{"id":646,"date":"2007-02-01T10:12:00","date_gmt":"2007-02-01T17:12:00","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=646"},"modified":"2007-02-01T10:12:00","modified_gmt":"2007-02-01T17:12:00","slug":"pop-quiz-time-fundamentals-or-speculation","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2007\/02\/01\/pop-quiz-time-fundamentals-or-speculation\/","title":{"rendered":"Pop Quiz Time: Fundamentals or Speculation?"},"content":{"rendered":"<style>.CNNTable {margin: 5px auto;} .CNNTable td {padding: 0px 5px; text-align: center; font-size: .9em;} .top_row {font-weight: bold;} .summary {background-color: #E0E0E0;}<\/style>\n<p>Here&#8217;s a pop quiz for you.  Take a look at the following two tables and try to determine which one more closely resembles a market based on <i>fundamentals<\/i>, and which one represents a market based on <i>speculation<\/i>.<\/p>\n<p><center><b>Median Household Income vs. Average Rent: 2000-2005<\/b><\/center><\/p>\n<table class=\"CNNTable\" border=\"1\" cellpadding=\"0\" cellspacing=\"0\">\n<tbody>\n<tr class=\"top_row\">\n<td>Year<\/td>\n<td>Med. Income<\/td>\n<td>% Chg<\/td>\n<td>Avg. Rent<\/td>\n<td>% Chg<\/td>\n<\/tr>\n<tr>\n<td>2000<\/td>\n<td>$53,200<\/td>\n<td>+3.9%<\/td>\n<td>$784<\/td>\n<td>+3.9%<\/td>\n<\/tr>\n<tr>\n<td>2001<\/td>\n<td>$55,900<\/td>\n<td>+5.1%<\/td>\n<td>$826<\/td>\n<td>+5.3%<\/td>\n<\/tr>\n<tr>\n<td>2002<\/td>\n<td>$58,000<\/td>\n<td>+3.8%<\/td>\n<td>$838<\/td>\n<td>+1.5%<\/td>\n<\/tr>\n<tr>\n<td>2003<\/td>\n<td>$59,200<\/td>\n<td>+2.1%<\/td>\n<td>$821<\/td>\n<td>-2.0%<\/td>\n<\/tr>\n<tr>\n<td>2004<\/td>\n<td>$60,400<\/td>\n<td>+2.0%<\/td>\n<td>$803<\/td>\n<td>-2.3%<\/td>\n<\/tr>\n<tr>\n<td>2005<\/td>\n<td>$60,700<\/td>\n<td>+0.5%<\/td>\n<td>$810<\/td>\n<td>+0.9%<\/td>\n<\/tr>\n<tr class=\"summary\">\n<td colspan=\"2\" style=\"text-align: right;\">Total 2000-2005<\/td>\n<td>+14.1%<\/td>\n<td>&nbsp;<\/td>\n<td>+3.3%<\/td>\n<\/tr>\n<tr class=\"summary\">\n<td colspan=\"2\" style=\"text-align: right;\">Average Yearly<\/td>\n<td>+2.67%<\/td>\n<td>&nbsp;<\/td>\n<td>+0.65%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><center><b>Median Household Income vs. Median Home Price: 2000-2005<\/b><\/center><\/p>\n<table class=\"CNNTable\" border=\"1\" cellpadding=\"0\" cellspacing=\"0\">\n<tbody>\n<tr class=\"top_row\">\n<td>Year<\/td>\n<td>Med. Income<\/td>\n<td>% Chg<\/td>\n<td>Med. Home<\/td>\n<td>% Chg<\/td>\n<\/tr>\n<tr>\n<td>2000<\/td>\n<td>$53,200<\/td>\n<td>3.9%<\/td>\n<td>$225,000<\/td>\n<td>4.9%<\/td>\n<\/tr>\n<tr>\n<td>2001<\/td>\n<td>$55,900<\/td>\n<td>5.1%<\/td>\n<td>$235,000<\/td>\n<td>4.4%<\/td>\n<\/tr>\n<tr>\n<td>2002<\/td>\n<td>$58,000<\/td>\n<td>3.8%<\/td>\n<td>$249,000<\/td>\n<td>6.0%<\/td>\n<\/tr>\n<tr>\n<td>2003<\/td>\n<td>$59,200<\/td>\n<td>2.1%<\/td>\n<td>$265,000<\/td>\n<td>6.4%<\/td>\n<\/tr>\n<tr>\n<td>2004<\/td>\n<td>$60,400<\/td>\n<td>2.0%<\/td>\n<td>$289,950<\/td>\n<td>9.4%<\/td>\n<\/tr>\n<tr>\n<td>2005<\/td>\n<td>$60,700<\/td>\n<td>0.5%<\/td>\n<td>$332,000<\/td>\n<td>14.5%<\/td>\n<\/tr>\n<tr class=\"summary\">\n<td colspan=\"2\" style=\"text-align: right;\">Total 2000-2005<\/td>\n<td>+14.1%<\/td>\n<td>&nbsp;<\/td>\n<td>+47.6%<\/td>\n<\/tr>\n<tr class=\"summary\">\n<td colspan=\"2\" style=\"text-align: right;\">Average Yearly<\/td>\n<td>+2.67%<\/td>\n<td>&nbsp;<\/td>\n<td>+8.09%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>These figures come from the most recent <a href=\"http:\/\/www.metrokc.gov\/budget\/benchmrk\/bench06\/AffHsg\/aff_housing.htm\" title=\"King County Benchmarks, Affordable Housing 2006\">King County Benchmarks Report<\/a>, released yesterday.  Both the <a href=\"http:\/\/seattletimes.nwsource.com\/html\/localnews\/2003550556_housing01m0.html\" title=\"Fewer can afford to buy a house in King County, report says\">Times<\/a> and the <a href=\"http:\/\/seattlepi.nwsource.com\/local\/301990_housing01.html\" title=\"Housing takes a bigger bite out of people's budgets\">P-I<\/a> have their usual un-insightful blabs about it, if you&#8217;re into that sort of thing.<\/p>\n<p>If the implication of these numbers is not obvious to you, you are either:<\/p>\n<ul>\n<li>willfully ignorant of basic economics<\/li>\n<li>incapable of comprehending basic math<\/li>\n<li>in the real estate business<\/li>\n<li>all of the above<\/li>\n<\/ul>\n<p>How anyone can argue (with a straight face) that home prices are based on &#8220;fundamentals&#8221; when those very same &#8220;fundamentals&#8221; have somehow allowed rents to climb <i>slower<\/i> than incomes is beyond me.