$100K off, HERE???
This is the house featured in Saturday's Seattle Times article:
10906 NE 197th St
Bothell, WA 98011
http://www.windermere.com/index.cfm?fus ... D=18430129
http://seattletimes.nwsource.com/html/r ... les06.html
It's interesting to see that this development, that was built during the last Bull RE market is seeing price weakness again this time. A friend's parents were RE agents living in this development back in the early 90's. They owned the house across the street, and ended up in foreclosure when the market turned.
They are nice homes, some of the nicest in the area when they were built, however because they all face 405 the traffic noise is pretty bad. It's worth noting that this small subdivision was started in 1989, but due to the weak market throught the 90's new homes were being built in it all the way up through 1998 on the still vacant lots.
Note, the smaller home across the culdesac from the current listing just sold in July for $650K.
10906 NE 197th St
Bothell, WA 98011
http://www.windermere.com/index.cfm?fus ... D=18430129
http://seattletimes.nwsource.com/html/r ... les06.html
It's interesting to see that this development, that was built during the last Bull RE market is seeing price weakness again this time. A friend's parents were RE agents living in this development back in the early 90's. They owned the house across the street, and ended up in foreclosure when the market turned.
They are nice homes, some of the nicest in the area when they were built, however because they all face 405 the traffic noise is pretty bad. It's worth noting that this small subdivision was started in 1989, but due to the weak market throught the 90's new homes were being built in it all the way up through 1998 on the still vacant lots.
Note, the smaller home across the culdesac from the current listing just sold in July for $650K.
Comments
Ziprealty has that MLS#27145286 only on the market since August while the article says June. If it doesn't sell, you think he will have much luck renting it out. You think it will cover his mortgage?
And they decided to go back to Hawaii. I wonder what they purchased there and how they financed.
So many questions.
from the article
If they haven't refi'd the crap out of it (which it doesn't sound like they have from the article) I think they can cover the mortgage. They can probably rent it and wait as long as they want.
They might cover the mortgage with rent, but how will they stomach losing even more free equity if the market pric drops more? Earning a few hundred dollars a month for a few years while giving up $50k in profits today does not sound like a good financial decision. Sure they might make it back eventually if the hold on long enough but how long might they have to wait.
What happens to rents when everyone else in the same situation puts thier properties on the rental market.
I don't think enough people are moving to Hawaii to move the rent prices...
As if Hawaii is the only place people can move to?
From this history, there is a definite possibility that they could break even renting the house out.
Hard to imagine entering retirement with a major investment that has a chance of breaking even. Deflation?
I don't see the deeds on line any more.
Eh, you can't see the deeds of trust themselves, but you can see the instrument #'s and the dates they were issued.
But they aren't moving away because of the value of the house. They are selling or renting the house because they are moving away. If "everyone in the same situation" does the same thing, I expect exactly nothing significant to come of it.
Will they rent them out, or will they keep living there, or will they just let the price fall?
Was just looking at this one, listed in late June at $649,000, dropped by September to $599,000, and now listed at $499,000. That's a $150,000 drop in 3 months (so the original price is 30% higher than current price, IrvineRenter would probably give that a WTF award)
http://www.redfin.com/stingray/do/print ... -id=871293
Looking at comps on Craigslist I'm going to guess they could rent this out for somewhere between $1500 to $2000/month. Assuming the place is paid off that's very roughly a 3.5% to 4.5% return on a $500,000 asset, which isn't that great. I think the price would have to fall another $100,000 before renting seems like an attractive deal vs selling (or rents need to come up significantly). Will someone who listed a house at $650K in the summer really be willing to accept an effective valuation of $400K in the fall?
I think most sellers will choose to lower the price if they really need to sell. I also agree that the rate of return on renting isn't that great at current prices. But loss aversion is a strong human instinct and there are a lot of people who are bad at math so who knows what will happen. If everyone who needs to sell decides to rent out the property instead then rent prices will fall. That will make the decision to rent out the property even worse and encourage other sellers to lower the price further.
The same human behavior that drove the bubble up can also drive it back down. The difference is that on the way back down, smart market participants can buy to take advantage of market irrationality setting prices too low. It is difficult to take advantage of that same irrationality when the price is too high in housing. In the stock market you can short a company (which means you borrow the stock and sell it with the promise to buy the stock sometime in the future -- ideally at a lower price). While bubble mentality can drive the price down, it won't last as long or go as far as the the bubble on the way up.
http://www.redfin.com/stingray/do/print ... id=1261949