I'm going to abstain from further comment...because I'm not sure it would be civil.
Holy cow, 148 comments?!? Some of you have a very high tolerance for wasting time. I don't know whether to be impressed by your fortitude or pity your apparent false impression that there's some actual point in arguing with those people.
Amusement, pure amusement - watching a bunch of salesmen (er, "professionals") run around frantically trying to deny the obvious, trying to deny that they ever said "buy now or be priced out forever", etc. It's like having a ringside seat at the Amsterdam Tulip Exchange in 1637!
The most hilarious thing is that financially, the volume of transactions is a lot more important to RE types than price levels - if they had any sense, they would be furiously talking the market down to the point where normal people are capable of buying a house with conservative financing, so that transactions volumes would return to normal levels soon. Instead, they are trying to prop up the market with misleading statements, and supporting government intervention to prop up the market, which will probably lead to a stagnant real estate market for years.
But so many of the salespeople drank the cool aid and bought heavily into the market themselves that a drop would hurt them more than increased volume would help.
But so many of the salespeople drank the cool aid and bought heavily into the market themselves that a drop would hurt them more than increased volume would help.
I think this is a key point. The unit downstairs from me was bought by an REA in late 2006 for a record price in the building (and was foreclosed on a year later, but that's another story). These people believed their own spin and went in head first, often making use of stated income (it varies! I made 15K last month alone!) and risky loans (0-down, I/O, maximize my leverage!). I think most of them didn't realize they were doubling-down: not only did their own mortgage terms and income depend on an appreciating market, so did their customers. The carnage is going to be particularly ugly down in Orange County, CA, with the triple-whammy of lower volume, lower prices, and a huge loss of jobs in the RE/mortgage industry.
I seem to prefer disagreeing with them there than agreeing with us here.
I have to quit reading political blogs right before reading this forum...for a second I thought that said "I prefer to disagree with them there than here"...and it sounded in my head all to much like "we're fighting them there so we don't have to fight them here."
But so many of the salespeople drank the cool aid and bought heavily into the market themselves that a drop would hurt them more than increased volume would help.
Oh No! I've got others spelling it wrong like my name. I only used a c instead of a k because I thought it looked better paired with 'colored'.
In my defense, I thought maybe I should use a 'k' there when writing it, but was too lazy to go back and change it. Plus its just a forum on the internetz so who cares.
Actually, that defense doesn't sound like it is doing a whole lot for me.
Over at "Seattle Condo Review", a RE agent actually uses the "P" word:
Some folks look at the news regarding Expo62 and the downsized Smith Tower project as reason for panic.
(Expo62 is now going to be a rental, not sold as condos; and Smith Tower is not going to be fully converted into condos.)
Not to worry, though:
In reality, developers' reduction of future supply is a textbook example of the market adjusting and balancing against demand and great news for owners/sellers (not so great for buyers in the short term).
6. ARDELL - January 21, 2008
The market hasn't changed, tj. January is always like this. The market is not down. People are simply valuing their properties incorrectly and refusing to listen to the market's response. Prices are not down where I am looking. Number of sales down, prices up, is still the order of the day for Eastside close in and Seattle close in.
6. ARDELL - January 21, 2008
The market hasn't changed, tj. January is always like this. The market is not down. People are simply valuing their properties incorrectly and refusing to listen to the market's response. Prices are not down where I am looking. Number of sales down, prices up, is still the order of the day for Eastside close in and Seattle close in.
Well, so long as the three blocks around MS campus are doing well, and the parking garages in downtown are still economical to convert to high-rise buildings, then it must be true. The market is exactly like normal.
6. ARDELL - January 21, 2008
The market hasn't changed, tj. January is always like this. The market is not down. People are simply valuing their properties incorrectly and refusing to listen to the market's response. Prices are not down where I am looking. Number of sales down, prices up, is still the order of the day for Eastside close in and Seattle close in.
Well, so long as the three blocks around MS campus are doing well, and the parking garages in downtown are still economical to convert to high-rise buildings, then it must be true. The market is exactly like normal.
Sales of single family homes kept pretty good pace against homes coming on market this week. But still running at about half the pace of this time last year.
