{"id":4483,"date":"2009-02-21T12:09:37","date_gmt":"2009-02-21T20:09:37","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=4483"},"modified":"2009-02-21T12:09:37","modified_gmt":"2009-02-21T20:09:37","slug":"john-talbott-on-spotting-the-bottom-in-seattle-real-estate","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2009\/02\/21\/john-talbott-on-spotting-the-bottom-in-seattle-real-estate\/","title":{"rendered":"John Talbott on Spotting the Bottom in Seattle Real Estate"},"content":{"rendered":"

In yesterday’s Bottom-Calling conclusion discussion, Sniglet asked<\/a>:<\/p>\n

If Mr. Talbott’s predictions were to come true, and we reverted to 1997 prices, what would those be? What percentage of a decline would we be talking about for the Seattle area?<\/p><\/blockquote>\n

I responded<\/a>:<\/p>\n

Based on the January 1997 King County SFH Median of $179,500, and using the bls.gov inflation calculator<\/a>, that would be a bottom median of $236,138 in 2009 dollars.<\/p>\n

Total drop: 51% from the July 2007 peak of $481,000 (in nominal dollars).<\/p><\/blockquote>\n

Obviously that’s quite a tumble, much larger than any of the forecasts presented this week. As I stated in the conclusion<\/a>, all of these forecasts are basically assuming that the current economic problems are essentially just a “hiccup.” I think there’s a decent chance this is not the case.<\/p>\n

Well, Contagion<\/a> author John Talbott himself decided to chime into the discussion<\/a>, and stands by the 50% off prediction for Seattle home prices:<\/p>\n

You are right, if Seattle returns to 1997 pricing as I predict it will mean a decline of about 50% in home prices from the peak. This is optimistic, not pessimistic, as this only brings homes back to where they were before all this crazy mortgage lending started. Banks are going to be lending 4 times your income for a home, not 8 times.<\/p>\n

And my numbers assume that Microsoft, Boeing and high tech in Seattle all remain vibrant growing industries, a bad assumption if we head into depression, Small high tech is dead as venture capital is gone now that there are no IPO exit strategies, MS is acting more and more like a staid old bureaucracy (have you tried to run Vista – a complete nightmare) and will be attacked by i-phone apps and declining international sales and I don\u2019t know anyone who is going to buy an airplane in the next ten years.<\/p>\n

The situation is really much worse than you hear on the news because the guys that got us into this mess, big corporations and banks and Wall Street, continue to bribe your Congressmen to be bailed out now and prevent real meaningful reform necessary to turn around the system.<\/p><\/blockquote>\n

Thanks for joining the discussion, John. So what do you all think of Mr. Talbott’s prediction? Optimistic? Pessimistic? Realistic?<\/p>\n","protected":false},"excerpt":{"rendered":"

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