RE: House Humper @ 2

    How high do you think the interest would go? In what time frame?

    Housing price getting halved means it’s a bigger drop than the Great Recession, probably similar to Great Depression, is that what you are preparing for?

    The interest rate in US is actually among the highest in developed countries, if you are convinced that interest rate is heading much higher (a big IF), you probably have better luck shorting housing in Germany, UK, or Canada.

  66. 67

    RE: Rentin’ @ 7
    Yes Rentin’

    In the early 80s it was just as bad with 15% mortgage rates forcing two professional incomes to buy [homes were about $80K then]….one professional sized income for mortgage and the other for the rest of the costs of living, like eating and driving two cars to work, etc, etc…

    I rented then too…bought a sweetheart deal home in 1990 in Lake Hills with one income…wait and good things can happen. Buy and the sweetheart deals pass ya by…

  67. 68
    JWoods says:

    From 1954 to 1981, effective Fed interest rate went from <1% to 19%, what happened to housing price?

    There isn't Case-Shiller data then, but I don't think there was 50% price drop in the US. The housing price in Seattle area probably doubled or tripled during that time frame.

  68. 69
    JWoods says:

    RE: House Humper @ 2
    Not sure why my previous posts are not showing, here is another try.

    How high do you think the interest would go? In what time frame?

    Housing price getting halved means it’s a bigger drop than the Great Recession, probably at Great Depression level. Is that what you are preparing for?

    US has some of the highest interest rate among developed countries, if you are truly convinced that interest rate is going much higher and housing price getting halved, shorting housing in Germany, UK, or Canada is probably a better trade.

  69. 70
    Justme says:

    The truth about the housing market is slowly coming out after decades of propaganda

    Some key data and issues: Weekly and daily inventory, what inventory constitutes a balanced market (1Month is balanced), weekly listing uptake/absorption (very low right now at peak season), better median sold price data analysis via regional breakdowns to understand variations (median did not rise in Feb 2019 the mix did), case-shiller index, true net migration data (not 1-way migration based on incoming-only driver license data) , potential buyer (renter) population versus overall population that includes newborns, real census-based job numbers, real vacancy rates rather than “stabilized”-buildings-only vacancy rates, real office occupation versus bustable and busted leasing announcements that mean nothing. All that good stuff is slowly coming out and getting disseminated.

    It is hard work but if all bubble-busters pitch in we can counterbalance the REIC propaganda. Especially important is to bust the fake stats that are promoted all over the mainstream media. Please go to seattletimesDOTcom and also use twitter to respond when some REIC source post fake data and misinformation.

    No thanks to the all the propagandists that have a vested interest in inflating housing prices and will spread fake and grossly misrepresented data all day long.

  70. 71

    RE: randomseattledummie @ 63
    Yes, His Last Blog Was a Bit Convoluted

    I agreed with justme on OVERPOPULATION destroying Seattle.

    We don’t need a New Green Deal no one can afford and still doesn’t do a dam_ thing about OVERPOPULATION in Seattle destroying the Orcas, salmon run, dead spots in Puget sound from sewage drainage, old growth owls extinctions and now wild fire air pollution, etc, etc too…OVERPOPULATION immigration makes it FAR worse.

    We need a New Ecological Deal in Seattle instead, tear down rich elite mansions in wetlands, ban building in salmon runs, killing them all off. Restrict park camping population to decrease wild fires and Seattle bad air. Reduce population [gradually, over generations] to shut off sewage waste in Puget Sound. Build the WALL now too, to shut off the OVERPOPULATION ecological harms now, foreign nations’ birth control planning problems are not Seattle’s responsibility or carbon cost! Carbon footprint is 1% of the problem, this is the other 99% we ignore. Tough love is needed not addiction to evil.

    IMO we need to improve the ecology with live Orcas [the canary in the mine] as proof….otherwise, dead ones are coming soon at a Puget Sound theater near you.

  71. 72
    JWoods says:

    RE: softwarengineer @ 64
    How is it buying a house in early 1990 in Lake Hill is a better deal than buying in early 1980s?

    I just picked a house in Lake Hill and looked at its county assessment record, for easy comparison I picked a house with pretty much original features, with 1100 sf. In the early 1980s it’s assessed at 62K, in 1990 it’s assess at 110k. You will have to time it really well (buying a bit earlier than 1990) to get the house at similar price as early 1980s.

    403940065002 1994 1995 0330 0 0 0 0 74,400 57,200 131,600
    403940065002 1992 1993 0330 0 0 0 0 49,300 71,000 120,300
    403940065002 1990 1991 0330 0 0 0 0 45,200 65,100 110,300
    403940065002 1988 1989 0330 0 0 0 0 23,400 43,600 67,000
    403940065002 1986 1987 0642 0 0 0 0 19,800 42,200 62,000
    403940065002 1985 1986 0642 0 0 0 0 20,000 39,600 59,600
    403940065002 1984 1985 0642 0 0 0 0 20,000 37,800 57,800
    403940065002 1982 1983 0642 0 0 0 0 20,000 42,500 62,500

    Of course interest rate is a big part of it, instead of paying 20% interest on mortgage in 1984, you will ONLY pay 8% mortgage in 1990.

    The same house has an assessed value of $580K today.

  72. 73

    RE: JWoods @ 66
    Good Question JWoods

    Where are interest rates going now? The 30 year Treasury Rate is about 2.8%, it was 3.2% a few months ago…this means about a .4% drop in the 30 year mortgage rate too. The YOY treasury rates increased about 50%, so did mortgage rates….watch long-term rates on stock charts to monitor. Its all a big mess for financial advisors, because their old Quantitative Easing paradigm is a joke now. Throw all your old planning agendas in the trash now, we have no Obama QE welfare to the banksters anymore…get used to it. Trump barks mean discontent with the Federal Reserve Manager raising interest rates, so he’s trying to steam the economy with slower impact on interest rates too, will the Dam Break anyway? We’ll know soon, at a theater near you… its mystery is just starting to unravel. I’m still positive anyway, higher interest rates mean more GDP and higher paying jobs, why is that bad?

  73. 74

    RE: JWoods @ 69
    My Home Buying Wasn’t Listed in 1990

    I bought a sweetheart deal in Lake Hills for $100K, 25% down….[totally remodeled it myself as contractor for an additional $26K $CASH$] new custom sold oak kitchen and bathroom, new kitchen counters, new wall, new floors, etc, etc…]…a contractor estimate would have charged me about $100-150K back then and the house private assessment went up only $40K after it was completely remodeled…multiply these numbers by about 4 today…

    The patient bird gets the worm…remodeling is a waste of money at contractor’s rates in 1990, it still is in 2019…

  74. 75
    JWoods says:

    RE: softwarengineer @ 71
    Now you are talking about something I can understand.

    The same sweetheart deal you got for 100K in 1990 probably will only cost $67K in 1983, by waiting 7 years you end up paying 50% more to get a sweetheart deal.

  75. 76
    uwp says:

    By Justme @ 62:

    Rather, what happened was that whatsmyname was promoting the gross misunderstanding that newborn children should be counted as potential buyers, after he and many others over the years had spouted about supposed big migration from California and other places, When the fake migration data was busted with real census ACS migration data (by myself mostly), WMN switched back to promoting “population growth” numbers instead, but skipping over the fact that the newborn children do not buy property, and dead people free up property. But I made one minor mistake while trying to correct the numbers, and of course WMN will never shut up about it.

    What you seem to have trouble with is that babies may not buy houses, but people also get older. The 18-year-old turns 19, and moves out of the house. The 24-year-old turns 25 and stops living with 3 roommates. The 29-year-old turns 30 and rents a house. The 34-year old turns 35 and maybe buys a house. Meanwhile the newborn turns 1 and the cycle begins anew.

    It’s apparently a difficult concept: the population is growing and needs more room to house people.

    The US (and Seattle) drastically reduced building houses in the last recession, and has only just recently begun to recover. Maybe they over built for a few years in the mid-2000s, but they under-built for much of the decade+ since.

  76. 77

    RE: Joe @ 21
    Yes Joe

    I’ve been thinking about the future of robots in Seattle soon, replacing our jobs and replacing the need for more social cost of more useless immigration OVERPOPULATION. Amazon can likely replace almost all its workers with robots, its simple therblig man hours with low S/W safety concerns…a hair stylist with sharp scissors near your face needs to be human IMO for a long while in the future too… Trump’s green card hotel workers can all be replaced with robots in about 5-10 years, S/W safety concerns mitigated there too. Burger flipping, robots can do these high tolerance type jobs soon too…

    IOWs low skilled Seattle’s economy is hinging on automation with Boeing Manufacturing almost all outsourced now…no jobs for a lion’s share of anyone IOWs, soon at a theater near you. I see fire and police, as well as pensions, etc, etc….down the “planning” toilet too, for the same reason and Boeing eliminating young pensions to eliminate old pensions simultaneously….we hate to admit these facts, but that’s our likely future without “skilled job” manufacturing [with paid employer health care] coming back from foreign countries…I see RE plummetting in price during this unraveling period. Years? Decades? We’ll know soon Bubbleheads, it depends on how fast we can train new Manufacturing Engineers that are the first milestone to renewed manufacturing skills with “people”, not robots.

  77. 78
    Eastsider says:

    By uwp @ 73:

    It’s apparently a difficult concept: the population is growing and needs more room to house people.

    Or maybe we will have too many houses in a not too distant future. Baby boomers own 2 out of every 5 homes in the county.

    Housing values may fall as baby boomers die off or sell off, two studies say
    https://www.washingtonpost.com/realestate/housing-values-may-fall-as-baby-boomers-die-off-or-sell-off-two-studies-say/2018/07/17/35b0dbf0-890c-11e8-8aea-86e88ae760d8_story.html

    One, from Fannie Mae’s Economic and Strategic Research group, warns that the “beginning of a mass exodus looms on the horizon,” where “homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.”

  78. 79

    RE: JWoods @ 72
    How Old Are You JWoods?

    I lived in Seattle all my life [I’m 65]….Lake Hills homes for $67K in 1990, 2000 SF sized? LOL…ya could get a new 1200 SF rambler in Everett for around $6OK [larger Silver Firs Everett new homes were going for about $130K] new then and commute 50 miles to work too…try about $150-180K listed for the large Bellevue 1953 built home/lot I bought [they’re $700K+ now]…the mortgage payments ate over half of a whole “higher” professional income at 10-12% interest, even at $60K…

    The old planning methods can’t be compared except by the net pay left after buying in…I prefer to spend like 30% of “current” net pay max for mortgage [the bank lending max limit later in the 90s anyway] , less if possible….I was only one income in a sea of two income sharks…it was almost impossible for single incomes to qualify for a mortgage in the 90s too.

  79. 80

    RE: softwarengineer @ 76
    Oh, One More Thing

    The $75K loan I signed in 1990 with a “0% sweetheart mortgage loan” in like 12-13 years of $600/mo $CASH$ payments….add up your numbers with like 10% interest then…LOL. The whole planning strategy changes as numbers change…its not constant at all. Your loan for 30 years would be horrifying if you do. BTW, with property tax, my 1990 bill was more like $750/mo….back then, that was about 50% of a single net pay, so I theoretically “overextended” myself even at “about” half off terms…

  80. 81
    House Humper says:

    Nice fancy words, most of us landlords aren’t that high-brow sorry. I’m sorry you’re skeptical that a fulltime investor would post on a real estate blog. Sounds like a personal problem. RE: Voight-kampff @ 58

  81. 82
    redmondjp says:

    By Deerhawke @ 24:

    RE: redmondjp @ 5

    “I can’t believe that my (now-renting) neighbor from Pakistan (who works for Customs & Border Protection – riddle that one out amongst yourselves) who moved here from Canada could afford to buy a house in Redmond recently, but he did.”

    Would you make this statement if the person were a white person? Do you not see that this statement is incredibly racist? Do you not care?

    Look if you don’t like being surrounded by people from other countries, just… move.

    Wow . . . just wow! A LOT of assumptions here. My surprise is not that he bought a house, but that they let non-US-citizens (of any race) work for the Customs and Border Protection department. And I have a huge issue with how people from many of these cultures treat women as well as those choosing alternate lifestyles. Are you OK with FGM? I’m not . . . it’s culturally-practiced in Pakistan BTW.

    And Deerhawke, I am not a racist. But I will not apologize for putting America first. When everything in our country (jobs, real estate, etc.) is for sale to the highest bidder worldwide, it does not bode well for the long-term health and vitality of our country and of our own native citizens. Many other developed countries around the world don’t let these things happen, and yet nobody here is griping about them. Try moving to New Zealand, for example.

    You have already admitted that you are profiting from rich foreigners moving here and buying your product, so are you part of the problem, or part of the solution? You must not have any kids. From what I have read from all of your posts to date, you seem to be looking out for only one person.

  82. 83
    House Humper says:

    I have only followed this blog for maybe 4 months but What’sMyName is truly worth skimming over or ignoring. He/She/Zer is like an angry bully outside the door of a classroom who attacks anyone who thinks there is a real estate bubble. Sure I could be wrong that we are in a big fat bubble, but it is my professional opinion having been a high volume real estate broker with the nation’s leading investment brokerage firm (M&M) and after that a f/T investor for approx. 15 years. I won’t repeat that again because I could care less if WhatsMyName or any other trolls think it is a big lie in order to boost my anonymous online standing with total strangers. That is such a funny concept to me! LOL.

    Anyway, yes I think a big bubble. There appears to be more ‘frenzy’ to the market than when I stopped selling in 07. Yes, there are not wide scale NINJA loans, but all bubbles are not equal. The Dutch Tulip Crisis was without NINJA loans also, but somehow a bubble formed. Prices are totally detached from median incomes. This is a big problem. Same goes for rents. My rents are all soft because I hate vacancy, and gouging tenants and turnover costs, but they are still too high. I prefer happy tenants candidly.

    I believe in the K-wave and basic market cycles of which I think we are currently at the peak of. Sure I could be wrong but I have chosen to be liquid in anticipation of a huge correction that I believe is coming. Worst case scenario my cash is eroded by 12 months of inflation and low returns. I only get approx. 2% of every one of my Goldman accounts so it does suck, I am not winning there, agreed. But I’ not a multifamily buyer for anything less than 10% cash on cash. 7 GRM and north and I don’t touch it. Sorry, it has worked for me. Those metrics are achievable in a normal market, which hasn’t been the case for approx. 7 years IMO. That’s ok, I sold all of my multifamily at 4-5 caps and will buy distressed deals again at my 10% COC target that I’ve always achieved. I think the listed inventory is Garbage. Total garbage.

    As for SFR’s, I buy those too, but normally not as rentals. I think housing prices are offensive and need to do reset so that 70% of Americans are unable to buy houses. I don’t think that’s healthy. I think the buyers right now are pure Amateur Hour and it is the ‘dumb money.’ The players I know and my former clients are NOT buying RE right now. They are sitting in cash. Many much more well papered than me.

    That’s my two cents anyway. I’ve been wrong before, but not really with real estate investing :)

    RE: Justme @ 62 – Nice fancy words, most of us landlords aren’t that high-brow sorry. I’m sorry you’re skeptical that a fulltime investor would post on a real estate blog. Sounds like a personal problem. RE: Voight-kampff @ 58

  83. 84
    uwp says:

    By Eastsider @ 75:

    Or maybe we will have too many houses in a not too distant future. Baby boomers own 2 out of every 5 homes in the county.

    Sure it’s possible. People have been saying for years boomers were going downsize from houses to condos. Maybe someday! Or maybe all those old folks love their big houses too much to move.

    Those age 60+ seem like the group in this country most resistant to change, but what do I know, I’m a silly millennial.

  84. 85
    House Humper says:

    Is that your way of calling me an Uncle Tom?