Last Jan KC SFH sales were 2500. Half that pace is 1250. Inventory is looking to top out around 9500. That gives us an absorption of inventory of ~13%.
To put this in perspective, head over and have a look at the charts at http://www.alanpope.com/charts. That's the lowest level of absorption for any January dating all the way back to 1992. As a matter of fact, if you take out the last four months, the previous low was 15%, and that was in 1994.
Yep, normal January. Nothing to see here. "January is always like this"
I just can't condone it [pricing 5% below comps]. I saw agents doing that in L.A., pricing 5% lower than the last sale as the norm. They dragged the market down due to their greed to make a commission. Where else could the market go but down if they kept pricing down and twisting seller's arms to do that?
How utterly unethical to price below prior comparable sales in a declining market glutted with inventory! Greed, greed, greed!
Actually, if Ardell can actually get her recommended 5% above "the comps" for her sellers in this market, my hat is off to her. Her sellers may be a little nervous about this approach, however...
Ardell is probably more in tune with the market than you are all giving her credit for.
As a amatuer market enthusiast on a personal level (ie, I'm not an agent), one area I think I may part from is the idea that the market is normal for this time of year. The feedback from some agents I have spoken with recently have indicated that the inventory levels are concerning them. A couple with listings have indicated that they will be dropping their asking prices earnestly (not token $1-5K meaningless drops).
For example, my understanding is that YOY increases in January (2007 vs 2008) inventory in Snohomish Co have more than doubled this month vs. last January for SFH's, and we have several more days left this month to add homes.
So, the good news is that if you are buying, you've got time and leverage on your side, never mind phenominal interest rates.
I'm astonished by these so-called experts - particularly the lack of faith in markets to discover fair pricing.
If a price is dropped, and the market is indeed supporting higher prices (in Seattle, since unlike anywhere else in the country, we have a large employer nearby...) then buyers will beat a path to the door to the attractively priced house, and bid it up to whatever the market will support.
Note that this was specifically the case during the credit-fueled bubble of the last several years, and sellers were patting themselves on the back for having a property worthy of the much-vaunted bidding war. (In reality, they should have been thanking their lucky CDO-fueled stars - it was nothing they or the region did).
This sort of surprisingly ignorant attitude about economics and markets casts the entire shelter-brokering profession in a bad light. Not to mention the absurd egocentric notion that the sales-agents are somehow shaping the market by holding up price levels. Not a chance.
I know that Ardell is well-connected and high profile. But I don't see why people in the industry politely bite their tongues as much as they do. Her statements range from tautological at the high-end to ignorant and incorrect at the average, to insulting at the low end of the range. Bravo, you go girl.
I disagree. I don't think real estate is liquid enough to always trigger bidding wars. If you are not pressured to sell, I think a seller is better off asking slightly higher than the market rate and then accepting a lower price through negotiation. In theory, any house that is sold could have been sold for slightly more. As long as the sales are recent, then pricing a new listing slightly above a recent sale price makes sense.
But you have to compare apples to apples. The properties have to be comparable and the prices have to include the same fees. Pricing 5% above a recent sale that includes closing costs and then expecting to tack closing costs on top of your 5% increase is a big bag of fail.
But you have to compare apples to apples. The properties have to be comparable and the prices have to include the same fees. Pricing 5% above a recent sale that includes closing costs and then expecting to tack closing costs on top of your 5% increase is a big bag of fail.
This is a great point. Since when did it become the norm to inflate a house's price by at least the closing costs, at each change of hands?
Also, fair point about the illiquid RE market (especially in times like these). I guess my scenario requires people to be actually looking for a house. A low price in a deflating market won't entice non-buyers to become buyers. But it would grab the attention of someone who was already a market participant.
Since we're on the subject of Ardell, I seem to recall a post of hers describing her sub-prime situation.
Although I don't remember details, I wonder if she is also in a appreciation dependant situation. If so, this may explain the recent tone of her posts of pricing. (vs. bias to making more deals)
Just a thought. Nevertheless, I hope she has some diversification in her other investments.
