Steve Tytler: 'I don't buy into the 'gloom and doom''
I think this may be the first mention of this blog in any of the local papers:
I'll probably write up a post about his latest missive later this week.
As you may guess, he spends most of the article describing / touting his "stair step" theory, which you may recall from my previous email conversation with him. By the way, the "long time" he says we've spent predicting the "collapse of the local real estate market" is essentially just as long as he has been saying similar things:Steve Tytler wrote:I don't buy into the "gloom and doom" scenarios being promoted by blogs such as seattlebubble.com, which has been predicting the imminent collapse of the local real estate market for a long time. While I give it credit for pointing out that many people in the Seattle media were overly optimistic about the Puget Sound real estate market during the boom, I think the bubble bloggers tend to be overly pessimistic.
That was also the time that this blog was started...Steve Tytler wrote:...in late 2005, I wrote that the housing market was peaking, meaning that it would soon start cooling off. That was at a time when the news was full of stories about how hot the housing market was and how fast home prices were rising.
Few, if any, people at that time were thinking that the party would soon come to an end.
I'll probably write up a post about his latest missive later this week.
Comments
It's good to see that people on this board predicting price drops are doom and gloom, but predicting a 10%-20% drop is reasonable. Does Steve Tytler realize he is predicting drops in value (not price) of nearly 40%? A 20% drop followed by a few years (3-5?) of zero appreciation (15%-25% inflation) is a 40% correction.
In other words, if 3 people on this site predict 60% drops, the whole board is filled with fools and can't be trusted. But we should trust Steve Tytler's 25%-45% decline prediction? Where do you even draw the line between a reasonably bearish opinion and a crazy fanatic's opinion?
I suppose that eliminates one of the major tasks in being a real estate reporter. No need to track down and parrot so called 'expert' opinions when you've got them in house.
By my math, if the house price goes up 20%, then loses 20%, it's worth 4% less than you paid. Maybe he means "as long as you don't need to sell or refinance". On a median priced SFH, that's a $20K loss before selling costs.
Thank you Mike2! It's sad that most Americans aren't math savvy enough to realize percentages work this way. The loss is off a larger starting amount, therefore the same percent loss as gain is a net loss. I guess the school system does need to be overhauled. But can we send the 40-60 year olds back too?
"Don't worry," he assured us, "you can just refinance before that happens."
Well, being able to refinance out of a dangerous loan like that requires that the value of the home continue to rise. If we had seen 20% appreciation since then, only to see it wiped away this year and next, we would have been in a heap of trouble come reset time next year.
How many people were in my situation, but simply took the mortgage broker at his or her word, and are now on the fast track to financial hardship?
I had the exact same thing happen. I wanted a 30 yr fixed, 20% down. The broker really pushed an ARM with less down. These are pretty much verbatim quotes:
"How long are you going to stay in that place" "You can do other things with your money, why waste it on a down payment"