    RE: Sfrz @ 61

  85. 86
    sfrz says:

    RE: House Humper @ 80 – NO. I was referring to DeerHawk’s comment that you commented on.

  86. 87
    Anonymous Coward says:

    By Eastsider @ 75:

    By uwp @ 73:

    It’s apparently a difficult concept: the population is growing and needs more room to house people.

    Or maybe we will have too many houses in a not too distant future. Baby boomers own 2 out of every 5 homes in the county.

    Housing values may fall as baby boomers die off or sell off, two studies say
    https://www.washingtonpost.com/realestate/housing-values-may-fall-as-baby-boomers-die-off-or-sell-off-two-studies-say/2018/07/17/35b0dbf0-890c-11e8-8aea-86e88ae760d8_story.html

    One, from Fannie Mae’s Economic and Strategic Research group, warns that the “beginning of a mass exodus looms on the horizon,” where “homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.”

    The “housing prices to crash as boomers sell due to age” argument assumes that the millennial cohort is smaller than the boomers. That’s simply not true; there are more millennials than boomers and the bulk of the millennials are just now starting to enter the peak home buying age brackets…

  87. 88
    Justme says:

    RE: uwp @ 73

    >>The US (and Seattle) drastically reduced building houses in the last recession, and has only just recently begun to recover. Maybe they over built for a few years in the mid-2000s, but they under-built for much of the decade+ since.

    Tremendously misleading. Huge amounts of of apartments have been built all over the US in general and in Seattle in particular, between 2008 and 2019. You are conflating housing with “houses” with SFH.

    What is happening right now is that renters are sitting pretty, in Seattle and elsewhere, and they are striking against the high price of SFH and condos alike. Which part of 10.5% apartment vacancies (Seattle, Jan 2019) did you not understand?

    Another day, another propaganda debunk.

  88. 89
    JWoods says:

    RE: softwarengineer @ 77

    I was simply trying to make a couple of cases, what you said and your own experience seem to support that:

    1) Buying house was never easy, not easy for you in 1990, not easy for me in 2001, and not easy for anyone who wants to buy today. But it’s doable for anyone who is determined to do it. A lot of people on this forum cry out loud about spending >30% income on mortgage payment, and that Seattle housing is in a bubble today, not realizing a lot of people like you spent ~50% income on mortgage payment in 1990, and it was considered a sweetheart deal.

    2) Housing in Seattle area in general has ALWAYS appreciated in any 10-year span (starting in 1950s when county records become available), regardless of interest rate, regardless of recessions, regardless of how expensive it seemed to be then. All of your housing bears can cry foul and hope, but the 50% haircut will probably never happen.

    3) The same house you bought in 1990 for $100K+26K remodeling, assuming you got a 30-year mortgage and close to payoff now, you initial $25K down payment + 26K remodeling cost has yielded $700K in return, not too bad for a total of 13X return, and 9.45% annual return over 29 year period of time!

  89. 90
    House Humper says:

    Ha oh sorry I misunderstood the reference It’s ok I have a sense of humor anyway :)RE: sfrz @ 81

  90. 91
    House Humper says:

    Ive been called worse anyway. As a Pakistani that is conservative and America-loving you can imagine I make heads explode sometimes. They really dont like it when they learn I am not anti-America because my skin is brown. It really bothers many people. Browns are supposed to fall in line. RE: House Humper @ 80

  91. 92
    BacktoBasics says:

    By JWoods @ 84:

    RE: softwarengineer @ 77

    I was simply trying to make a couple of cases, what you said and your own experience seem to support that:

    1) Buying house was never easy, not easy for you in 1990, not easy for me in 2001, and not easy for anyone who wants to buy today. But it’s doable for anyone who is determined to do it. A lot of people on this forum cry out loud about spending >30% income on mortgage payment, and that Seattle housing is in a bubble today, not realizing a lot of people like you spent ~50% income on mortgage payment in 1990, and it was considered a sweetheart deal.

    2) Housing in Seattle area in general has ALWAYS appreciated in any 10-year span (starting in 1950s when county records become available), regardless of interest rate, regardless of recessions, regardless of how expensive it seemed to be then. All of your housing bears can cry foul and hope, but the 50% haircut will probably never happen.

    3) The same house you bought in 1990 for $100K+26K remodeling, assuming you got a 30-year mortgage and close to payoff now, you initial $25K down payment + 26K remodeling cost has yielded $700K in return, not too bad for a total of 13X return, and 9.45% annual return over 29 year period of time!

    I agree with you. Seattle is a very desirable place to live and good place to find good paying job. Yes it is bubble, Yes it is unaffordable, But as long as your have a job and willing to work harder a bit, you can afford it through initial hardship. Would you buy cheap house in a place with no job or buy expensive house and at least find a good job. The answer is very easy. Consider it is a leveraged loan, plus tax write off, you gain is more than 9.3%. Better than S&P500.

  92. 93
    BacktoBasics says:

    By JWoods @ 84:

    RE: softwarengineer @ 77

    I was simply trying to make a couple of cases, what you said and your own experience seem to support that:

    1) Buying house was never easy, not easy for you in 1990, not easy for me in 2001, and not easy for anyone who wants to buy today. But it’s doable for anyone who is determined to do it. A lot of people on this forum cry out loud about spending >30% income on mortgage payment, and that Seattle housing is in a bubble today, not realizing a lot of people like you spent ~50% income on mortgage payment in 1990, and it was considered a sweetheart deal.

    2) Housing in Seattle area in general has ALWAYS appreciated in any 10-year span (starting in 1950s when county records become available), regardless of interest rate, regardless of recessions, regardless of how expensive it seemed to be then. All of your housing bears can cry foul and hope, but the 50% haircut will probably never happen.

    3) The same house you bought in 1990 for $100K+26K remodeling, assuming you got a 30-year mortgage and close to payoff now, you initial $25K down payment + 26K remodeling cost has yielded $700K in return, not too bad for a total of 13X return, and 9.45% annual return over 29 year period of time!

    Consider it is a leveraged investment, plus tax write off, your return is more than 9,3%, better than S&P500. Do you consider selling it, 500K cap gain tax free for a married couple!

  93. 94

    RE: softwarengineer @ 64
    It Was a Good Thing I Walked Carefully Through the 75% Divorce Rate “Rattle snakes” of King County in the 90s

    My friends and I all got hit with divorces in the 90s destroying our real estate investments….in my case it was really hopeless…a 90-95% divorce if you had a severely mentally retarded child [moderate Autism too]….LOL, it turned out he became my “lucky charm” anyway…he kept me single after I took custody of both my children in 1998. I still pat him on the head today BTW….LOL

    The single stock of spouses in Seattle sucks IMO BTW, that’s why they’re still single [me too??? LOL]…the young [gold diggers?] women are mean and the older women with money are greedy and selfish….if ya really need to re-marry, try a widow…LOL

    So you naive two incomes in Seattle are sitting on a keg of divorce dynamite in your $700K+ homes, I hope it doesn’t blow up for you like the 90s….LOL

    I really do hope your marriages work out, but if you’re still married for real estate investing [and not love]…I wish ya luck ;-)

  94. 95
    sfrz says:

    RE: House Humper @ 86 – No worries. I have great friends on the Eastside from Gujaret that have a 24 yr old that is a Trump fan. They are American as apple pie (and Thai food, and pizza, and goat cheese, etc.) :)

  95. 96
    uwp says:

    By Justme @ 83:

    What is happening right now is that renters are sitting pretty, in Seattle and elsewhere, and they are striking against the high price of SFH and condos alike. Which part of 10.5% apartment vacancies (Seattle, Jan 2019) did you not understand?

    Feel free to rent as many micro-apodments as you would like. None of us “bubble-mongers” are going to stop you. When my wife and I first got married we shared a 600 sq. foot apartment that was awesome.

  96. 97

    RE: BacktoBasics @ 87
    Its Changed IMO

    The high paying jobs dried up a lot more than most will admit to….this Bubble Blog convinces me of that. Also low priced housing areas like Kansas City pay the same average pay as high priced real estate areas like NYC and SEA. Its a NWO out there, its all changed fast…keep up with it or Stephen King’s Mercedes Man will mow ya down….[great 2016+ trilogy, I just finished it last week…] ;-)

    BTW, if ya want a great read without Fake News back drops, try Dean Koontz’s Jane Hawk 4 book 2018 series….I’m on the 2nd book and that rogue 27 YO widow FBI lady rocks. Its about the FBI and DOJ going bad on us [like now? LOL] and plotting “brain control” dominance of America. She battles insidious nanotechnology injections “gradually” and secretly brainwashing us to be compliant zombies….kind of like today, huh….LOL

    Maybe I’ll write a short science fiction horror story about buying Seattle Real estate….Amazon e-books is a good way for a new author to start…

  97. 98
    sfrz says:

    RE: uwp @ 91
    Twitter feed:
    Juergen Amft
    ‏ @jamft
    4h4 hours ago

    “It is the “Greater Fool Theory.” You know you are a fool for buying something for a price that is too high, in the hopes of finding an even greater fool that you will be able to sell it to for a higher price. Like real estate in 2006. Eventually, the world runs out of fools.”

  98. 99
    BacktoBasics says:

    By Justme @ 83:

    RE: uwp @ 73

    >>The US (and Seattle) drastically reduced building houses in the last recession, and has only just recently begun to recover. Maybe they over built for a few years in the mid-2000s, but they under-built for much of the decade+ since.

    Tremendously misleading. Huge amounts of of apartments have been built all over the US in general and in Seattle in particular, between 2008 and 2019. You are conflating housing with “houses” with SFH.

    What is happening right now is that renters are sitting pretty, in Seattle and elsewhere, and they are striking against the high price of SFH and condos alike. Which part of 10.5% apartment vacancies (Seattle, Jan 2019) did you not understand?

    Another day, another propaganda debunk.

    The rent is also so unaffordable in Seattle. A two-bed apt cost $2000/month. My 1st SFH cost me $2000/month mortgage payment. I have see so many people house share and living in basement. If the apt owner is willing to lower the rent, I don’t think people would living in other people’s basement.

  99. 100
    BacktoBasics says:

    The house crisis in Settle has reached some point. Let ‘s me give you an example. My neighbor rented his basement to some folks. Since then his tenant parked his car at my house parking spot. Of course I have to put a note on the car request to move. Have you ever drive in Seattle neighbor, the street is packed with parked cars. the street can only allow one car through. Every house has a garage but very few were used for car. Many landlord trun their basement as mini apt and guess all where the junk collected over the years go?

  100. 101
    BacktoBasics says:

    There is only limited land in Seattle. Now your have tripled or even quadrupled the population. Of course the SFH price is going to triple or quadrupled . Unless the city is to changed the zone code to allow high rise. redevelop the housing is going cost more money due to constructing labor shortage and wage inflation. It’s very common to see a 2 bed high rise condo listed for 1mil now. As long as there is population inflow, you are not going to see housing easing in Seattle. I don’t think people are foolish to buy in this bubble market. It is supply vs demand.

  101. 102
    Blake says:

    Another leading indicator flashing red!
    https://twitter.com/EconguyRosie/status/1110608311748083712
    Declines in the Conference Board “jobs gap” index of 5.7 points or more don’t happen every day. In fact, this development was saved for the past five recessions; they don’t happen in expansions.

    Also from David Rosenberg:
    “Alternative facts from POTUS: “the world is slowing, but we’re not slowing”.
    The facts – real GDP growth: 4.2% (Q2), 3.4% (Q3), 2.2% (Q4), 1% (current).”

    To many still drinking the kool aid!
    Pro Tip: The Great Recession of 2007-2009 began 9 months BEFORE the stock market crashed. The bond and credit markets started freezing up in 2007…

  102. 103
    ess says:

    By uwp @ 96:

    By Justme @ 83:

    What is happening right now is that renters are sitting pretty, in Seattle and elsewhere, and they are striking against the high price of SFH and condos alike. Which part of 10.5% apartment vacancies (Seattle, Jan 2019) did you not understand?

    Feel free to rent as many micro-apodments as you would like. None of us “bubble-mongers” are going to stop you. When my wife and I first got married we shared a 600 sq. foot apartment that was awesome.

    UWP

    Your comments dovetail nicely with the following article about how one can become a better saver. According to this article – it isn’t a choice of buying vs renting – it is the size of what is either bought or leased. Notice the last chart – the size of a residence has increased dramatically over the past 40 years or so, while the size of the family occupying the residence has decreased just as dramatically. And in areas such as Seattle – they aren’t building any smaller houses anymore. As discussed – the cost of the land, not to mention materials, labor and permitting fees have all escalated dramatically. Thus smaller single family houses, as a percentage of the single family house universe continues to shrink in the Seattle area as new houses are built and smaller houses are replaced with MUCH larger ones.

    We also had a small efficiency apartment – approximately 500 sq. feet when we were first married. And even at present – we reside in a smaller single family house. We certainly don’t need the extra space, and everything – taxes, upkeep, utilities are all much less expensive. There are more important things in life than paying 8-10 thousand a year in property taxes.

  103. 104
    BacktoBasics says:

    High tech job drying out? You are kidding me. US high paying jobs not are not drying out. Tech companied can’t find enough hi tech employees domestically. They are hiring from overseas by so-called H1B visa. US can’t produce enough STEM graduate. Go to Bellevue and Redmond and look it by yourself. Those folks are living in crowded apartments. High tech wage inflation is outrages. A fresh CS Bachelor starting 200k plus sign on bonus. It would be stupid to buy a new BMW using this money. Those young folks are forming families. Their background make them believe education. The No 1 wise way to spend 1st couple stock option is to buy a SFH in a good school district. I believe est side has huge potential. The next revolution of AI, automation, 5G, bio-medicine tech are just at beginning stage. Seattle is one of the place that’s happening. Wait for 10 years and we will see.

  104. 105
    Matt P says:

    By BacktoBasics @ 99:

    By Justme @ 83:

    RE: uwp @ 73

    >>The US (and Seattle) drastically reduced building houses in the last recession, and has only just recently begun to recover. Maybe they over built for a few years in the mid-2000s, but they under-built for much of the decade+ since.

    Tremendously misleading. Huge amounts of of apartments have been built all over the US in general and in Seattle in particular, between 2008 and 2019. You are conflating housing with “houses” with SFH.

    What is happening right now is that renters are sitting pretty, in Seattle and elsewhere, and they are striking against the high price of SFH and condos alike. Which part of 10.5% apartment vacancies (Seattle, Jan 2019) did you not understand?

    Another day, another propaganda debunk.

    The rent is also so unaffordable in Seattle. A two-bed apt cost $2000/month. My 1st SFH cost me $2000/month mortgage payment. I have see so many people house share and living in basement. If the apt owner is willing to lower the rent, I don’t think people would living in other people’s basement.

    $2000/mo for a 2 bed? Not anywhere close to downtown Seattle unless it’s a dump.

  105. 106
    Market Pyschologist says:

    RE: BacktoBasics @ 104 – “A fresh CS Bachelor starting 200k plus sign on bonus.”

    This is total BS. As many have commented in the past, only a small group of tech workers make that much money, including bonuses. The average guy makes about $110k. It’s a great salary, but when you factor in student loans, saving for a home, and your families future, that $900k SFH money-pit built 60 to a 100 years ago is not feasible. Hence the buyers’ stike.

  106. 107
    steve says:

    Hi House Humper,

    Thank you for contributing to the thread! I look forward to more of your posts, your insight is valuable.

  107. 108
    ess says:

    RE: ess @ 103

    And here is the article cited above but didn’t make my comment due to the dreaded “technical difficulties”.

    https://www.marketwatch.com/story/the-no-1-thing-people-with-fat-savings-accounts-scrimp-on-that-you-likely-dont-2019-03-29?mod=mw_theo_homepage

  108. 109
    BacktoBasics says:

    By ess @ 103:

    By uwp @ 96:

    By Justme @ 83:

    What is happening right now is that renters are sitting pretty, in Seattle and elsewhere, and they are striking against the high price of SFH and condos alike. Which part of 10.5% apartment vacancies (Seattle, Jan 2019) did you not understand?