Not a happy situation - Ardell does have a huge vested interest in keeping RE prices up in Kirkland. It does help explain her rather odd theory that prices can collapse elsewhere across Puget Sound, but that this collapse will have no effect on RE values in the Microsoft Fortress.
Well, the continued price appreciation of the Eastside Fortress is ready to be put to an empirical test - Ardell is putting her Kirkland house on the market for $999,950. She bought it in September of 2005 for $850,000.
I wish A. well in her house sale, but her experience does illustrate the credit conditions that created this runup.
"No one was more surprised than I, when I got the mortgage and closed on my home. In the end, the lender wanted me to write my profile of "Who I Am" right before the loan funded. I was starting over again in a new city. No proven history of what I might be able to make long term, as an agent in a new place. Coming out of a 20 year marriage, too old to wait until I stablilized my income, arriving with only what could fit in the trunk of my car. Sleeping on the floor at my sister's in Green Lake while I worked hard to re-establish myself after a debilitating and nasty divorce."
"Yes, for the first time in my life I was "sub-prime", I was "stated income", I was 49 and starting over. I am the person sub-prime and stated income was made for, and I've worked hard to be the person they believed in when that loan funded."
$850k? How did she afford to live there for even a few years? I am seriously in the wrong industry. I should have just gone into real estate sales instead of studyinging engineering in college.
Comments
Oh no! A math pun.
GROAN!!! :roll:
The most hilarious thing is that financially, the volume of transactions is a lot more important to RE types than price levels - if they had any sense, they would be furiously talking the market down to the point where normal people are capable of buying a house with conservative financing, so that transactions volumes would return to normal levels soon. Instead, they are trying to prop up the market with misleading statements, and supporting government intervention to prop up the market, which will probably lead to a stagnant real estate market for years.
Pure entertainment!
Guilty as charged! I seem to prefer disagreeing with them there than agreeing with us here.
Occasionally I learn a little something about the RE mindset.
And am probably the dumber for it.
I think this is a key point. The unit downstairs from me was bought by an REA in late 2006 for a record price in the building (and was foreclosed on a year later, but that's another story). These people believed their own spin and went in head first, often making use of stated income (it varies! I made 15K last month alone!) and risky loans (0-down, I/O, maximize my leverage!). I think most of them didn't realize they were doubling-down: not only did their own mortgage terms and income depend on an appreciating market, so did their customers. The carnage is going to be particularly ugly down in Orange County, CA, with the triple-whammy of lower volume, lower prices, and a huge loss of jobs in the RE/mortgage industry.
I have to quit reading political blogs right before reading this forum...for a second I thought that said "I prefer to disagree with them there than here"...and it sounded in my head all to much like "we're fighting them there so we don't have to fight them here."
I am having the same trouble with your handle, actually.
First I thought it was "Get Two Homes!"
Then I thought "Ghetto Homes"
Now I have no idea what it means. I'm 9 and the street-lights just came on?
Oh No! I've got others spelling it wrong like my name. I only used a c instead of a k because I thought it looked better paired with 'colored'.
Actually, that defense doesn't sound like it is doing a whole lot for me.
It's actually the name of my dad's old residential construction business.
No...seriously.
Not to worry, though:
http://www.seattlecondoreview.com/2008/ ... ble-h.html
6. ARDELL - January 21, 2008
The market hasn't changed, tj. January is always like this. The market is not down. People are simply valuing their properties incorrectly and refusing to listen to the market's response. Prices are not down where I am looking. Number of sales down, prices up, is still the order of the day for Eastside close in and Seattle close in.
So Ardell thinks we have not reached the bottom yet and that sellers will need to lower their prices.
Well, so long as the three blocks around MS campus are doing well, and the parking garages in downtown are still economical to convert to high-rise buildings, then it must be true. The market is exactly like normal.
That is comical. To quote her post at RCG:
Last Jan KC SFH sales were 2500. Half that pace is 1250. Inventory is looking to top out around 9500. That gives us an absorption of inventory of ~13%.