<\/p>\n<p>(<i>King County Budget Office, <a href=\"http:\/\/www.metrokc.gov\/budget\/benchmrk\/bench06\/AffHsg\/aff_housing.htm\" title=\"King County Benchmarks, Affordable Housing 2006\">Affordable Housing 2006<\/a>, 01.2007<\/i>)<br \/>(<i>Sharon Pian Chan, <a href=\"http:\/\/seattletimes.nwsource.com\/html\/localnews\/2003550556_housing01m0.html\" title=\"Fewer can afford to buy a house in King County, report says\">Seattle Times<\/a>, 02.01.2007<\/i>)<br \/>(<i>Aubrey Cohen, <a href=\"http:\/\/seattlepi.nwsource.com\/local\/301990_housing01.html\" title=\"Housing takes a bigger bite out of people's budgets\">Seattle P-I<\/a>, 02.01.2007<\/i>)<\/p>\n<div class=\"blogger-post-footer\">\n<div style=\"margin: 0 auto; padding: 2px; font-size: 12px; width: 150px; text-align: center; border: 1px dashed #4386ce; background-color: #D5E2F1;\"><a href=\"https:\/\/www.paypal.com\/xclick\/business=paypal%40timandjeni.com&#038;no_note=1&#038;tax=0&#038;currency_code=USD&#038;lc=US&#038;item_name=Seattle%20Bubble%20Donation\" title=\"Seattle Bubble Tip Jar\">Seattle Bubble Tip Jar<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Here&#8217;s a pop quiz for you. Take a look at the following two tables and try to determine which one more closely resembles a market based on fundamentals, and which one represents a market based on speculation. Median Household Income vs. Average Rent: 2000-2005 Year Med. Income % Chg Avg. Rent % Chg 2000 $53,200&#8230;<\/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":[],"tags":[61,62,58,59,60],"coauthors":[],"class_list":["post-646","post","type-post","status-publish","format-standard","hentry","tag-fundamentals","tag-income","tag-king_county","tag-rent","tag-speculation"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Pop Quiz Time: Fundamentals or Speculation? \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\/2007\/02\/01\/pop-quiz-time-fundamentals-or-speculation\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Pop Quiz Time: Fundamentals or Speculation? \u2022 Seattle Bubble\" \/>\n<meta name=\"twitter:description\" content=\"Here&#8217;s a pop quiz for you. Take a look at the following two tables and try to determine which one more closely resembles a market based on fundamentals, and which one represents a market based on speculation. Median Household Income vs. Average Rent: 2000-2005 Year Med. Income % Chg Avg. Rent % Chg 2000 $53,200...\" \/>\n<meta name=\"twitter:creator\" content=\"@The_Tim\" \/>\n<meta name=\"twitter:site\" content=\"@SeattleBubble\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"The Tim\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2007\/02\/01\/pop-quiz-time-fundamentals-or-speculation\/\",\"url\":\"https:\/\/seattlebubble.com\/blog\/2007\/02\/01\/pop-quiz-time-fundamentals-or-speculation\/\",\"name\":\"Pop Quiz Time: Fundamentals or Speculation? \u2022 Seattle Bubble\",\"isPartOf\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/#website\"},\"datePublished\":\"2007-02-01T17:12:00+00:00\",\"author\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f\"},\"breadcrumb\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/2007\/02\/01\/pop-quiz-time-fundamentals-or-speculation\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/seattlebubble.com\/blog\/2007\/02\/01\/pop-quiz-time-fundamentals-or-speculation\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2007\/02\/01\/pop-quiz-time-fundamentals-or-speculation\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/seattlebubble.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Pop Quiz Time: Fundamentals or Speculation?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#website\",\"url\":\"https:\/\/seattlebubble.com\/blog\/\",\"name\":\"Seattle Bubble\",\"description\":\"local\u00a0real\u00a0estate\u00a0news, statistics,\u00a0and\u00a0commentary without\u00a0the\u00a0sales\u00a0spin.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/seattlebubble.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f\",\"name\":\"The Tim\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/image\/37756956c11dcc50d2559761ffa5ee70\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g\",\"caption\":\"The Tim\"},\"description\":\"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. 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