    Feel free to rent as many micro-apodments as you would like. None of us “bubble-mongers” are going to stop you. When my wife and I first got married we shared a 600 sq. foot apartment that was awesome.

    UWP

    Your comments dovetail nicely with the following article about how one can become a better saver. According to this article – it isn’t a choice of buying vs renting – it is the size of what is either bought or leased. Notice the last chart – the size of a residence has increased dramatically over the past 40 years or so, while the size of the family occupying the residence has decreased just as dramatically. And in areas such as Seattle – they aren’t building any smaller houses anymore. As discussed – the cost of the land, not to mention materials, labor and permitting fees have all escalated dramatically. Thus smaller single family houses, as a percentage of the single family house universe continues to shrink in the Seattle area as new houses are built and smaller houses are replaced with MUCH larger ones.

    We also had a small efficiency apartment – approximately 500 sq. feet when we were first married. And even at present – we reside in a smaller single family house. We certainly don’t need the extra space, and everything – taxes, upkeep, utilities are all much less expensive. There are more important things in life than paying 8-10 thousand a year in property taxes.

    yes I would like to spend 1/2 to buy 1/2 the size lot and size of the house. But where can I find them. Seattle is pretty much build up. developer has to buy existing house, demolish it , divide it or simply build a duplex wall to wall town house. It is not undoable. It is the cost of acquire property, building cost according to new building code plus inflated labor cost. Any one did remodeling recently will understand how hard and expensive to find a contractor in Seattle. Don’t blame these contractor. They have to live in this expensive city and of course they will demand higher wages. Once housing expense inflated, everything will be inflated. I have seen so many small business closure because landlord raise their rent. When big business choose HQ in your city, be prepared to pay more for everything. That’s why NYC rejected Amazon.

  109. 110
    BacktoBasics says:

    By Market Pyschologist @ 106:

    RE: BacktoBasics @ 104 – “A fresh CS Bachelor starting 200k plus sign on bonus.”

    This is total BS. As many have commented in the past, only a small group of tech workers make that much money, including bonuses. The average guy makes about $110k. It’s a great salary, but when you factor in student loans, saving for a home, and your families future, that $900k SFH money-pit built 60 to a 100 years ago is not feasible. Hence the buyers’ stike.

    That’s what I have seen recently. And guess what degree these H1B have. the all have MS at least and some have PhDs. I have never heard those folks have student loan. they got BS for “free” and get paid in graduate school working as TA for American kids. and a lot of them are ‘escspers’ from Silicon Valley with 200K pay. Not typical fresh BS from WSU, UW folk. Lot of them are duel income with spouse on H2B (ever heard of it?)

  110. 111
    Eastsider says:

    By uwp @ 84:

    Sure it’s possible. People have been saying for years boomers were going downsize from houses to condos. Maybe someday! Or maybe all those old folks love their big houses too much to move.

    Those age 60+ seem like the group in this country most resistant to change, but what do I know, I’m a silly millennial.

    Haha, I agree with you for once. Enjoy your weekend!

  111. 112
    Eastsider says:

    By Anonymous Coward @ 87:

    The “housing prices to crash as boomers sell due to age” argument assumes that the millennial cohort is smaller than the boomers. That’s simply not true; there are more millennials than boomers and the bulk of the millennials are just now starting to enter the peak home buying age brackets…

    You need to cross check your assumption with demographic data. The millennial generation does not have the wealth to afford boomer homes at current prices. Here is a shocker for you – Many boomers can’t afford their own homes at today’s prices!

  112. 113
    Market Psychologist says:

    RE: BacktoBasics @ 110 – Goal posts moved so quickly from one post to the next. First, it’s a “fresh CS with a bachelors,” now it’s a Master and PhD.

    Again, you are providing examples that are the exception to the rule.

  113. 114
    ess says:

    By Eastsider @ 78:

    By uwp @ 73:

    It’s apparently a difficult concept: the population is growing and needs more room to house people.

    Or maybe we will have too many houses in a not too distant future. Baby boomers own 2 out of every 5 homes in the county.

    Housing values may fall as baby boomers die off or sell off, two studies say
    https://www.washingtonpost.com/realestate/housing-values-may-fall-as-baby-boomers-die-off-or-sell-off-two-studies-say/2018/07/17/35b0dbf0-890c-11e8-8aea-86e88ae760d8_story.html

    One, from Fannie Mae’s Economic and Strategic Research group, warns that the “beginning of a mass exodus looms on the horizon,” where “homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.”

    Possible in some areas that are not as popular to reside in as others. It is my understanding that there are inexpensive properties right now in declining communities in the northern US interior. But that is not where population growth is occurring. That growth is primarily happening on both coasts, the south and in major cities.

    But there are other factors that mitigate against this dire prediction

    -The baby boom population is no longer the largest group in the US. The millennial population now occupies that honor. Sooner or later they will pay down their student debt, and begin their family formation, and they will require larger apartments and single family houses.

    -Millennials, especially in places such as Seattle, are doubling and tripling up. While it may be party time when one is in their 20s, by the time they reach their late 30s and early 40s, they will probably wish to reside on their own, or with a significant other, or even by themselves.

    -The number of adult children residing with their parents has reached an all time high. That will get old for many of them, especially as they reach their late 20s and beyond. They will finally move out, and require independent residences.

    -The number of residences that are being built – especially single family houses has not kept up with demand after the 2007 meltdown. The industry never bounced back to pre 2007 levels, and there are still shortages, especially in the modest single family residence arena.

    -There has been large scale immigration to the US, and those immigrants have larger families than native born Americans. They will need to occupy those bigger houses that baby boomers are in part currently occupying.

    -Long term demographics favor the Democratic Party on the national level. as well as in a majority of states. As a result, there will probably be a general amnesty for people who are here illegally, as well as increased legal immigration. Both will contribute to the demand for housing of all types.

    -Baby boomers are often not interested in leaving their long term residences. People are not only living longer, but better, and many of these boomers are able to “age in place”. Furthermore, they have not interested in downsizing even if a bedroom or two is empty, because not only are they comfortable where they are, but often the cost of moving will not result in great savings.

    Thus I am not overly concerned that there will be massive houses appearing on the market because of baby boomers. But if one believes this theory – they should wait the 10 -15 years before buying when prices decline according to the thesis presented in the WAPO article.

  114. 115
    BacktoBasics says:

    RE: Market Psychologist @ 113
    Ever heard Amazon slave labor camp? It is true that Amazon offer $200k packages to fresh BS. Guess what Bezos would expect from you? I believe it would be stupid for these fresh BS to buy BMW 3. Instead, they should buy their very 1st start up fixture house for living and as future rental properties after they form family.

  115. 116
    BacktoBasics says:

    Millennials are better not use their 1st paycheck to buy a BMW 3. better to buy a fix and rent rooms to their college classmates to help pay for outrages mortgage while building equity. It can their 1st house and future rental property. I have seen again and again successful wealth build story by smart kids. I see these kid drive a beat up Civic and ready to be on-call to fix rental problems. Wealth build always starts from very little and ugly things.

  116. 117
    Eastsider says:

    RE: ess @ 114 – Wow. That is a long list of assumptions to support your narrative. Whatever.

  117. 118
    BacktoBasics says:

    By ess @ 114:

    By Eastsider @ 78:

    By uwp @ 73:

    It’s apparently a difficult concept: the population is growing and needs more room to house people.

    Or maybe we will have too many houses in a not too distant future. Baby boomers own 2 out of every 5 homes in the county.

    Housing values may fall as baby boomers die off or sell off, two studies say
    https://www.washingtonpost.com/realestate/housing-values-may-fall-as-baby-boomers-die-off-or-sell-off-two-studies-say/2018/07/17/35b0dbf0-890c-11e8-8aea-86e88ae760d8_story.html

    One, from Fannie Mae’s Economic and Strategic Research group, warns that the “beginning of a mass exodus looms on the horizon,” where “homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.”

    Possible in some areas that are not as popular to reside in as others. It is my understanding that there are inexpensive properties right now in declining communities in the northern US interior. But that is not where population growth is occurring. That growth is primarily happening on both coasts, the south and in major cities.

    -There has been large scale immigration to the US, and those immigrants have larger families than native born Americans. They will need to occupy those bigger houses that baby boomers are in part currently occupying.

    Thus I am not overly concerned that there will be massive houses appearing on the market because of baby boomers. But if one believes this theory – they should wait the 10 -15 years before buying when prices decline according to the thesis presented in the WAPO article.

    I have see multi generation immigrant families live together. Kind of non-American tradition. they costume build their house with the arrangement of muiti-family. they are pulling fund together to pay for the house. You will see 4 or 5 cars parking in front their house. I would guess every able adult is working and paying for the mortgage. American will have hard time to understand this kind living arrangement. That’s how those immigrant can afford expensive mega house.

  118. 119
    Eastsider says:

    RE: BacktoBasics @ 116 – I find it interesting that so many people here just make assumptions without doing legit analysis. Do you seriously believe that a bank will loan you money to lose money?

  119. 120
    S-Crow says:

    I was speaking to some folks this week about the housing market , consumer debt loads, qualifying standards for mortgages, etc. Today, someone in the group forwarded the article below to me. When you read below keep in mind the qualifying is based on gross income not take home pay. So, the actual housing expense is OVER 50% of take home pay.

    Today From Ken Harney article regarding FHA:

    “According to FHA Commissioner Brian Montgomery, the agency has been seeing disturbing trends in the quality of loans lenders have been delivering to it:

    1) Nearly one of every four approved home purchasers had a debt-to-income (DTI) ratio exceeding 50 percent, the worst since 2000. In January, 28 percent of buyers were in that category.

    2) FICO credit scores are tanking. They’ve fallen to the lowest level since 2008 — an industry-low average of 670. In the first quarter of fiscal 2019, more than 28 percent of all new purchase loans had FICOs below 640. In the same quarter, more than 13 percent of new loans had scores under 620 — 19 percent higher than the same period in the previous fiscal year. (FICO scores range from 300 to 850; low scores predict higher risks of nonpayment. …..

    3) Borrowers are siphoning equity from their homes at an alarming rate. In fiscal 2018, the FHA saw a 60 percent increase in “cash-out” refinancing as a percentage of all refinancings. Cash-outs allow borrowers to convert equity into spendable money.

    4)Growing numbers of loans have multiple indications of serious future risk of nonpayment — combinations of low credit scores of 640 or less and DTI ratios that exceed 50 percent.

    Further down the article, local Kent, WA mortgage broker, John Porter, Vice President of Mortgage Masters Service Corp. suggested that FHA’s abrupt rule change will slash the number of FHA loans approved nationwide by anywhere from 20 percent to 30 percent in the coming months.

    Another broker:
    “Absolutely they’re going to turn a lot of loans down,” said Skeens. Joe Metzler, a loan officer at Mortgages Unlimited in St. Paul, Minnesota, welcomes the stricter standards.

    “FHA has become the dumping ground for crappy (loan) files with ridiculous DTI allowances and bad scores,” he said. “A lot of it lately has been straight-up subprime. We should not be doing them.”
    ————————————–
    How critical are first time homebuyers? Essential to the market. This is why I am of the conviction that people need to have an understanding of “what’s under the hood” of residential housing. In other words, knowing the underlying financing. I see it daily. Some of it is good. A lot of it is as the article states.

    From the escrow trenches, have a good weekend.

    S-Crow

  120. 121
    whatsmyname says:

    By Justme @ 64:

    RE: House Humper @ 57
    RE: whatsmyname @ 59

    Rather, what happened was that whatsmyname was promoting the gross misunderstanding that newborn children should be counted as potential buyers, .

    Nobody in any way suggested newborn children are candidates for buying (or renting) houses. Both ess and yourself claimed to be talking population growth when I entered the conversation. Only one was. I think I straightened that out.

    I think uwp explained nicely why population growth matters in post 73, and the fluid nature of the data. Lacking perfect data, people have to model on what they can get.

  121. 122
    Laurie Klein says:

    By S-Crow @ 119:

    I was speaking to some folks this week about the housing market , consumer debt loads, qualifying standards for mortgages, etc. Today, someone in the group forwarded the article below to me. When you read below keep in mind the qualifying is based on gross income not take home pay. So, the actual housing expense is OVER 50% of take home pay.

    Today From Ken Harney article regarding FHA:

    “According to FHA Commissioner Brian Montgomery, the agency has been seeing disturbing trends in the quality of loans lenders have been delivering to it:

    1) Nearly one of every four approved home purchasers had a debt-to-income (DTI) ratio exceeding 50 percent, the worst since 2000. In January, 28 percent of buyers were in that category.

    2) FICO credit scores are tanking. They’ve fallen to the lowest level since 2008 — an industry-low average of 670. In the first quarter of fiscal 2019, more than 28 percent of all new purchase loans had FICOs below 640. In the same quarter, more than 13 percent of new loans had scores under 620 — 19 percent higher than the same period in the previous fiscal year. (FICO scores range from 300 to 850; low scores predict higher risks of nonpayment. …..

    3) Borrowers are siphoning equity from their homes at an alarming rate. In fiscal 2018, the FHA saw a 60 percent increase in “cash-out” refinancing as a percentage of all refinancings. Cash-outs allow borrowers to convert equity into spendable money.

    4)Growing numbers of loans have multiple indications of serious future risk of nonpayment — combinations of low credit scores of 640 or less and DTI ratios that exceed 50 percent.

    Further down the article, local Kent, WA mortgage broker, John Porter, Vice President of Mortgage Masters Service Corp. suggested that FHA’s abrupt rule change will slash the number of FHA loans approved nationwide by anywhere from 20 percent to 30 percent in the coming months.

    Another broker:
    “Absolutely they’re going to turn a lot of loans down,” said Skeens. Joe Metzler, a loan officer at Mortgages Unlimited in St. Paul, Minnesota, welcomes the stricter standards.

    “FHA has become the dumping ground for crappy (loan) files with ridiculous DTI allowances and bad scores,” he said. “A lot of it lately has been straight-up subprime. We should not be doing them.”
    ————————————–
    How critical are first time homebuyers? Essential to the market. This is why I am of the conviction that people need to have an understanding of “what’s under the hood” of residential housing. In other words, knowing the underlying financing. I see it daily. Some of it is good. A lot of it is as the article states.

    From the escrow trenches, have a good weekend.

    S-Crow

    I read the article and it sounds like the FHA is tightening it’s standards due to the growing risk which is a good thing. So they are catching the problem and changing the requirements before another subprime mortgage fiasco brings down the economy or housing.

  122. 123
    Rentin’ says:

    RE: S-Crow @ 119 – Thank you for the insight S-Crow. Just for some additional details about my own personal situation, the mortgage amount I was recently pre-approved for is:

    60% higher than what I would be comfortable with
    51% of my GROSS pay
    67% of my take home pay

    The last mortgage I applied for was in 2013, and that was a completely different story. I wasn’t able to purchase a home I wanted because the sellers wanted 20k more than the bank would lend me. I ended up finding a different home months later, but would have been able to comfortably afford the first house I wasn’t able to buy.

    I realize my situation is anecdotal, but it seems crazy to me. I just keep wondering how so many people are affording these homes that have doubled in the last few years. If they are able to take out loans like I was pre-approved for, that would at least be one explanation. Of course there are the investors/developers, etc., but there are also normal working families buying these (outrageously expensive) homes. How many of them are house-poor? What will happen to them if layoffs happen and/or if prices drop further?

  123. 124
    Rentin’ says:

    RE: S-Crow @ 119 – Just another note about the article you referenced. If 83% of FHA buyers are first-time homebuyers and they are abruptly making the lending standards much higher, that’s potentially eliminating a lot of buyers from the lower end of the market. I suppose we can add that to the list of general headwinds.

