The sky is not falling, so why is real estate sales performance so much weaker on Seattle's Eastside? I posted the latest stats on my blog recently and noticed how many of the Eastside markets had dropped dramatically in sales production. The numbers for August got me thinking. Are we overreacting to the media hype about the mortgage and housing industry? Are we succumbing to the "fear factor" as the mortgage fiasco plays out on the national stage?
Real estate and the economy are hyper-local and should be treated as such. So what's really happening with the local economy? Here's just a sample of what's been happening with the economy in Seattle and on the Eastside:
...
(You know what goes here: Boeing, Microsoft, etc...)
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So buyers, this is your time! Make wise decisions and get ahead of the curve. Real estate is an investment and like many investments, it's difficult to make a "fast buck" in the short term. Maybe this is part of the problem here. The Seattle/Eastside has been doing so well, people have expected to make quick money on real estate. This is no longer the market for real estate flippers. If you buy, plan to hold onto your home for at least a few years.
You heard her everybody. Go out and buy that real estate 'investment'
today, so you can be
ahead of the curve!
Comments
I'm glad her professional code of conduct ensures that she will give unbiased, ethical advice to investors.
I hear that the "smart money" rushes into assets that are slumping and forecast to continue underperforming for years to come, at the very peak of a national bubble. You know, instead of into bonds, stocks, and other investments that are actually, you know, productive.
And yes, Ms. Sinick, you're really hot on the trail of the truth. The only reason the market in many regions of the country, soon to be followed by the PNW, is swirling the bowl is because of media scares
Ms. Sinick - Is it a safe bet to assume that you follow your own professional advice, and are fully invested, leveraged, and doubled-down on real estate? I would certainly hope that you're walking the walk. After all, this is the time to get out in front of the curve and win big!
Repeat after me - real estate is hyper-local, the economy is hyper-local, credit markets are hyper-local (oh wait...).
"Ms. Sinick - Is it a safe bet to assume that you follow your own professional advice, and are fully invested, leveraged, and doubled-down on real estate? I would certainly hope that you're walking the walk."
Actually, she probably is. One amusing facet of this bubble is that most RE types drank the Kool-Aid right along with their customers, so the RE types suffer the full consequences of their own "investment" advice. Karma is a bitch, isn't it?
Real estate may be local, and the *desire* to buy those houses on the eastside may also be strong. Also, jobs are local, and it's true that the job scene is doing well in Seattle. It's also doing well in San Diego BTW, but let's not get into that old debate..
BUT, the credit markets ARE NOT LOCAL! Please, Ms Real Estate agent, go and talk to a mortgage broker about how things are in the credit markets. Try and get a 0% down interest only for that 550K Issaquah home. Good luck! If you *can* get it, you can't afford the rate.
The loose credit standards of the past half a decade brought forward many buyers who would otherwise be buying right now. This inflated prices due to the increased demand. So we have fewer people who actually are looking to buy (housing ownership at record highs) and even if you *do* want to buy it's harder to get the financing.
I don't get why this is so hard to understand. Actually, I do get why. It's not simple. It requires some thought, research, and an open mind. I guess it's hard to accept something to be true when your livelihood depends on it NOT being true.
Oh the irony. That great economy she's referencing was the internet bubble.
Isn't this because Boeing now has tons of parts built overseas and then has them shipped here for final assembly? A trend towards more outsourcing overseas doesn't bode well for jobs here.
Most of this is for existing employees. I'm doubled up in an office right now as are many others on my team.
Oh, and he also mentioned that RE never goes down here, so if you're planning on owning your house for two years or more, you'll be just fine so get out there and buy, buy BUY!
But the best part of what he said is that since buyers are holding off purchasing right now, there will be a HUGE pent-up demand for houses when these buyers can't wait any longer and jump into the market during next spring, so you better buy NOW and beat the rush.
I think it's possible there will be some kind of pent up demand next Spring. In fact, it's possible there is pent up demand now!
The *desire* to buy a home NO LONGER implies that a lender is willing to *lend* you the money. Without silly financing, lots of demand will never enter into the sales statistics. No loan, no sale.
That's what I think these real estate folks are missing. They tell people "buy buy buy" as if that's enough to make people buy a house, but that's only half the picture. Underwriting standards are back!
she puts up some of the gloomiest statistics I have seen anywhere, and then wraps them up with a bow and says "don't worry". here's a snippet, with my colors added for emphasis...
get your horse and buggy indeed!
