{"id":14440,"date":"2011-02-16T08:00:02","date_gmt":"2011-02-16T16:00:02","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=14440"},"modified":"2015-07-25T15:07:10","modified_gmt":"2015-07-25T22:07:10","slug":"on-the-radio-walk-aways-and-puyallup-condos","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2011\/02\/16\/on-the-radio-walk-aways-and-puyallup-condos\/","title":{"rendered":"On the Radio: Walk Aways and Puyallup Condos"},"content":{"rendered":"

Before we get to the main topic of today’s post, here’s a brief service announcement. I’ll be on KUOW 94.9 FM<\/a> again<\/a> today to discuss the topic of “walking away.” Here’s their promo copy:<\/p>\n

Is It Ethical To Walk Away From A Mortgage?<\/a><\/strong><\/p>\n

More than a third of homeowners in the Seattle area now owe more on their mortgages than their homes are worth. If you’re underwater on your mortgage, is it ethical to walk away? Have you done it? Would you ever considering it? Or do you think it’s unethical? Call our listener feedback line now at 206.221.3663. Walking away from a mortgage is the topic on KUOW Wednesday (2\/16\/2011) at 12:20. (call in # during the program: 206.543.5869)<\/p><\/blockquote>\n

Call in with your comments and questions. Although I’ve made my position on this issue pretty clear<\/a> here in the past<\/a>, my main role on the program today will be to address the overall issue from a more neutral perspective.<\/p>\n

[Update:<\/strong> Here’s the audio from this afternoon’s program<\/a>.]<\/strong><\/em><\/p>\n\nhttp:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2011\/02\/ConversationB20110216.mp3<\/a><\/audio>\n

<\/div>\n

[End of Update]<\/strong><\/em><\/p>\n

Speaking of radio… I was flipping through the local AM radio stations recently, and I happened to land on Dave Ramsey’s financial advice show<\/a>. If you’re not familiar with Dave Ramsey, his basic schtick is that he is anti-debt to the extreme.<\/p>\n

As luck would have it, the caller that was talking with Dave when I happened to tune in was calling with a question about Seattle-area real estate. Here’s the audio from the call, and a transcribed excerpt:<\/p>\nhttp:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2011\/02\/Dave-Ramsey-Puyallup-Condo.mp3<\/a><\/audio>\n

<\/div>\n

Caller:<\/strong> In 2006… we bought a condo. Of course, knowing we would be gone in four years and knowing of course<\/span> that our condo would sell… at that time we got a 5\/1 ARM and were doing interest-only. Well, of course the price went down… I moved out of Washington… We owe about $157k on it, and it was appraised a few months ago at $164k.<\/p>\n

Ramsey:<\/strong> What’s your plan with the condo?<\/p>\n

Caller:<\/strong> Ultimately we would love just to be done with it. But, we know at this point that if we try to sell it, not only are we going to lose that $36,000 we put down, we’ll end up paying a little on top of that. So [selling]<\/span> it just doesn’t seem like a real good option, at this point.<\/p>\n

Ramsey:<\/strong> You’ve got two options. One is you lose some money on it now, or you let [the loan]<\/span> adjust this once, rent it for another year, and then dump it next year, regardless. In a year it may come up enough that you don’t actually write a check. But the $36,000 is gone, dude.<\/strong><\/p><\/blockquote>\n

Ramsey starts off strong. His point about sunk costs<\/a> is a good one. If you’re holding onto a home because of money that you’ve already lost, you’re not doing yourself any favors. The money you’ve lost is already gone. Get over it and move on.<\/p>\n

However, Ramsey doesn’t stop there. He rolls right on through his area of expertise and into a realm in which he is obviously not well-versed…<\/p>\n

Caller:<\/strong> Do we just start paying a bunch of principal now, just to get the loan-to-value ratio better so we can re-fi and get a 15-year…<\/p>\n

Ramsey:<\/strong> No, I would save up the money and sell the condo in one year. Let it adjust, and let’s let this market recover. The market is recovering. Ever so gently, but it is recovering. As some of this inventory burns off, these prices in many markets are going to recover. Where in Washington is it?<\/p>\n

Caller:<\/strong> It’s near Tacoma. It’s in Puyallup.<\/p>\n

Ramsey:<\/strong> That’s a pretty good market.<\/p>\n

Caller:<\/strong> Okay.<\/p>\n

Ramsey:<\/strong> That’s a pretty good market. A pretty stable economy. It’s not one of those that’s just got the wind whistling through the streets kind of thing. I’m thinking I give this thing a year, and see how much it heals. But as far as the $36,000, I wouldn’t be worried about it. The question is now: Do we keep this liability or not? The answer is no, on the long term.<\/p><\/blockquote>\n

Yikes. Advising someone to hold onto a condo<\/em> in Puyallup?<\/em> Sorry, but condos in Puyallup are the kind of housing stock that people were only really interested in because we were in a frenzied housing bubble, and they were convinced that they would be priced out forever<\/a> if they didn’t buy something, anything<\/em> as soon as possible.<\/p>\n

From the numbers this caller gave, it sounds like he spent somewhere in the ballpark of $180,000 on his condo. The median listing price of condos currently listed in Puyallup<\/a>: $100,000. The total number of condos sold<\/em> in Puyallup<\/a> in the last six months: 5.<\/p>\n

Here’s a Puyallup condo that sold for $218,000 in August 2006<\/a>. It’s currently pending at $85,000. Here’s another that sold for $185,000 in January 2006<\/a>. That one is currently listed for $79,900 (with no takers, apparently). If the caller thinks he’ll be getting anywhere near $164,000 for his condo, he’s probably dreaming.<\/p>\n

Condos in Puyallup are not going to suddenly become a hot commodity a year from now. That market is dead. This is why you don’t take real estate advice from a national talk show host. Here’s hoping the caller does some research of his own and lists sooner rather than later.<\/p>\n","protected":false},"excerpt":{"rendered":"

Before we get to the main topic of today’s post, here’s a brief service announcement. I’ll be on KUOW 94.9 FM again today to discuss the topic of “walking away.” Here’s their promo copy: Is It Ethical To Walk Away From A Mortgage? More than a third of homeowners in the Seattle area now owe…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[264],"tags":[165,4,281,748,99,747],"coauthors":[],"class_list":["post-14440","post","type-post","status-publish","format-standard","hentry","category-media","tag-audio","tag-condos","tag-kuow","tag-puyallup","tag-radio","tag-ramsey"],"yoast_head":"\nOn the Radio: Walk Aways and Puyallup Condos \u2022 Seattle Bubble<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/seattlebubble.com\/blog\/2011\/02\/16\/on-the-radio-walk-aways-and-puyallup-condos\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"On the Radio: Walk Aways and Puyallup Condos \u2022 Seattle Bubble\" \/>\n<meta name=\"twitter:description\" content=\"Before we get to the main topic of today’s post, here’s a brief service announcement. 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