  124. 125
    House Humper says:

    Oh, well thank you and for the kind words. It is just one man’s perspective, but thank you for the kind words. RE: steve @ 107

  125. 126
    sfrz says:

    RE: BacktoBasics @ 110RE: BacktoBasics @ 110 – Not sure about that. I’ve worked in immigration for a major tech firm. H-1b’s spouses usually aren’t able to work. They have to have an H-4. H-1b’s can stay for 6 years, with a 3 year extension. There’s a 10 year backlog on the green cards for H-1b’s. They are also contracted, which saves the company money.

  126. 127
    sfrz says:

    Bye Boeing.
    “MCAS was not the only change that made the 737 MAX a ‘kludge’. The design errors were inexcusable. Boeing did not inform the regulators when it quadrupled the maximum effect the MCAS system could have. These changes had side effects that were not properly analyzed. Failure of the system was hazardous and extremely difficult to handle. Indicators lights showing that the system may have failed, a safety feature, were sold as extras.

    And today we learned that Boeing did not even provide its customers with the “clear explanations” the certifications required it to deliver.

    These were not ‘mistakes’ by some lowly technicians. These were breaches of legal requirements and of trust.

    It will take quite long to certify the changes Boeing announced for the 737 MAX. Lawsuits were filed against the company. Orders were canceled. The company is under criminal investigation. The commercial damage to Boeing will likely be larger than currently estimated. It comes on top of a recent WTO ruling that Boeing illegally received billions of dollars in subsidies and will need to compensate its competition.

    All these are consequences of bad management decisions.”

    “Boeing once was an engineering company with an attached sales department. It 2001, when it moved its headquarter to Chicago, it became a dealership with an attached engineering wing. The philosophical difference is profound. ”
    https://www.moonofalabama.org/2019/03/regulators-knew-of-737-max-trim-problems-certification-demanded-training-that-boeing-failed-to-deliv.html#more

  127. 128
    Blake says:

    RE: sfrz @ 125
    Indeed… criminal negligence!
    Wall Street Journal reader Erich Greenbaum said in comments on an older article, How Boeing’s 737 MAX Failed:
    “No – this isn’t about “planes that fly by themselves.” It’s about an airplane manufacturer that put engines on an airframe they weren’t designed for, having to add a flight control override to guard against said airplane’s new tendency to nose up, and then adding insult to injury by driving that system with a single sensor when two are available. Oh – and charging airlines extra for the privilege of their pilots being told when one of those sensors is providing bad data.”
    https://www.nakedcapitalism.com/2019/03/boeing-doubles-down-on-737-max-rejects-need-for-simulator-training.html

  128. 129
    N says:

    @ S-Crow 119 – Interesting. How easy mortgages have become gets very little attention here and while maybe it’s not as big a factor in Seattle metro I think it’s a meaningful factor in the nationwide recovery. In 2012 you certainly weren’t getting a mortgage with 5% or 10% down, nor with a credit score of 620. Something about risk :) Someone earlier today made reference to the 90’s stating people back then were.. stretching and paying 50% of their income for their mortgage payment. I highly doubt that, as I recall before the early to mid 2000’s, 20% down was the standard and debt to income was much lower. Am I off base?

    Do you know what percent of buyers are FHA today? Slashing that by 30% could be impactful, although not to the degree it would have been in 2012, especially given that traditional banks will give you 5% down loans with so so credit scores even. At the time I served on a highrise condo board and having our building FHA certified so that buyers could get FHA loans was a big deal to increase the potential buyers pool.

  129. 130

    RE: sfrz @ 127
    Boeing Tried to Blame the Engineers

    How about blaming the engineers’ supervisors at Boeing, almost all are not engineers or qualified to supervise professional engineers either…these village idiots write the Boeing Engineers’ performance reviews at Boeing and schedule their training, right? LOL

  130. 131

    RE: sfrz @ 127
    Other Ma and Pa Stores Closing Down in Seattle With Layoffs?

    Walmart is. Maybe the AMZ effect is destroying department stores with Seattle jobs on the line too? One AMZ hand giveth and the other AMZ hand taketh?

    https://www.businessinsider.com/walmart-stores-closing-list-2019-3#712-n-western-ave-liberal-kansas-4

    The welcome to Walmart worker is now replaced with the AMZ Star Wars robot delivery R2D2? At a theater near you soon?

  131. 132

    RE: Eastsider @ 28
    I’m staying Out of the Deerhawke fight for Open Borders perhaps?

    Gosh with the Open Border Party (OBP) you can’t tell…they say there’s no border crisis and now Obama’s old DHS director agrees with Trump….there’s a border crisis and the Mexican border is closing down next week if Mexico can’t stop the illegals….its that simple. There’s a border crisis the OBP agrees to but won’t lift a finger to fix? Am I the only one confused? That’s why I’m staying out of it….Koontz was right they’re secretly brainwashing us to be compliant zombies? LOL

  132. 133
    Deerhawke says:

    RE: N @ 129

    If you think mortgages are easy to get these days, try to get one. Guaranteed it will be a pedagogical experience and an exercise in maintaining patience.

    For me, the process was agonizing. On day 1, they had all the information they needed. Every week would bring a new request for additional information, a request for a written explanation of something obvious, a request for new documentation. Then it was requests for information already sent to them.
    Eventually it had to be “escalated” through different levels of management. Three months later after two no-cost extensions, we finally closed.

    Granted, I am self-employed and that is the next thing to being a crime. Granted, I sought the refi from one of the systemically important banks (Chase) so they are under a much higher level of Dodd-Frank scrutiny.

    But I see this in almost every closing involving financing. People with large incomes, substantial net worth, stable employment and 800 credit scores show up at closing feeling that the process was wildly out of control. (Wait? I have to prove to you my previous spouse is dead? And you want an explanation of how I can be a citizen of the US and Australia? And you want a written explanation of how I made the large sum money in my bank account? And you want the closing docs and proof of insurance on the building in which I am a part owner?)

  133. 134
    dariakus says:

    By N @ 129:

    @ S-Crow 119 – Interesting. How easy mortgages have become gets very little attention here and while maybe it’s not as big a factor in Seattle metro I think it’s a meaningful factor in the nationwide recovery. In 2012 you certainly weren’t getting a mortgage with 5% or 10% down, nor with a credit score of 620. Something about risk :) Someone earlier today made reference to the 90’s stating people back then were.. stretching and paying 50% of their income for their mortgage payment. I highly doubt that, as I recall before the early to mid 2000’s, 20% down was the standard and debt to income was much lower. Am I off base?

    Do you know what percent of buyers are FHA today? Slashing that by 30% could be impactful, although not to the degree it would have been in 2012, especially given that traditional banks will give you 5% down loans with so so credit scores even. At the time I served on a highrise condo board and having our building FHA certified so that buyers could get FHA loans was a big deal to increase the potential buyers pool.

    We bought in 2006 at the peak with 20% down and my monthly payment was 25% of my take home pay. It’s a myth that people have always struggled. This area is objectively significantly less affordable for even above-average incomes. I could take my skills to almost any other city right now, even with a significant pay cut, and buy a home with about a 25% take home pay burden.

    I choose not to because this is our kids’ hometown, I like being able to maximize my 401k without eating rice and beans, and renting is a very cushy deal for us.

  134. 135

    RE: Deerhawke @ 133
    Yes Deerhawke

    Foreign transcripts from Chinese students grabbing up “scarce” U of W college admissions slots can’t be vetted either….trust the NWO, they won’t lie? LOL

    BTW, the Border Patrol [Canada border for Seattle area too] can’t find NEAR enough qualified job applicants who speak Spanish as well as English…a mandatory Obama policy for Border Patrol employees [even Canadian Border?]…that American citizen Border Patrol folk you mentioned from the Mid East from your neighborhood speaks Spanish too? Can he juggle 5 knives at the same time too? LOL

    Did Obama destroy the Border Patrol by over regulating it? Left Trump with a GIANT CRISIS now with a million/yr illegal aliens pouring through the porous WALL now? Hey, maybe Seattle could get some of the MASS Fiat Chrysler high paying manufacturing jobs for the new $8B large car [Chargers? ;-)] Detroit plant transferred from Canada/Mexico to America now….I’d switch from Boeing to FCA too…LOL

    This would be a great boost to Seattle Real Estate too…but Trump’s WALL emergency order was manufactured….LOL

  135. 136
    JWoods says:

    RE: Rentin’ @ 123
    Can you share which bank/mortgage offered you that?

    I could not find any company which would offer me loan above 43% debt to income ratio. I have excellent credit.

  136. 137
    JWoods says:

    RE: Deerhawke @ 133
    This has been more like my experience as well, I’ve done 3 finance deals with different banks in the last year, the most recent one is this month. I don’t see lending standards getting loose at all.

  137. 138
    ruxpert says:

    How the Bay Area tech IPO boom could create a ‘ripple effect’ in Seattle’s housing market

    https://www.geekwire.com/2019/bay-area-tech-ipo-boom-create-ripple-effect-seattles-housing-market/

  138. 139
    Matt P says:

    Came across this when browsing: https://www.redfin.com/WA/Seattle/3041-Beacon-Ave-S-98144/unit-A/home/18659794

    Has the dreaded offer review date and seems to be priced for a bidding war. I’ve seen most 3 bedroom townhomes go for $675K+ lately, and King County says the taxable value is $605k. A lot of people are going to be wasting time bidding on it.

  139. 140
    Justme says:

    Weekend update, King County active inventory, graphical edition.

    The graphs compare 2019,2018,2017 inventory on an hourly basis. 2017 was the year inventory was at a multi-year low for most of the year. Click the link and scroll to see the graphs. Click on each graph for an enlarged view. ESC and scroll to navigate.

    https://imgur.com/gallery/6Xdd2CH

    2019-03-30 King County SFH active for-sale inventory 2017,2018,2019
    2019-03-30 King County Condo active for-sale inventory 2017,2018,2019
    2019-03-30 King County SFH active for-sale inventory ratio YYYY/2017
    2019-03-30 King County Condo active for-sale inventory ratio YYYY/2017

    Editorial: The big picture is that SFH (and Condo) inventory in 2019 is growing even faster than it did in 2018, as can readily be seen from the graphs. This week, there was yet another spike in active for-sale inventory, and a bit larger than last week. New listings are outpacing new pendings by a considerable margin. Last year (2018), March was the month when active for-sale inventory started pulling away from the year-before (2017) levels, indicating the start of the bubble bust. With 2019 in turn outpacing 2018, there is little doubt that the bubble-bust is in full swing.

    Now, a more detailed look at the uptake of product, first looking at 1-week rolling values (as of ~8am today). For three types of conventional listings (SFH+condo+townhouse), there were 976 (696+138+140) new and still-active listings, 539 (393+83+63) new solds/closings (from ~4wk old pendings), and 65 (65+0+0) new pendings (pending within a week of listing). Also there were 520 (395+79+46) pending from <2-week old listings.

    With 2 weeks to get 520 pendings, from 2406 units (976+910(last week)+520) worth of <2wk old inventory, buyers are not absorbing much new product, with a 21.6% rolling <2-week absorption rate. The absorption rate for older inventory is even lower, as the remaining and older inventory is generally also the most overpriced.

    Overall<2wk on market: 520 pendings, from 2406 (976+910(last week)+520) inventory, rolling 21.6% absorption rate.
    Condos <2wk on market: 079 pendings, from 0399 (138+182(last week)+079) inventory, rolling 19.8% absorption rate.

    SFH and overall absorption stayed low, condo absorption is even lower. Basically, buyers are on strike against overpriced product. With buyers holding back, and very iffy macroeconomic developments, it is hard to imagine anything but continuing falling prices on apples-to-apples comparable product. The buyer strike is working, and continues to roll on.

  140. 141
    Realistic says:

    RE: Justme @ 139
    Thanks for the update. The imgur link is not working though.

  141. 142
    Justme says:

    RE: Realistic @ 140

    Looks like imgur has not made the post “public” yet after I “shared” it. Not sure why

    >>Huzzah! Your post has been shared to the community. It will be available in the gallery momentarily.

    Meanwhile, here is the SFH graph

    https://imgur.com/6Usv1LQ

  142. 143

    RE: N @ 129

    “In 2012 you certainly weren’t getting a mortgage with 5% or 10% down, nor with a credit score of 620. Something about risk :) Someone earlier today made reference to the 90’s stating people back then were.. stretching and paying 50% of their income for their mortgage payment. I highly doubt that, as I recall before the early to mid 2000’s, 20% down was the standard and debt to income was much lower. Am I off base?”

    I would have to say you are “off base”. I bought my first house in1981 with $500 down FHA. I started in Real Estate in 1990 and 5% down Conventional Loans were available. Think about it this way. IF 20% down were the standard for any period of time, we wouldn’t have PMI. (FHA is MIP) PMI is Private Mortgage Insurance on the borrowings above 80% of the purchase price. If a lender lends 95% of Purchase Price on a Conventional loan with 5% down, PMI covers the 15% that is not the 80% LTV (Loan to Value) and the 5% down. I think PMI has been around since the 1880’s but you can google that.

    Credit scores have always been a lower standard for FHA and VA and that is why someone can fully qualify for a conventional loan and have 20% down but still use FHA because the interest rate is not dramatically raised because of a lower score. That a broad brush answer. I don’t think FHA changes their rate at all due to credit score like a Conventional Loan, but I haven’t checked that in awhile.

    As to qualifying at 30% or 28% or 50% of your Gross Income, VA Loans for as long as I can remembeer, which would take me back to when I started in real estate in 1990, allowed 40% for Housing Payment IF you had zero debt. Other loan programs had a “front end” and “back end” so that if you had zero debt, your mortgage payment was still limited to about 1/3rd of your Gross Income. But VA had a 40% DTI without regard to front end-back end, so you could use the full 40% for house payment if you had zero debt.

    I’m on vacation with my grandkids just for the weekend, but since you asked a bit ago “am I off base” and no one answered yet, I thought I’d give at least a brief history on the topic(s). I get back tomorrow if you have more detailed questions.

  143. 144
    Justme says:

    RE: Realistic @ 140

    Looks like imgur post it is public now.

  144. 145
    justsomedude12 says:

    Some people on here talk about demand for homes causing ever increasing prices.

    We’re not talking about people bidding on the last loaf of bread at the local bakery, where the price could be be bid up by many multiples because many people can afford a $100 or $200 loaf of bread if they want it badly enough.

    With home buying people have a maximum they can afford, no matter how much they would like to buy one. Sure there will always be people who can afford very expensive homes, but to really propel the market as a whole ever higher, the masses need to be able to afford these ever increasing prices.

    This is why even with demand, price increases just break down and stop at a certain point. This is what has happened over the last 10 months or so.

  145. 146
    House Humper says:

    3x the amount of condos on the market today than this time last year. (545 vs. 202)

    Totally normal market. Buy now or be priced out forever.

  146. 147
    House Humper says:

    Real estate booms and busts are natural. They’ve been documented for almost 500 years. Between 1582 to 1810 Amsterdam had three large real estate bubbles for example. Why would anyone on this blog, a modern 2019 era real estate salesperson, a developer, or anyone else be so aghast and offended by the idea that we are in a big fat asset bubble again? It doesn’t exactly shock the conscience to image being in another asset bubble as we have so many times throughout recorded history. For those of us that didn’t pay attention during history, none of those past boom/bust cycles had NINJA loans until the last bubble. That whole Dutch Tulip Bubble didn’t have NINJA loans.

    Humans are odd creatures, think of how offended some people get on this blog when some suggest that assets are massively inflated as a result of $13 trillion in global QE and overnight rates at near-zero for a decade. It’s like a micro-aggression to even say ‘unsustainable pricing’ or ‘prices detached from median incomes’ to the ears of DeerHawke the social justice warrior and his venomous lemming admirer, WhatsMyName.