To put this in perspective, head over and have a look at the charts at http://www.alanpope.com/charts. That's the lowest level of absorption for any January dating all the way back to 1992. As a matter of fact, if you take out the last four months, the previous low was 15%, and that was in 1994.
Yep, normal January. Nothing to see here. "January is always like this"
How utterly unethical to price below prior comparable sales in a declining market glutted with inventory! Greed, greed, greed!
Actually, if Ardell can actually get her recommended 5% above "the comps" for her sellers in this market, my hat is off to her. Her sellers may be a little nervous about this approach, however...
As a amatuer market enthusiast on a personal level (ie, I'm not an agent), one area I think I may part from is the idea that the market is normal for this time of year. The feedback from some agents I have spoken with recently have indicated that the inventory levels are concerning them. A couple with listings have indicated that they will be dropping their asking prices earnestly (not token $1-5K meaningless drops).
For example, my understanding is that YOY increases in January (2007 vs 2008) inventory in Snohomish Co have more than doubled this month vs. last January for SFH's, and we have several more days left this month to add homes.
So, the good news is that if you are buying, you've got time and leverage on your side, never mind phenominal interest rates.
"Unhappy home buyer, feeling misled on price, sues agent"
http://seattlepi.nwsource.com/business/ ... source=rss
If a price is dropped, and the market is indeed supporting higher prices (in Seattle, since unlike anywhere else in the country, we have a large employer nearby...) then buyers will beat a path to the door to the attractively priced house, and bid it up to whatever the market will support.
Note that this was specifically the case during the credit-fueled bubble of the last several years, and sellers were patting themselves on the back for having a property worthy of the much-vaunted bidding war. (In reality, they should have been thanking their lucky CDO-fueled stars - it was nothing they or the region did).
This sort of surprisingly ignorant attitude about economics and markets casts the entire shelter-brokering profession in a bad light. Not to mention the absurd egocentric notion that the sales-agents are somehow shaping the market by holding up price levels. Not a chance.
I know that Ardell is well-connected and high profile. But I don't see why people in the industry politely bite their tongues as much as they do. Her statements range from tautological at the high-end to ignorant and incorrect at the average, to insulting at the low end of the range. Bravo, you go girl.
But you have to compare apples to apples. The properties have to be comparable and the prices have to include the same fees. Pricing 5% above a recent sale that includes closing costs and then expecting to tack closing costs on top of your 5% increase is a big bag of fail.
This is a great point. Since when did it become the norm to inflate a house's price by at least the closing costs, at each change of hands?
Also, fair point about the illiquid RE market (especially in times like these). I guess my scenario requires people to be actually looking for a house. A low price in a deflating market won't entice non-buyers to become buyers. But it would grab the attention of someone who was already a market participant.
Evidently, 2004,2005,2006,2007.
I fixed it for you.
Although I don't remember details, I wonder if she is also in a appreciation dependant situation. If so, this may explain the recent tone of her posts of pricing. (vs. bias to making more deals)
Just a thought. Nevertheless, I hope she has some diversification in her other investments.
http://www.raincityguide.com/2007/09/17 ... ime-story/
Not a happy situation - Ardell does have a huge vested interest in keeping RE prices up in Kirkland. It does help explain her rather odd theory that prices can collapse elsewhere across Puget Sound, but that this collapse will have no effect on RE values in the Microsoft Fortress.
http://www.raincityguide.com/2008/02/15 ... ll-part-1/
"No one was more surprised than I, when I got the mortgage and closed on my home. In the end, the lender wanted me to write my profile of "Who I Am" right before the loan funded. I was starting over again in a new city. No proven history of what I might be able to make long term, as an agent in a new place. Coming out of a 20 year marriage, too old to wait until I stablilized my income, arriving with only what could fit in the trunk of my car. Sleeping on the floor at my sister's in Green Lake while I worked hard to re-establish myself after a debilitating and nasty divorce."
"Yes, for the first time in my life I was "sub-prime", I was "stated income", I was 49 and starting over. I am the person sub-prime and stated income was made for, and I've worked hard to be the person they believed in when that loan funded."
Eight hundred and fifty thousand dollars.
http://www.raincityguide.com/2007/09/17 ... ime-story/