RainCity seems almost reasonable compared to the PI blogs.
If your livelihood depended on the rate of sales transactions, you'd be snarky too.
The nation may have trouble, but not Washington.
What? Washington may have trouble, but not Seattle.
Ok, so maybe Seattle has trouble, but not the East-side.
Alright, not many transactions on the East-side, but I saw a house sell. I swear.
Sort of reminds me of when reduced price changed into "New" price.
Preston in trouble? "I meant Eastside, but not too far east".
Renton in trouble? "Eastside, excluding South, and East, Eastside".
"Hell, I just meant Bellevue!"
"Downtown Bellevue!"
"OK, just my condo in downtown Bellevue!!!!"
BTW, Perry mentions The Tim in a recent post:
"I sometimes enjoy reading The Tim's posts on the seattlebubble. He's trying hard to figure things out. I generally don't agree with his conclusions, but then again I live with different numbers and the market from my perspective."
What different numbers??????
http://blog.seattlepi.nwsource.com/real ... p#comments
Numbers from the GUT! Didn't you know that the gut has the most nerve endings in all the body? Colbert told me that... He's smart.
It's fun to read. He's like Shug on meth.
http://blog.seattlepi.nwsource.com/realestate/archives/122635.asp
I do love it when someone makes a broad point and backs it up with proof against the original point. If most people weren't even effected by the Great Depression, then why was it the cause of WWII and why does nobody in this country over the age of 70 ever throw anything away?
The proof is in the name: GREAT Depression. As far as depressions go, this one was "great". It may as well have been called the Awesome Depression.
I don't understand this mentality. If it's highly cyclical, why doesn't it make sense to buy at the bottom of the cycle? The attitude is "you're gonna have this thing a long time, so buy whenever". The reality is, the average holding period for a home is ~7 years. That fits within a cycle. And I don't believe what people say about market timing in real estate. It's pretty easy to see up and down cycles. It's not like stocks where you can $ cost average and be pretty safe. Down cycles in RE don't come around very often, so you'd have to be total fool to buy into the face of one - which I think is what people really started saying here in 2005/2006.
If someone has been waiting for 10 years for a down cycle, then I agree it doesn't make sense - but only the most ardent tin-foil hat crew has been doing that. But if timing the bottom is a case of missing out on a year or so of appreciation in order to maximize value - that makes sense to me.
Great Depression was the cause of WWII? Is this some kind of 'New American History' or something?
Sorry I simplified slightly, obviously there were numerous causes.
After WWI, a system of reparations were put in place, whereby Germany was required to pay for damages from the war because they lost. Meanwhile, for a number of reasons Europe was no longer self sufficient. They relied on American manufactured goods and food stuffs. When the depression started, everyone wanted to get repaid and because of reparations Germany was at the end of the stick. This whole chain pushed the western world into depression. Dictators tend to thrive during hardship, and this was certainly the case in the 1930s. And the end result was WWII.
And why do people over age 70 like my dad, continue to tell us stories about eating nothing but corn on the cob for dinner, spaghetti that consisted of watered down tomato soup over pasta, and cutting out cardboard to put in the bottom of his shoes because there was no money to buy new shoes? Luckily, he's still around to tell these stories to my kids.
I've got to go over there now and read it for myself.
The markets of the last few years were an aberration. Unskilled agents could fairly easily get a house sold.....and come away thinking they were on top of the game. When the fish were jumping in the boat, how good did agents really have to be to make the sale? Sure the best agents took deep care of their clients, but did their clients always understand that level of care? It is not hard to understand why consumers were doubting the value of real estate agents. That is why "good" markets can actually be tougher for the professional.
I have always believed that markets are cyclical. I think the only debate I have with the "bubble community" is the depth of the cycle. That being said, my belief is that ALL MARKETS CORRECT.
makes you go hmmmmmmm
(Courtesy of the Four Yorkshiremen aka Monty Python.)
"We had no fireworks on the fourth of july, instead we had to bang pots and pans together for noise....we had to put hydrogen and oxygen together to make our own water..." he has a million of these.
Luxury.
http://blog.seattlepi.nwsource.com/realestate/archives/123556.asp