  147. 148
    Justme says:

    RE: House Humper @ 146

    LOL, yeah these guys are so blinded by their self-interest that they cannot accept anything else than the Gospel According To REIC.

  148. 149
    Rentin’ says:

    RE: JWoods @ 136 – Caliber Home Loans.

    And to Deerhawke’s point, I haven’t (and will not) make it through an actual home purchase at this price, so I can’t speak to whether or not the loan would go through. It was just the amount I was preapproved for after providing financial documentation.

  149. 150
    DavidE says:

    By House Humper @ 2:

    I’ve been a fulltime RE investor for 16 years and before that was an apartment broker (sold multi-family) with Marcus and Millichap.

    This global asset bubble is nastier than anything I’ve ever seen. The unraveling will be of biblical proportions in my opinion. Guess that’s what $13 trillion of QE and a decade of near-zero interest rates does.

    The issue is not to create “affordable housing.” The issue is that housing in general is no longer affordable. The affordable housing crisis will be solved the second interest rates go to a normal level and the mania dies. I think we could see RE prices get halved in most markets. And I’m not a bearish or paranoid person. I’m a numbers guy. Prices anchored to median household income means massive price hacks. It will happen. Always has. Don’t fight the mean reversion.

    All good observations, but interest rates unfortunately cannot normalize as you hope or they will bankrupt the U.S. Treasury. Further, our debt-based monetary system depends on asset bubbles to increase the value of the underlying collateral, so home affordability is not a major concern of the policy makers.

    As such, policy makers will continue down this path of asset bubbles until something seriously breaks. In my view they will be (1) a currency crisis in the dollar, and (2) layoffs which will bankrupts 70% of the population that lives paycheck to paycheck and start the next domino effect.

  150. 151
    whatsmyname says:

    By House Humper @ 147:

    Real estate booms and busts are natural. They’ve been documented for almost 500 years. Between 1582 to 1810 Amsterdam had three large real estate bubbles for example.

    I’m not strong on Dutch history, but I think that 3 bubbles in 228 years is not a strong argument for 2 bubbles in 12 years. Still, I am not aware of anyone on this site who contends that real estate booms and busts are not natural – or frequent. It would be nice if we could drop the straw man arguments; if that’s not too pedantic.

    Why would anyone on this blog, a modern 2019 era real estate salesperson, a developer, or anyone else be so aghast and offended by the idea that we are in a big fat asset bubble again?

    No one is aghast or offended that you think there’s a bubble. I do recognize that pretending so has the double benefit of undermining your critics based on fallacious emotional appeal, and allowing you to distract from your lack of reasoned support.

    It doesn’t exactly shock the conscience to image being in another asset bubble as we have so many times throughout recorded history. For those of us that didn’t pay attention during history, none of those past boom/bust cycles had NINJA loans until the last bubble. That whole Dutch Tulip Bubble didn’t have NINJA loans.

    No NINJA this time either. Is there any point to this statement?

    Humans are odd creatures, think of how offended some people get on this blog when some suggest that assets are massively inflated as a result of $13 trillion in global QE and overnight rates at near-zero for a decade. It’s like a micro-aggression to even say ‘unsustainable pricing’ or ‘prices detached from median incomes’ to the ears of DeerHawke the social justice warrior and his venomous lemming admirer, WhatsMyName.

    Again, no one is offended. Some might mock your dog whistles, and challenge you to go beyond magical inferences, (Oooh, these prices make me mad – they must be unsustainable; or house prices can’t hold at levels that people who don’t live in houses can afford).

    Speaking of SJW’s, aren’t you the fellow telling the housing “victims” here that you go after only the most profitable apartment deals (such as can’t be had for the last number of years), yet at the same time you are an advocate for cheaper rents? How is that coherent?

  151. 152
    BigBadBanks says:

    Banks are very very strict still. They needed a letter explaining why I wanted to purchase a duplex when I am living in a SFH.

    “Because I live in America” how about that?

    Anyways buying every 2 years when I can afford to as long as I will have a few hundo with cash flow.

    Fear mongers fear, and winners always buy!

  152. 153
    House Humper says:

    You are quite the rookie. Do you think investors like me need to max out rents and squeeze tenants when we are buying reasonably priced assets with 10% ROI and at GRM’s south of 7??It will be amateur hour trying to explain this to you, but I will try to dumb it down. You may even have to google basic terms like, ‘GRM’ to track so keep another browser open.

    Cheap rents and fruitful landlording are not mutually exclusive. Quite the opposite actually. The best multifamily investments I have ever owned or sold have nice units, soft rents at say 15% below market (happy tenants and low turnover being mutually beneficial,) and ease of management. Any seasoned landlord will tell you that. The fact that I have to explain that to you means to me that you have never owned apartment complexes for a living like I have. I will also likely stop replying to you after this because you need to come up the learning curve a bit to even expand for here. Your inability to see the ‘coherency’ between these very simple and basic dynamic tells me you are either trolling or have no experience in investment RE.

    Rents need to come down. Values need to come down. Unless this happens people will not be able to afford rent and investors like me will not touch these investments. Instead we will leave them to private equity funds who are OK with pro-forma 4 caps because they rely on a leveraged struggling tenant.

    There is a huge difference between institutional and ‘mom and pop’ investors. ‘Mom and pop’ multifamily owners, of which I identify despite having a lot of units, have interests almost equally aligned with tenants. I don’t need onerous rents to meet my cash flow goals. I need happy longterm tenants to make my investment work. Exactly the opposite dynamic of a private equity firm that is buying for such little ROI that they need to include ‘principal reduction’ in their underwriting to convince an underwriter that it is not negative cashflow.

    RE: whatsmyname @ 151

  153. 154
    whatsmyname says:

    RE: House Humper @ 152 – My rentals are SFR’s, but I agree with keeping rents low and retaining tenants. My comment was that if you are insisting to acquire at high going in yields- as you stated; rents are high, (or expenses are unsustainably low), when you get there.

    In post 83 you wanted not less than 10% COC and north of a 7GRM vs south of that. It would help if you could keep your story straight.

  154. 155

    RE: House Humper @ 147
    You Should Read Dean Koontz Recent Books With Sanctuary Cities as His Back Drop

    He tells the truth…economic degradation in CA with morals down the tube…he now has a rogue FBI agent, Jane Hawk, fighting the corrupt NWO FBI/DOJ management brainwashing with nanotechnology…its science fiction but scares the Hades out of me because it also kind of reminds me of now…

  155. 156
    ess says:

    RE: House Humper @ 152

    There is a huge difference between institutional and ‘mom and pop’ investors. ‘Mom and pop’ multifamily owners, of which I identify despite having a lot of units, have interests almost equally aligned with tenants. I don’t need onerous rents to meet my cash flow goals. I need happy longterm tenants to make my investment work. Exactly the opposite dynamic of a private equity firm that is buying for such little ROI that they need to include ‘principal reduction’ in their underwriting to convince an underwriter that it is not negative cashflow.

    ——————————————————————————————————————————-

    Our rents have always been below the market rate, because we have always believed that it is less expensive and less aggravating in the long run to undercharge the market- but have tenants in for a number of years that are reasonably happy in being there. It would cost us more to have to redo the house every year to bring it back to the condition we would want to rent it, the missed month of rents, and the hassle of getting new tenants, rather than not charging as much as we could.

    This is what many renters miss the boat in terms of issues such as rent control, as well as other restrictions on landlords. Renters think it is great to pass these various restrictions -but it will hurt the rental housing market and ultimately renters. The more onerous the requirements – the more mom and pop landlords are going to get out of the business because the total return isn’t worth the hassle, and the more corporations are going to take over. And tenants will rue the day when all their housing choices are from faceless corporations. There was a recent article that indicated that housing corporations issue three day notices to pay rent or vacate much more than mom and pop landlords. Has rent been late to us -sure – but we have worked with tenants on occasional rent issues, and we have never issued a 3 day notice to vacate so far, nor have we ever charged a late fee for rent that didn’t show up right on time.

  156. 157
    House Humper says:

    Yes minimum COC (cash on cash) of 10% has been my minimum for almost 15 years and never north of a 7GRM on a trailing two year. A ‘trailing two year’ is what us fulltime investment peofessionals use as shorthand to describe the last 24 months of an operator’s P&L’s. A P&L is an acronym for ‘proft and loss sheet.’ You might have heard of those.

    Oh. And It isnt a ‘story,’ those are my investment parameters.

    In dumbed down What’sMyName speak it means I need 10% returb on my money and what we call in the investment business a 7 ‘gross rent multiple,.’ You probably havent heard that basic term until today because SFR landlords are usually entry level ‘wannabe’ investors that never learned what economies of scale meant so they dont understand the value of multifamily. Ie i have one gardner bill at one of my 15 unit complexes instead of 15 different single family accounts for gardners to service. This is what we investors call ‘economies of scale.’ Im sorry that your business requires inflated rents and valuations to work. That is sad and very Amatuer Hourish. But it explains why you are so angry when anyone on this forum suggests that we are in an asset bubble. Which is so obvious a toddler could see it. Keep fighting WhatsMyName, your vitriol will keep asset prices elevated at unsustainable levels forever!! Markets are driven by your snark and condescention. It is like rocket fuel for Bubbles.

    RE: whatsmyname @ 153

  157. 158
    House Humper says:

    You are 100% correct. Rent control directly affects the pocketbooks of renters. Except not in the intended way. It makes housing even more unaffordable and the housing stock gets converted to condos, TIC’s, or is loaded with unchecked deferred maintenance, like the housing stock in SF. Low-information real estate clowns like WhatsMyName dont understand the complexity of this issue.

    RE: ess @ 155

  158. 159
    whatsmyname says:

    By House Humper @ 156:

    Yes minimum COC (cash on cash) of 10% has been my minimum for almost 15 years and never north of a 7GRM on a trailing two year. A ‘trailing two year’ is what us fulltime investment peofessionals use as shorthand to describe the last 24 months of an operator’s P&L’s. A P&L is an acronym for ‘proft and loss sheet.’ You might have heard of those.

    Oh. And It isnt a ‘story,’ those are my investment parameters.

    In dumbed down What’sMyName speak it means I need 10% returb on my money and what we call in the investment business a 7 ‘gross rent multiple,.’ You probably havent heard that basic term until today because SFR landlords are usually entry level ‘wannabe’ investors that never learned what economies of scale meant so they dont understand the value of multifamily. Ie i have one gardner bill at one of my 15 unit complexes instead of 15 different single family accounts for gardners to service. This is what we investors call ‘economies of scale.’ Im sorry that your business requires inflated rents and valuations to work. That is sad and very Amatuer Hourish. But it explains why you are so angry when anyone on this forum suggests that we are in an asset bubble. Which is so obvious a toddler could see it. Keep fighting WhatsMyName, your vitriol will keep asset prices elevated at unsustainable levels forever!! Markets are driven by your snark and condescention. It is like rocket fuel for Bubbles.

    RE: whatsmyname @ 153

    I’ll give you credit for knowing more than I thought you did. You don’t need to tell me about financials, economies of scale, or common rules of thumb. I’ve been in commercial real estate for decades. My houses are just investments on the side.

    GRM made me smile. Even when I started, only old guys used that. If I was newer, I might not have known what it is. It’s OK for thinking about whether you want to really look at the property, but it can’t account for the disparity of expense structures, and we ultimately have so much information to get at the actual NOI anyway, You very, very seldom see it in an appraisal.

    As for your story, when you were bragging about your financial acumen, you said your standards were GRM north of 7. Now you say they’re south of 7. Am I at fault for not understanding that you meant the opposite of what you wrote? Someone sounds angry, but it’s not me. At least you have your toddler vision :)

  159. 160
    whatsmyname says:

    By House Humper @ 157:

    You are 100% correct. Rent control directly affects the pocketbooks of renters. Except not in the intended way. It makes housing even more unaffordable and the housing stock gets converted to condos, TIC’s, or is loaded with unchecked deferred maintenance, like the housing stock in SF. Low-information real estate clowns like WhatsMyName dont understand the complexity of this issue.

    RE: ess @ 155

    You excoriate “my” high rents; call for a need for lower rents, and then accuse me of supporting rent control? Too funny.

    That reminds me. In post 2 you said you switched from broker to full time investor 16 years ago. In post 50 you said you made that switch in 2007, (12 years ago). Which is it?

  160. 161
    House Humper says:

    We are all now better on this blog for you catching a typo, thank you so much for your diligence and hard work!! I’m sure others appreciate you being here to catch typos too. It is such a valuable service!! Especially since I am typing this out fast not using a thesaurus like you and submitting ‘works of art.’ Truly, from everyone here on the forum, Thank You WhatsmyName for catching some typos.

    To clarify so that we can move on, yes of course I meant to type ‘south’ of 7 for my GRM’s. Obviously. As you may have learned googling the terms today, a lower GRM is preferable when buying, and a lower cap rate is better when selling. So yes, my specific buying parameter is to buy at sub-7 GRM’s, or ‘south’ of 7 as I called it. In the professional real estate business we typically call lower numbers ‘south’ and higher numbers ‘north.’ Like for example, when selling a 500 unit class A project the principal would want a cap rate ‘south’ of his neighbor’s workforce housing that traded recently. Let me know if you need further clarification because I go back to running my business tomorrow and won’t be wasting time responding to the special needs WhatsMyName any longer.

    You don’t need to focus too much on the specific day that I transitioned from high-volume apartment broker at the nation’s leading real estate investment brokerage firm (Marcus and Millichap) and became a fulltime landlord. That really isn’t too critical so I encourage you to move on. But kudos to you you for acknowledging that I know what I’m talking about as far as real estate is concerned. I’d be interested in hearing what level of involvement you’ve had in the CR business, because candidly I don’t believe you. You didn’t even know that soft rents were common and preferential amongst professional landlords like me. I’m glad you have done some learning this weekend. That is a positive development for this forum.

    On a personal note though, you sound very paranoid that people on this forum are lying about their real estate experience, their professions, etc. You clearly see yourself as the virtual gatekeeper of the site. Vetting posters and making sure they are ‘real’ since we all know you’re so legit too and not a REIC propagandist troll as so many others on here have been saying for as long as Ive been reading. That sounds like a real personal problem. That level of skepticism and paranoia seems like a medical condition. But there is help for that so don’t give up.

    You’re in luck though WhatsMyName, I am so slammed with my rentals that I won’t be here to post much more. This weekend was an anomaly for me and for some reason I decided to engage you instead of just reading the comments here. It was kind of like feeding a forest monkey. I gave you some peanuts and you’ve followed me around the whole forest walk and tried to pluck sun glasses off the heads of other visitors and pulled a purse off another woman. There should be a ‘Don’t Feed the Animals’ slogan next to the selfie you took in the mirror for you avatar, overweight and drunk in a prom dress.

  161. 162
    whatsmyname says:

    By House Humper @ 160:

    We are all now better on this blog for you catching a typo, thank you so much for your diligence and hard work!! I’m sure others appreciate you being here to catch typos too. It is such a valuable service!! Especially since I am typing this out fast not using a thesaurus like you and submitting ‘works of art.’ Truly, from everyone here on the forum, Thank You WhatsmyName for catching some typos.

    To clarify so that we can move on, yes of course I meant to type ‘south’ of 7 for my GRM’s. Obviously. As you may have learned googling the terms today, a lower GRM is preferable when buying, and a lower cap rate is better when selling. So yes, my specific buying parameter is to buy at sub-7 GRM’s.

    You don’t need to focus too much on the specific day that I transitioned from high-volume apartment broker at the nation’s leading real estate investment brokerage firm (Marcus and Millichap) and became a fulltime landlord. That really isn’t too critical so I encourage you to move on. But kudos to you you for acknowledging that I know what I’m talking about as far as real estate is concerned. I’d be interested in hearing what level of involvement you’ve had in the CR business, because candidly I don’t believe you. You didn’t even know that soft rents were common and preferential amongst professional landlords like me. I’m glad you have done some learning this weekend. That is a positive development for this forum.

    On a personal note though, you sound very paranoid that people on this forum are lying about their real estate experience, their professions, etc. You clearly see yourself as the virtual gatekeeper of the site. Vetting posters and making sure they are ‘real’ since we all know you’re so legit too and not a REIC propagandist troll as so many others on here have been saying for as long as Ive been reading. That sounds like a real personal problem. That level of skepticism and paranoia seems like a medical condition. But there is help for that so don’t give up.

    You’re in luck though WhatsMyName, I am so slammed with my rentals that I won’t be here to post much more. This weekend was an anomaly for me and for some reason I decided to engage you instead of just reading the comments here. It was kind of like feeding a forest monkey. I gave you some peanuts and you’ve followed me around the whole forest walk and tried to pluck sun glasses off the heads of other visitors and pulled a purse off another woman. There should be a ‘Don’t Feed the Animals’ slogan next to the selfie you took in the mirror for you avatar, overweight and drunk in a prom dress.

    Works of art – wow! I’m flattered. I just try and say what I think. And I try to be clear about it. For example, I didn’t say you know what you’re talking about. I said you know more than I thought you did.

    And I said GRM has been out of fashion for some time. Perhaps you found it in investopedia. You were so quick to assume that’s how people write here. Kind of a “he who smelled it, dealt it” situation.

    Kind of like how you told me you thought I was lying about my real estate experience exactly one paragraph before you said it was paranoid sickness to think someone would lie about their real estate experience.

    Also, I’m not interested in the day you left what we used to lovingly call “Marcus Megacrap”, But this is a 4 year difference; a big market difference. Did you leave in 07 just as the SF housing market was topping, but still shy of the apartment market top, and cash out for the small and less significant window in the apartment market? Or did you leave in 03 which would not have left you much real opportunity and even that not for years? If you’re unsure about the year, it makes me unsure too.

    I’m glad you like my avatar. I found it on the internet, just like I found you. Finally, I don’t want you to go away, and you shouldn’t need to. Remember, you just have one complex now; far less work that what you are accustomed to. You no doubt have much more time available, and that shouldn’t change anytime soon given the market right now.

  162. 163
    House Humper says:

    Ok I’m actually starting to like you, I must confess. I did leave brokerage as the market was cratering, yep! I worked 7 days a week selling apartments and learned from my incredible mentors/clients. It was the most valuable education one could get. My clients were people who were independently wealthy and much older than me. They had seen it all, I hadn’t. Almost every one of my clients when I left the business had almost $50k/month minimum passive cash flow. They knew what they were doing, and I sponged up everything I could. I lived in a tiny unit as an onsite manager for one of my clients (rent free) and banked a lot of money before buying my own rentals and building from there. I am not yet at $50k/month passive but I’m doing very very well. Nobody has cut me a check for the last 16 years almost. 100% self employed, spend all day with my family managing my units and buying distressed properties, although admittedly I have only been buying select properties (no MF for quite a while now, maybe 7 years because they don’t pencil.)

    That’s funny Marcus and MegaCrap. Never heard that one! I don’t think George Marcus would be offended at all though, you may not know but he is worth almost $2 Billion. He’s done OK for himself, even if WhatsMyName on the internet called his company MegaCrap. I really don’t think it would get to him. I will tell him next time we do lunch but I really don’t think he will be hurt by the name calling from What’sMyName, the internet blogger with 2.5 SFR rental units/former commercial real estate flex-space discount leasing agent. Essex, isn’t exactly a flop either, but let’s not talk REITS. I’m tired enough from Feeding the Animal.

    But as I said I kind of like you now, so I will scale it back. Have a good night! Until we meet again…

    RE: whatsmyname @ 161

  163. 164
    MD says:

    The city should tax the crap out of anyone who owns multiple single family homes or condos and rents them out. Owners of multi-family units are fine, as that increases density. But this race to buy up single family housing and rent it out – it should be outlawed. There’s no social value provided, it’s pure rent-seeking behavior.

  164. 165
    Matt P says:

    By MD @ 163:

    The city should tax the crap out of anyone who owns multiple single family homes or condos and rents them out. Owners of multi-family units are fine, as that increases density. But this race to buy up single family housing and rent it out – it should be outlawed. There’s no social value provided, it’s pure rent-seeking behavior.

    100% agree.

  165. 166
    northender says:

    RE: Matt P @ 164
    There is plenty of social value provided! When owners of single-family houses rent them out that gives people with fewer resources the opportunity to live in something other than an apartment.

    People make investments to make money. That is how our capitalist system works.

  166. 167

    Add In Another $11.50/day to Commute/Visit/Work [live?] at Seattle Soon

    We’re expected to add the “congestion tax” too, just like our sister NYC:

    https://newyork.cbslocal.com/2019/03/31/nys-budget-deal-passes-congestion-pricing/

    At a theater near you soon… MSFT needs to hire more H-1Bs with unlimited chain migrations into Seattle; to get the congestion tax implemented ASAP too. This should be a small cost for the huge diversity surge…you should pretend to welcome the new tax with open arms and phony smiles….LOL

  167. 168

    RE: northender @ 165
    Have You Ever Heard the Term Land Baron?

    Many dream of being “Trump-like” land barons; grabbing it all up when the price plummets, like repos…let’s not confuse somewhat sensible “repo” real estate investments made Trump-like 12 years ago [some of the bloggers on the Bubble?] to these rip off investments today. Its apple and oranges IMO. Its like trying to compare Obama’s economy to Trump’s economy [without the $7T Quantitative Easing Obama welfare to the banksters]…investments demand critical timing and patience, not brainless shooting from the hip…

  168. 169
    Eastsider says:

    RE: northender @ 165 – I would add that in the current bubble, rental homes owned by individuals (not corporations) allow families to live in the city at lower rental costs than otherwise. Instead, we should go after absentee SFH owners and Airbnb home rentals (but not condos). The city can also reduce regulations and encourage (re)development to lower cost of housing.

  169. 170
    Matt P says:

    By northender @ 165:

    RE: Matt P @ 164
    There is plenty of social value provided! When owners of single-family houses rent them out that gives people with fewer resources the opportunity to live in something other than an apartment.

    People make investments to make money. That is how our capitalist system works.

    Keep telling yourself that to feel better about what you are doing because what you are really doing is distorting the housing market.

    You drive up housing prices by paying more for a house than someone who would live there. That marginal family now cannot afford a house and must rent so rents are not lower because the number of renters has increased and house prices go up from a reduction of available houses to buy.

  170. 171

    I’m Currently Converting As Much ” Locked Box Taxable Income” into $CASH$ ASAP

    The saving interest rates are way too low to lock it up that way, I’m not the only one…

    https://www.bloombergquint.com/global-economics/america-s-wealthiest-households-have-record-cash-on-hand-chart#gs.3cub42

    $CASH$ is King now…

  171. 172
    Deerhawke says:

    RE: Rentin’ @ 149

    If you have been in the real estate business for any length of time, you know that what people are pre-approved or pre-qualified for does not represent reality.

    There was one agent in the area who used to use pre-approval letters as a bargaining chip. “He would like to pay you more, but he was only pre-approved for $10,000 below asking. Can you work with us?” When the answer was no, the next day, magically the person was approved for the full amount.

    I had a person show up with a pre-approval letter from a full price offer. I have a clause in my contract that the contract does not become valid and the house is not shown as pending until the person’s financials are put through my preferred lender. My preferred lender dove into it and found… a foreclosure and bankruptcy three years before. When I called the loan officer to ask what the H that was about, his answer was that this was really the real estate agent’s fault for not pre-clearing his client. He said his job was just to put out the pre-approval letter and it didn’t really mean anything until after the client had a signed contract. Then he would do a full check on him. Why waste time on something that might not go anywhere?

    Just like in any business, there are good loan officers and lazy ones. There is no immediate way to tell the difference.

  172. 173
    Deerhawke says:

    RE: Matt P @ 164
    RE: MD @ 163

    You can make any kind of statement you want, but you should not expect to be taken seriously if you don’t have valid reasons for that belief. Argument by assertion is always nonsense.

    No social value? Explain yourself.

    I have two SFH rentals in the Greenlake area. One has 5 bedrooms and one has 4 bedrooms. The house in the better location rents for $900 per bedroom and the one on a noisy busy street rents for $800 per bedroom.

    The social value this provides is allowing young people just out of college to live together relatively inexpensively so they can get a start in their careers and save money. And they get to have a nice yard to hang out in and garden in. If they all lived in studio apartments in the area, they would pay about $1500 per month, plus parking, plus dog fees, etc. And they would not have their own deck, garden and green space.

    This is the kind of place I lived in when I was in college. Some of the best days of my life. This is the kind of place my 26 year-old son is living now (not my rental, somebody else’s.) He is having a blast with his buddies.

    Maybe you have no argument? Maybe you are one of those people who just don’t want young people in their prized single-family neighborhoods? A bit of NIMBY?

  173. 174
    Macro Investor says:

    Looks like the March data just came out. Seattle prices went up 6.4% month over month, so I guess the slowdown is over. Back to multiple offers for moss-covered shacks on busy streets.

    On the other hand, April Fools you pink pony riders.

  174. 175
    Matt P says:

    RE: Deerhawke @ 172 -See post 169. I have obviously struck a nerve as the rentiers always believe their right to make money trumps all and make up reasons why they are helping the housing market and not harming it.

    For every hypothetical young family you are supposedly helping to get a yard, ther is another family you priced out of the market.

  175. 176
  176. 177
    House Humper says:

    Deerehawke, as a self proclaimed leftist, I’m surprised you don’t see the inconsistency with your vocation as a developer. That is ideologically inconsistent. Have you considered opening up your housing to transients in need of housing or other low income individuals instead of polishing up old buildings with fancy cooktops and selling them to tech workers? You could do a lot to actually help the affordability crisis if you weren’t an ivory tower liberal.

    RE: Deerhawke @ 173

  177. 178
    kenmorem says:

    dear everyone:

    i’m sorry to inform you that from now on you will only be able to have in your possession or in your property a maximum of two items of similar function. failure to do so will cause undue harm to the masses by creating price wars, asset inflation, and a general societal sense of being a failure. please use your two sheets of TP wisely, today.

    @MD, @Matt P

  178. 179
    Don says:

    Looks like the Three month – Ten year yield curve has un- inverted. Do we get to stop the Doom Clock then?
    Although as Macro Investor has pointed out, it’s 4/1…

  179. 180
    ddunn says:

    RE: BigBadBanks @ 152

    That’s normal. Banks always want an explanation when you are “downgrading” your primary residence . Because they don’t want you buying an investment property with primary residence mortgage.

    I’ve done it a couple times. No problem if you have good credit. Then again, I was buying crappy house on better lot with expectation to improve. SFR to duplex is a little harder to explain unless you are moving to better area (schools, commute, whatever).

  180. 181
    ess says:

    Think higher priced houses in the Seattle metro area are having difficulties selling for the asking price? Check out the sad story of this house, which selling price per square foot is much lower than the typical Seattle house. Imagine trying to dust all the rooms in one day – not to mention cleaning the toilets?

    https://www.marketwatch.com/story/50-cent-finally-sells-his-52-room-connecticut-mansion-at-a-huge-discount-2019-04-01?mod=mw_theo_homepage

  181. 182
    whatsmyname says:

    RE: Matt P @ 175
    For every hypothetical young family you are supposedly helping to get a mortgaged house, there is another family you just priced out of their yard. One family will live there either way.

  182. 183
    Matt P says:

    By whatsmyname @ 182:

    RE: Matt P @ 175
    For every hypothetical young family you are supposedly helping to get a mortgaged house, there is another family you just priced out of their yard. One family will live there either way.

    Of course, but the investor knocks out 2 families in your scenario.

  183. 184
    whatsmyname says:

    RE: Matt P @ 183 – 2 families?

  184. 185
    Deerhawke says:

    By Matt P @ 170:

    By northender @ 165:

    RE: Matt P @ 164

    “You drive up housing prices by paying more for a house than someone who would live there. That marginal family now cannot afford a house and must rent so rents are not lower because the number of renters has increased and house prices go up from a reduction of available houses to buy.

    Actually, my goal is always to pay LESS for a house than someone else. That is how you do well in the real estate world.

    So I suppose I am the good guy in your scenario by driving down housing prices. Wow who knew that driving down housing prices was my social value add!?

  185. 186
    Deerhawke says:

    RE: House Humper @ 177

    I am a self-proclaimed centrist. I view Trump and Kshama Sawant (and their mindless minions) with equal loathing.

    I have produced rental housing, low income housing, assisted finance NTC housing (nurse, teacher, cop), market rate townhouses and rowhouses, and market rate single family housing.

    Most of the houses I tear down are uninhabitable. Somebody might be living there, but nobody should be living there. I actually have increased the supply of habitable housing in this city by several hundred units. Let me know what you have done about the problem.

  186. 187
    whatsmyname says:

    “You drive up housing prices by paying more for a house than someone who would live there. That marginal family now cannot afford a house and must rent so rents are not lower because the number of renters has increased and house prices go up from a reduction of available houses to buy.”

    OK, now I get it. The family who lives there doesn’t matter; we should ignore the willing tenant’s lifestyle opportunity to benefit an owner wannabe, because it might provide a nickel for each. The good news is:
    1. The market is just not that efficient.
    2. I learned on Seattle bubble that it is cheaper to rent than buy anyway – so both families win.
    3. A lot of buyers are apparently on strike; current buyer is already advantaged by this.
    4. Sellers get full value from a willing party, rather than some manufactured distress sale market. (I support the same open market for whatever job skills you are selling.)

  187. 188
    Matt P says:

    RE: whatsmyname @ 187 -You mentioned 2 families, the one that got the mortgage and the one that did not. In your hypothetical, both would lose to an investor ignoring Deerhawke’s outrageous claim that he brings down prices by buying for less as though sellers would willingly do so.

    Thus the renter pool is increased. Show me a willing renter of a SFH and I’ll show you someone who would buy at the right price.

  188. 189
    whatsmyname says:

    RE: Matt P @ 188
    One family will be living in that house, regardless, and it won’t likely be the investor’s. Houses are a tool to shelter people. Their primary function is not to shrink the renter pool.

    I’d buy a Lambo at the “right price”. I’m not being oppressed by the people who pay the real price.

  189. 190
    kenmorem says:

    By Matt P @ 188:

    RE: whatsmyname @ 187 Thus the renter pool is increased. Show me a willing renter of a SFH and I’ll show you someone who would buy at the right price.

    sure, i’d love to eat lobster everyday for the right price. or travel to beautiful places across the world for the right price. or a host of other things. this isn’t some “everyone gets a participation medal” game. supply and demand isn’t manufactured by the REIC; it, uh, evolved, you know?

  190. 191
    MD says:

    RE: whatsmyname @ 189 – you compare housing to Lambos. Kenmorem in comment 178 compares it to toilet paper. But housing is neither of these things; it is a fundamental human right.

    You’re making these absurd comparisons to justify your participation in rent-seeking behavior. To justify bidding wars and evictions.

    Having a place to build a family and community – that’s not some impossible luxury, like a Lambo. Bad comparison.

    Reasonable regulation to stamp out real estate speculation and limit housing to families who live here – that’s not some Soviet-style toilet paper deprivation. Bad comparison.

    Real estate investors and speculators increase the quantity of housing demanded at any given price. This shifts the demand curve up and to the right, while supply barely moves. The net effect is that housing gets more expensive for everyone.

    And then young people can’t start families. And then rents increase across the board. And then homelessness increases. And then wealth inequality gets worse.

    Oh, but I must be some leftist nutjob, some lemming who longs for the USSR? Surprise, I’m actually from a Republican family! But this growing inequality in our country, exacerbated in part by housing speculators, is going to lead us to a revolution.

  191. 192
    Eastsider says:

    By Deerhawke @ 186:

    Most of the houses I tear down are uninhabitable. Somebody might be living there, but nobody should be living there. I actually have increased the supply of habitable housing in this city by several hundred units. Let me know what you have done about the problem.

    Yes, you are building ‘habitable’ houses except that the new ones are often far more expensive than the ones that you replace. In effect you are decreasing ‘affordable’ housing stock for the middle class. I think that’s what others are complaining.

    Re: Centrist?!!! Haha I see it’s April 1.

  192. 193
    kenmorem says:

    RE: MD @ 191

    human rights, as defined by the UN:
    Article 1.

    All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood.

    Article 2.

    Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Furthermore, no distinction shall be made on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs, whether it be independent, trust, non-self-governing or under any other limitation of sovereignty.

    Article 3.

    Everyone has the right to life, liberty and security of person.

    Article 4.

    No one shall be held in slavery or servitude; slavery and the slave trade shall be prohibited in all their forms.

    Article 5.

    No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment.

    Article 6.

    Everyone has the right to recognition everywhere as a person before the law.

    Article 7.

    All are equal before the law and are entitled without any discrimination to equal protection of the law. All are entitled to equal protection against any discrimination in violation of this Declaration and against any incitement to such discrimination.

    Article 8.

    Everyone has the right to an effective remedy by the competent national tribunals for acts violating the fundamental rights granted him by the constitution or by law.

    Article 9.

    No one shall be subjected to arbitrary arrest, detention or exile.

    Article 10.

    Everyone is entitled in full equality to a fair and public hearing by an independent and impartial tribunal, in the determination of his rights and obligations and of any criminal charge against him.

    Article 11.

    (1) Everyone charged with a penal offence has the right to be presumed innocent until proved guilty according to law in a public trial at which he has had all the guarantees necessary for his defence.
    (2) No one shall be held guilty of any penal offence on account of any act or omission which did not constitute a penal offence, under national or international law, at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the penal offence was committed.

    Article 12.

    No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.

    Article 13.

    (1) Everyone has the right to freedom of movement and residence within the borders of each state.
    (2) Everyone has the right to leave any country, including his own, and to return to his country.

    Article 14.

    (1) Everyone has the right to seek and to enjoy in other countries asylum from persecution.
    (2) This right may not be invoked in the case of prosecutions genuinely arising from non-political crimes or from acts contrary to the purposes and principles of the United Nations.

    Article 15.

    (1) Everyone has the right to a nationality.
    (2) No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.

    Article 16.

    (1) Men and women of full age, without any limitation due to race, nationality or religion, have the right to marry and to found a family. They are entitled to equal rights as to marriage, during marriage and at its dissolution.
    (2) Marriage shall be entered into only with the free and full consent of the intending spouses.
    (3) The family is the natural and fundamental group unit of society and is entitled to protection by society and the State.

    Article 17.

    (1) Everyone has the right to own property alone as well as in association with others.
    (2) No one shall be arbitrarily deprived of his property.

    Article 18.

    Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship and observance.

    Article 19.

    Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.

    Article 20.

    (1) Everyone has the right to freedom of peaceful assembly and association.
    (2) No one may be compelled to belong to an association.

    Article 21.

    (1) Everyone has the right to take part in the government of his country, directly or through freely chosen representatives.
    (2) Everyone has the right of equal access to public service in his country.
    (3) The will of the people shall be the basis of the authority of government; this will shall be expressed in periodic and genuine elections which shall be by universal and equal suffrage and shall be held by secret vote or by equivalent free voting procedures.

    Article 22.

    Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.

    Article 23.

    (1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.
    (2) Everyone, without any discrimination, has the right to equal pay for equal work.
    (3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.
    (4) Everyone has the right to form and to join trade unions for the protection of his interests.

    Article 24.

    Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay.

    Article 25.

    (1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
    (2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.

    Article 26.

    (1) Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit.
    (2) Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of peace.
    (3) Parents have a prior right to choose the kind of education that shall be given to their children.

    Article 27.

    (1) Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits.
    (2) Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.

    Article 28.

    Everyone is entitled to a social and international order in which the rights and freedoms set forth in this Declaration can be fully realized.

    Article 29.

    (1) Everyone has duties to the community in which alone the free and full development of his personality is possible.
    (2) In the exercise of his rights and freedoms, everyone shall be subject only to such limitations as are determined by law solely for the purpose of securing due recognition and respect for the rights and freedoms of others and of meeting the just requirements of morality, public order and the general welfare in a democratic society.
    (3) These rights and freedoms may in no case be exercised contrary to the purposes and principles of the United Nations.

    Article 30.

    Nothing in this Declaration may be interpreted as implying for any State, group or person any right to engage in any activity or to perform any act aimed at the destruction of any of the rights and freedoms set forth herein.

    ————-

    you have the right to remain silent. and to own a gun. and a bunch of other things. does that mean you have to? no.

    if you want to own a house, either save more money, get a better job, or move somewhere that better matches your spending lifestyle. it’s not like the REIC conspired to make NYC uber expensive 200 years ago while there was endless free land elsewhere.

    next, i’m sure you’ll tell us that it’s a basic right that minimum wage be set to $30/hr.

  193. 194
    MD says:

    RE: kenmorem @ 193 – Article 25 refers to a right to housing. Did you miss that?

    Are you attempting to refute my assertion that housing is a human right? LOL

    But your right to speculate and front-run the real estate market is MUCH more important than middle class people who want to build families and establish roots in the communities. Your right to drive up housing prices must remain untouched. The lowly plebs can either suck it up, or move!

    Keep dreaming.

    (By the way, learn how hyperlinks work. No one except myself is going to read that UN Human Rights blob of text).

  194. 195
    whatsmyname says:

    RE: MD @ 191 – You can build a home and ultimately a family in a rental house, an apartment, a less expensive house with a further commute, or a a fixer. I’ve done all of these. If you’re too good for this, don’t complain to me about the expense.

  195. 196
    dariakus says:

    An observation from someone who is contentedly renting and raising his family in a rental.

    I’m seeing a huge divide here between people who have houses and people who don’t. And both sides are acting somewhat petulant and rotten.

    The house owners are rubbing the renters’ faces in it as much as they can, while the renters are rubbing the owners’ faces into their “greediness” as much as they can.

    Objectively, I can say that owning housing here is too expensive for a reasonable average family. If you’re not already independently wealthy or don’t have at least a dual income household, you cannot afford a home large enough to raise a family in within commute distance of your job.

    There are plenty of SFH rentals at the right price, however, and so I make the most of it.

    I guess my overall point here is that both sides are so dug in that they’re missing the whole picture. You can make it here on a single income and raise a family, but as a renter and never an owner. This is fine, and doesn’t reflect poorly on either the renter or the owner. It just is what it is.

  196. 197
    house humper says:

    I AGREE WITH WHATSMYNAME!!! WE FINALLY AGREE!!!!!!RE: whatsmyname @ 195

  197. 198
    Deerhawke says:

    RE: MD @ 194

    This whole notion of having a “right” to housing truly fascinates me.

    A bit of perspective.

    In previous times, people in Seattle found that they had a right to scrape by and live in a flophouse or the conestoga wagon they arrived in. Then they had a right to save until they bought a platted lot and then they could go camp on it — a two-pole canvas tent amid stumps, slash and mud. They had a right to scrimp and buy a Sears or Montgomery Ward kit. They had a right to figure out how to frame and roof. Usually they had a right to move into the unfinished structure until they could afford plumbing, electricity, plaster and trim. Which often came later, much later.

    I got to know a very old man when I lived in Wallingford in the early 90’s. He was a toddler when his family arrived in Seattle from the Dakotas at the turn of the century. They built the house he still lived in from a Sears kit. Two grandparents, two parents and eventually 9 kids in 950 sf. plus garage (aka the boys bunkhouse). Because that is what they had a right to.

  198. 199
    Eastsider says:

    Here is an article from today’s WSJ (pay wall). Overall a balanced article. Below are a few excerpts relevant to above discussion. Some commenters also mentioned the effect of illegals on rising home prices (supply/demand).

    Affordable Housing Crisis Spreads Throughout World
    https://www.wsj.com/articles/affordable-housing-crisis-spreads-throughout-world-11554210003

    Soaring prices are also being fueled by increasing demand from investors. These have included domestic “mom-and-pop” investors buying second homes and foreign investors taking advantage of new technologies and an increasingly globalized financial system.

    The private sector has also fallen short. In numerous hard hit cities, developers have built hundreds of thousands of units but most of them are priced at upscale buyers and renters, not the middle and working class people who are being priced out of the market.

    A few years ago, prices in Vancouver and Toronto were growing by up to 30% annually. But today they’re virtually flat, thanks in part to a steep sales tax aimed at foreign buyers and tightened rules to make it more difficult for families to qualify for mortgages.

  199. 200
    House Humper says:

    Anyone who works full-time should be able to afford housing. However ‘housing’ entitlement does not mean that all are entitled to be actual homeowners. There is a difference. Owning a home is not a human right. This is narrative that many on the left seem to push. The system should certainly allow for any person that works a full-time job to have shelter, I am with you there, I think most people are. But that is already the case. Your concept of ‘shelter’ and ‘housing’ need to adjust if you think everyone is entitled to home ownership.

    If rents on a large scale ever become out of reach for that full-time working man or woman so that they truly cannot afford shelter, then I agree the system must change. We are not there yet. It’s just that Americans have a general sense of entitlement and think they all deserve the best. They don’t ‘act their wage.’ There is nothing wrong with raising your family in a rental or a low income neighborhood. If you don’t like your reality then work to change it by working multiple jobs or delaying gratification like every successful person on this forum and in real life has.

    The main difference between poor people and rich people is DELAYED GRATIFICATION. That is the single most important difference I have seen over the years between the haves and the have-nots. Generally (with exception of course,) poor people have much difficulty practicing the discipline of delayed gratification. They want the fancy car before they own and asset. Or fancy clothes and jewelry. It’s as obvious a trend as the day is long. Just do some observation. It also comes down to IQ levels which we can’t control for, but that’s another topic.

  200. 201
    Don says:

    If housing is separated from location, there is enough housing for every and any budget.
    Shovels and tents were very expensive in the Klondike when the nuggets showed, free when it got to difficult, and people left.

  201. 202

    RE: Deerhawke @ 186
    In NYC the Destroyed Apartments are The Homeless Units

    Fixing them up as “slum-lord” units takes homeless citizen stock from them…

  202. 203

    RE: House Humper @ 200
    Or the Hades With Houselessness in Seattle

    Grab up a large SFH $50K unit on large lot in Kansas City instead….problem immediately solved. The average pay and job opportunities aren’t the reason not to move to KS anymore…

    I’ve lived in Seattle all my life and if it wasn’t for my severely disabled son, I’d move to Kansas too…and I can still afford Seattle because I bought in 1999.

  203. 204
    Deerhawke says:

    RE: dariakus @ 196RE: dariakus @ 196

    There are a lot of ways to skin this particular cat. (Actually … when you think about it, that is a horrid expression. I wonder where it came from?) OK, there are a lot of ways to work out housing while still having a life. People can be very creative and come up with different solutions.

    Dariakus, your solution is to continue to rent from owners who are willing to rent to you at a sub-market rate. Meanwhile you are maxing out your retirement savings and planning an early retirement. Mazel tov. This seems very smart to me.

    One engineer I met recently commutes into town from out near Enumclaw on the Sounder. He has a reasonably relaxed commute that allows him to work on his laptop. He has a 5 acre property in the country and his kids are out romping around in the woods and meadows after school every day.

    Some folks I have worked with gave up their place in Fremont to get a big house and workshop on Whidbey. He comes into town Wednesday and Thursday to meet with clients and stays overnight with his folks. She has a business that sells handmade items on Etsy. Their kids are in high school and seem to have the best of both worlds. They come into Seattle when they want to, but live in the country near Langley.

    One young couple I know decided they could do better by avoiding Seattle. They took jobs just south of Everett. They just bought a townhouse near work and plan to live there until they have married and had kids in about 5 years. Then they will buy a house and keep the small townhouse as a rental.

    Another young early 30’s couple had been living in San Francisco and had a great lifestyle but could never save a cent. They decided to “uncouple” life and work. They did a study of where they could live that would be cheaper, provide a good basis for his small manufacturing business, provide her with an airport where she could easily get to her consulting clients (and back to home base in SF twice a month). They wanted to be near good skiing, the mountains, rivers, lakes, natural beauty, etc. They moved last summer and bought a 2600 sf house in good shape for $375,000. They will have their house paid off in 15 years and are maxing out her retirement savings while investing in his business.

    Does anyone else have any other practical suggestions for avoiding the high cost of housing in Seattle?

  204. 205
    randomseattledummie says:

    RE: House Humper @ 157

    I find most of your comments to be quite insightful but I have to say you’re getting mighty snarky with this comment and several after that. Maybe tone it down a bit. I am exclusively a single family investor and have no interest in multifamily for a number of reasons. Painting with such broad strokes saying things like, “SFR landlords are usually entry level ‘wannabe’ investors that never learned what economies of scale meant so they dont understand the value of multifamily.” is just ridiculous. I know investors who own 200 houses and I don’t think anyone would agree that they are an “entry level ‘wannabe’ investor”.

    No need to define all of your terms as people either will know it, google it, or continue reading.

  205. 206
    randomseattledummie says:

    RE: MD @ 164

    This is a very common opinion however it fails with one key point.

    If you make it so that people cannot own houses and condos for rent but only own multifamily that means that people who cannot afford to own will HAVE to live in multifamily properties. This is ridiculous to force a family of 7 to live in an apartment when they should be able to afford to live in a house that they rent but in your scenario you are removing nearly all of the non multifamily rental housing supply.

    It just isn’t feasible.

    Maybe taxing those who own over a certain number could work but then tracking the ownership would become very problematic.

  206. 207
    uwp says:

    By Deerhawke @ 204:

    They wanted to be near good skiing, the mountains, rivers, lakes, natural beauty, etc. They moved last summer and bought a 2600 sf house in good shape for $375,000.

    Well, don’t leave us hanging Deerhawke! Where did they go?

  207. 208
    Matt P says:

    Housing is a right yes and owning a home is not, but turning housing into an investment makes it much less likely that people can afford housing as we are seeing all over the world. The investor class of course disputes this and claims their right to buy as many houses as they see fit as universal as the right to affordable housing.

  208. 209
    Deerhawke says:

    RE: uwp @ 207

    I probably should make this an exercise for everyone. If you aren’t going to live in Seattle forever, what are your criteria for your next place to live? Where could you be happier than here? Where would that be? So think about that and please share your thoughts.

    OK, spoiler alert ahead.

    They Boise Idaho. And they are happy as proverbial clams.

    A big part of the problem for Seattleites is that they tend to look down their noses at smaller cities. We are not as bad as New Yorkers, but we have our own case of Seattle chauvinism. Remember, it was not that long ago that Seattle looked a lot like Boise.

    But Boise also has Starbucks, good Asian food, locally brewed beer, etc. etc. plus reasonably priced apartments and houses.

  209. 210
    Deerhawke says:

    Something in today’s Washington Post on this same topic.

    The Article is called “I live in a High Cost Area. Was I Wrong to Save In My 401k Rather than Buy a Home?”

    https://www.washingtonpost.com/business/2019/04/01/i-live-high-cost-area-was-i-wrong-save-my-k-rather-than-buy-home/?utm_term=.34e92cd6e704&wpisrc=nl_most&wpmm=1

  210. 211
    kenmorem says:

    By Matt P @ 208:

    Housing is a right yes and owning a home is not, but turning housing into an investment makes it much less likely that people can afford housing as we are seeing all over the world. The investor class of course disputes this and claims their right to buy as many houses as they see fit as universal as the right to affordable housing.

    EVERYTHING IS AN INVESTMENT. not just housing. or, would you prefer to go back to the era of horse and buggy b/c otherwise there’s no henry ford, bill gates, steve jobs, etc that have made your life immeasurably easier?

    and before you pencil me into some upper class investor, you should know that:
    my wife bought a place, single income, below median wage
    i bought a place, single income, below median wage
    we married
    then we rented out both properties and bought a 3rd place, still with below median wage incomes.

    no handouts. no first time homebuyer credits. we just live within our means. in seattle. it’s radical. try it.

  211. 212
    Rarely Comment says:

    I’ve been following the blog recently and I generally don’t comment. The issue of affordable housing is obviously a hot topic. I think that the general public is fed with a lot of misinformation. Increase regulation, rent control, tighter development standard, passing of more fees etc is marketed to alleviate and make it more affordable when it has the opposite affect.

    On the discussion of how to make it in Seattle. Here is my story and I think it’s doable. I’m on the edge of being considered a millennial. I entered the workforce at the height of the Great Recession. Both my wife and I lived at home. In my culture we don’t move out until marriage. I was a huge saver and we spent a quarter of our net pay and save the rest. When I use to tell people, I can tell by their response that it didn’t fit with the norm. In 4 years, we had enough for a 20% down payment and fortunately purchased a short sale in 2014 for less than replacement cost. Again because we live at home we were able to ride out the painful process. Honestly I didn’t know what we were getting into and it worked. The market elevated quite a bit right after we closed in November. We didn’t buy a home for reasons that other alluded to. We wanted to create our own and our way. If you think that at the time we were just huge saver and gave up on quality of life it’s the opposite. We ate out, took vacation, went out doing things we wanted to do, etc but within our means. We both had no student loans and both work when we were in college. We were making 80k combined at the time out of college. This is just how we did it.

    I realize homes are expensive now but it is still very much doable. I know of other that lived with roommates and saved. Others rented basement and shared room with families and did the same. Home ownership is difficult but not unmanageable if you are willing to defer gratification like others. There are also options of not living in Seattle and be completely happy. Just my two cents.

  212. 213
    Anonymous Coward says:

    By MD @ 164:

    The city should tax the crap out of anyone who owns multiple single family homes or condos and rents them out. Owners of multi-family units are fine, as that increases density. But this race to buy up single family housing and rent it out – it should be outlawed. There’s no social value provided, it’s pure rent-seeking behavior.

    Eh, we spent two years as expats. Rented a lovely house for our family. I think our land lord provided a great deal of social value. And while we were gone, we rented our house out to a family who had just been foreclosed on. I think they would agree that we also provided some social value…

  213. 214
    JWoods says:

    RE: kenmorem @ 211
    This is the inspirational post of the year.

  214. 215
    Anonymous Coward says:

    By MD @ 191:

    But housing… is a fundamental human right.

    No, it’s not. Housing is created, which means it is the result of human labor*. Which, if true, would mean that some/all people have a fundamental human rights claim to someone else’s labor. What if nobody wants to provide the labor required to create/maintain housing? Wouldn’t that mean society has the right to compel certain people to labor and create housing for us?

    *Unless you’re claiming that there’s a fundamental human right to the raw materials used to create housing and a fundamental human right to be able to take those raw materials and fashion them into an abode and not be displaced due to property taxes. This implies that there’s human rights argument to be made against property taxes, zoning restrictions, and building codes for owner occupied structures. That sounds like an interesting argument, but I’m going to guess that is far removed from your position on housing as a human right.

  215. 216
    JWoods says:

    RE: MD @ 164
    RE: MattP@ 165

    You guys are barking at the wrong tree.

    Level headed developers and investors don’t drive up prices, they buy houses when they are attractively priced, and sell them when they’re inflated. In every housing bubble, it’s always the herds who drove the price to unsustainable levels at the end.

    The investors and developers, in large part, have act as buffers to smooth out ups and downs a bit. They buy and help set a floor when housing price going down to attractive values, and they sell and help slow down the appreciation when housing is richly priced.

  216. 217
    uwp says:

    By Deerhawke @ 209:

    RE: uwp @ 207
    I probably should make this an exercise for everyone. If you aren’t going to live in Seattle forever, what are your criteria for your next place to live? Where could you be happier than here? Where would that be? So think about that and please share your thoughts.

    I’ve always though Wenatchee might be decent. You’ve got an OK mountain 45 minutes away for skiing. A river. A lake not far away. Reasonable housing. A lot more sun. Not too far from Seattle. It’s just hard to move away from family. Even if it’s only 2 hours.

    At one point I used Google maps to draw a 5 hour driving radius around Seattle and made a list of potential locations based on things we valued as a family. That came out near the top. (I also really like Walla Walla, but that’s a long drive.)

  217. 218
    JWoods says:

    I’m always amazed so many folks on this forum spent years doing hypothetical debate that housing is in a bubble or the system is broken against me, they got nowhere in the years since I started browsing this forum. While there are people offering real world insight and successful experience, it’s strange people would just argue and ignore. It’s like refuse to see and pick up money left on the ground.

  218. 219
    steven says:

    RE: JWoods @ 217

    LOL

    you and MD with that comment on housing is a human right just crack me up

  219. 220
    Deerhawke says:

    By Anonymous Coward @ 214:

    By MD @ 191:

    But housing… is a fundamental human right.

    No, it’s not. Housing is created, which means it is the result of human labor*. Which, if true, would mean that some/all people have a fundamental human rights claim to someone else’s labor. What if nobody wants to provide the labor required to create/maintain housing? Wouldn’t that mean society has the right to compel certain people to labor and create housing for us?

    Well said. Good post. Communism/Socialism always starts with noble words about human rights but ends with state compulsion that degrades human rights.

  220. 221
    steven says:

    home, healthcare, food , security, what next? your lexus? so many entitlements… and what have you done for this country? or for any one else?

  221. 222
    House Humper says:

    You are totally right, the sarcasm and snaek was intentionally heavy and directed exclusively at WhatsmyName for attacking me out of the gates. Im a counterpuncher. Nice and polite until attacked then become a huge dick! I dont think SFR investors are rookies I was jist beinf over-the-top. Most of what I write I am doing with a smile. RE: randomseattledummie @ 205

  222. 223
    richard says:

    RE: Deerhawke @ 209
    seattle is a nice area except it is too expensive. there is job concentration on both coasts, that is the problem. if there is more balanced job distribution in thr country, ppl will pick a more cost friendly area. if job and wealth continue to concentrate a few pockets, there will be serious social consequence in my opinion . if winners get all,well,the losers may destroy all.

  223. 224
    Justme says:

    RE: JWoods @ 215

    >>Level headed developers and investors don’t drive up prices, they buy houses when they are attractively priced, and sell them when they’re inflated. In every housing bubble,

    Who was it that mentioned front-running? Well, that’s all you do. Buy low from people that overpaid in the last bubble. Then get a tenant to squeeze, for a few years, all the while refusing to sell and spreading propaganda about SFH shortages. When the FOMO peaks, finally sell to some poor schlub renter that doesn’t know any better. Profit and then repeat the cycle. There is *nothing* of social value in this process.

    Predatory landlords telling themselves they are doing society a favor. It takes special delusion to buy into it.

  224. 225
    JWoods says:

    RE: Justme @ 223
    I don’t understand your argument, it’s a free and open market, no one can force anyone to buy or sell. investors are not a single entity, they have different opinions as well, some are selling and some are buying today, as you can see from this forum. That’s what makes a market.

    I bought a rundown shack a few years back, agent actually posted a note on the house “Danger, Do Not Enter”. The owners moved and had to sell the house to fund medical expenses, I submitted the only offer. After I bought the house, it was a such relief to the owner, he doesn’t have to worry about fixing the house and his hip at the same time anymore. After spending 150k and 18 months, I turned the house to a beautiful place to live. Neighbors all came out and thanked me for buying and fixing it, because it’s been such an eyesore for them for so long. Do I think I have created social value and feel good about it, of course. Neighbors, owners, and people living in the house today certainly think so. Did I make a lot of money with the investment? You bet! But I didn’t make money by squeezing owner or tenants, I made money by creating value and riding on the housing appreciation cycle, the opportunity is available to anyone who is willing to take the risk and do the hard work.

    Now can you tell me what social value you have created by whining and attacking on this forum?

  225. 226
    biosci101 says:

    First time poster here, but have enjoyed the discussions and insights for some time now. Question for the group: With the new HALA legislation passing, our neighborhood is being upzoned to an LR3 designation. We’ve been approached by several brokers/developers who are offering “better than market price,” and I’m wondering how to value our rezoned land value. There seems to be quite a large range according to comparable sales which is not always close to the taxable land values. Can someone give me an idea of how we might go about figuring out a reasonable price range?

  226. 227
    sfrz says:

    RE: JWoods @ 224 – This forum is the Seattle BUBBLE…BUBBLE… repeat after me… B.U.B.B.L.E.
    Note to the back slappers on this site. We are all on the Titanic together.
    “Bubbles typically experience mania phases during the maturity stages of their life-cycles because investors and other participants become overconfident and extrapolate continued growth very far into the future after an already long period of steady growth such as the decade-long period of growth that housing had already experienced by 2004. After a long boom, many participants develop cult-like attitudes and display thinking patterns such as, “housing prices never go down!” or “people will always need healthcare and prices only go up, up, up!”” from Jesse Colombo in 2012 http://www.thebubblebubble.com/next-bubble/

  227. 228
    Eastsider says:

    RE: JWoods @ 224 – Investors and generally the rent seeking class do push up prices (supply/demand.) See my earlier post @199.

    The rundown shack you bought could also have been renovated by a new homeowner. It is not uncommon new homeowners renovate/remodel homes before moving in.

    That said, I am not against landlords. But if too many people own multiple homes, especially in a ‘hot’ market, it will adversely impact affordability.

  228. 229
    northender says:

    Good for you JWoods! Isn’t it great to make money and help people at the same time?

    I suspect that Justme believes they are creating a load of social value by promoting the so called buyer’s strike and saving people from buying property just before its value crashes.

    But on a different note, I appreciate this forum for all the different opinions and facts (or semi-facts) that are discussed here. It does have social value in that it allows public discourse and readers can learn, evaluate, and believe or disbelieve what they choose and use that to help make important financial decisions. Thanks for hosting this Tim!

  229. 230
    steven says:

    RE: sfrz @ 225

    no . not everyone’s on the titanic. some got off according to the people talking on this forum within the last couple years. Many of the renters were never on.

    i think for condos, their gains within the last 2-3years are almost erased already considering the transaction costs. imho, this is a very very scary market even from a 3rd person (at least the condo market as of right now).

  230. 231
    sfrz says:

    RE: steven @ 228 – When this economy blows, we’re all gonna ride it down. Fighting for chairs on the Titanic. I have more chairs than you! Yay! You win for the next 20 minutes! Cue the violins.

  231. 232
    BacktoBasics says:

    The worst nightmare is the population growth. I am not worrying about economy cycle. Once the population growth slows or becomes negative, then housing market is doomed. The birth rate minus death rate in the US is the net population. Seattle housing depend on inflow of migrant.

  232. 233
    uwp says:

    By biosci101 @ 226:

    First time poster here, but have enjoyed the discussions and insights for some time now. Question for the group: With the new HALA legislation passing, our neighborhood is being upzoned to an LR3 designation. We’ve been approached by several brokers/developers who are offering “better than market price,” and I’m wondering how to value our rezoned land value. There seems to be quite a large range according to comparable sales which is not always close to the taxable land values. Can someone give me an idea of how we might go about figuring out a reasonable price range?

    Ardell and Deerhawke can chime in, but I seem to recall the standard was somewhere between 1/4 and 1/3 of the final product value. So if you could put 4 townhouses that would sell for 750k/each, you might get 750k-1 million for the lot.

    We got upzoned as well, and also get those letters, but I can’t imagine developers would value the lot more than it’s current use as SFH, but I’m not sure. I wonder how many row houses you can put on 5,700 sq/ft…

  233. 234
    Justme says:

    Another article from ST about the excess production of apartments.

    “Renters looking for something that might qualify as a deal by Seattle standards are in luck as a record number of new apartments spring up. And with new housing openings scheduled to peak this spring and summer, there’s a consensus that rents won’t be budging much for a while. About 1 in 10 apartments across the city remain empty, and perks like a free month’s rent have become standard at most new buildings, and even some older ones.”

    http://www.seattletimes.com/business/real-estate/seattle-rents-growing-at-among-slowest-rates-in-country-as-apartment-boom-reaches-record/

    “The Seattle metro area built 17,450 apartments in 2018 — 48 per day — the fourth most in the country for the third straight year, according to census data. That beat the local record set the prior year, which in turn had surpassed the previous high from the suburban-driven apartment boom in the mid-’80s.”

  234. 235
    Justme says:

    It’s a good time to be a striking buyer, in other words.

  235. 236
    uwp says:

    By Justme @ 234:

    Another article from ST about the excess production of apartments.

    “Renters looking for something that might qualify as a deal by Seattle standards are in luck as a record number of new apartments spring up. And with new housing openings scheduled to peak this spring and summer, there’s a consensus that rents won’t be budging much for a while. About 1 in 10 apartments across the city remain empty, and perks like a free month’s rent have become standard at most new buildings, and even some older ones.”

    http://www.seattletimes.com/business/real-estate/seattle-rents-growing-at-among-slowest-rates-in-country-as-apartment-boom-reaches-record/

    Blah Blah Blah
    You should have quoted the headline of the article which starts “Seattle rents growing

    “Compared to a year ago, rents across the region grew 4.7 percent…”

    Landlord Strike?

  236. 237
    steven says:

    RE: sfrz @ 231

    i would like to say you’re right but you’re not. Rich got richer in the last crash and the wealth inequality got much worse. People who saw it coming were prepared and made lots of money out of the situation. Is it wrong? well that’s a totally different topic to be had.

  237. 238
    Justme says:

    RE: uwp @ 236

    Propaganda report:

    Fallacy1: Year-over-Year fallacy when quarter-over-quarter prices were falling in “hot areas (CHECK)

    Fallacy2: Late-bubble rent increases in outlying areas counted as significant to Seattle (CHECK)

    Oh, and since you complain about the quotes, who was it that left out the critical information in the following sentence, which relates to Fallacy2? Yeah, that was you.

    QUOTE: Compared to a year ago, rents across the region grew 4.7 percent, with the largest increases in low-cost areas getting the least apartment construction — South King County and north Snohomish County. Average rents across all unit types reached $1,940 in Seattle, $1,980 on the Eastside, $1,460 in South King County and $1,500 in Snohomish County.

    Fallacy3: (suspected, to be confirmed): When calculating the “average” rent increase for King and Snoshomish counties, it appears that the formula was a simple average of the average rent in the subregions, NOT WEIGHTED BY THE AMOUNT OF PRODUCT/APARTMENTS IN EACH REGION. For example, the “North/East Snohomish” was billed as having a 17.6% YOY rent increase, probably because of some new “luxury units” hitting the market. With NES having probably a small number of units total compared to many of the other region, using a simple average would give a totally misleading number for the two counties overall.

    Oh, and then there is question of whether the prices are LIST prices, recently rented prices, or rent prices across all units. And are incentives included in the reported prices?

    Lots of questionable stuff in this data, all in the direction of exaggerating the rent prices.

  238. 239
    whatsmyname says:

    By Justme @ 224:

    Who was it that mentioned front-running? Well, that’s all you do. Buy low from people that overpaid in the last bubble.

    And here is the classic Justme conundrum: Shame on you predatory landlords for low-balling victim sellers. And shame on you more for paying so much that I can’t low-ball them worse.

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