Good God! We're running out of land sometime after 2022!
Get in now, because prices are gonna skyrocket!
What the heck, NWMLS is publishing an article that suggests any land shortage won't happen until after the boomers start pushing dasies. Someone's gonna get fired.
King County officials say there is "an ample supply" of buildable land to support commercial and residential development for King County's growing population over the next 15 years. In fact, analysts estimate c ities and towns in King County have enough capacity for an additional 277,000 households through 2022, more than twice the remaining residential target of 106,000 households.
http://www.nwmls.com/discover/nwreporte ... ageID=4091
What the heck, NWMLS is publishing an article that suggests any land shortage won't happen until after the boomers start pushing dasies. Someone's gonna get fired.
King County officials say there is "an ample supply" of buildable land to support commercial and residential development for King County's growing population over the next 15 years. In fact, analysts estimate c ities and towns in King County have enough capacity for an additional 277,000 households through 2022, more than twice the remaining residential target of 106,000 households.
http://www.nwmls.com/discover/nwreporte ... ageID=4091
Comments
I think the bubble argument is that demand has been artificially increased by the easy credit. Prices falling in the short term will be an indication that demand/supply has decreased in the short term.
I think everyone here would agree that over the long term demand/supply will increase if the businesses here continue to hire more people in this area.
If you were right then a housing bubble should continue as long as the factors that helped create it (e.g. easy credit) exist. But bubbles can pop at any time even if the factors that made it continue to exist. Bubbles can exist for no reason other than exuberance (i.e. they can be completely psychological), so bubbles can last after any factors that helped create it cease to exist.
I agree that "base demand" will continue to increase in this area. I think that "base demand" is fairly easy to predict. However, it is not useful in predicting or understanding bubbles.
"Speculative demand" on the other hand behaves quite differently. There are feedback cycles in speculative demand. When "speculative demand" increases it drives prices up. Rising prices encourage more "speculative demand". It makes me think about a Van der Pol oscillator. Van der Pol oscillators are non-linear systems with similar feedback loops. They exhibit chaotic behavior and specific trajectories are difficult to predict very far out in the future because they are extremely sensitive to initial conditions.
Using this demand separation and feedback theory does not help predict when bubbles will start or stop. It does predict that bubbles will exist. It can probably be used to identify bubbles if you have a good estimate of base demand.
Much of the analysis done at this site attempts to estimate base demand and growth of base demand to determine if this is a bubble. I'm fairly certain we are in a real estate bubble, but have a contingency plan in case I am wrong.
It works in reverse too. There is such a thing as negative speculative demand. When negative speculative demand increases it drives prices down. Prices can fall to below fair market prices (a "negative bubble" or "oversold" or whatever we should call it). Falling prices encourage more negative speculative demand, until they don't, and then the negative bubble pops.
If I was looking to buy when prices are right, I'd keep a very close eye on the market now. House prices are said to be sticky on the way down, but that's in the past not necessarily the future--the maxims of markets are continuously overwritten to maintain their natural chaotic state. Also not all comparable houses are priced the same; their prices tend to fit a bell curve, so that out of any given 30 comparable houses there might be one house that is priced at a steep discount off the average price of the lot. The best time to buy an underpriced house is during a negative bubble, when your competition is on the sidelines waiting for a clear bottom signal that never comes.
I agree that prices likely fit something like a bell curve. Unfortunately, the houses at the low end do not stay on the market very long. I would even wager that many of the 'good' deals get snapped up by people who invest in RE full-time. I'm planning to shoot for a median deal.
Three months of supply is the equilibrium point from what I've been told.
From what I can see, many houses at well-below-comparables prices that used to get snapped up are languishing along with everything else.
Here's a normal distribution (bell curve)
Here's a poisson distribution
Let's say there's a certain type of house with a median price of $400,000. With a poisson distribution, you might expect to see the cheapest houses listed for $375,000 or so, which the highest priced would list for $500,000. Whereas, with the normal distribution you might see a $500,000 home only if there were a $300,000 comparable (approximately).
I think what DJO linked shows fairly accurately that total sales prices fits a poisson more closely than a bell curve (obviously neither is all that accurate).
Here's an explanation of why I am asking the question in the first place. Most sellers receive pricing advice from agents, and most also check Zillow. Now let's make (a wild and almost certainly wrong) assumption that both Zillow and a typical agent know what the house should sell for (median price). Some people will hear that price and say 'I can get 10% more than that'. Others will say 'fine lets sell for that'. Very few (any?) will hear that price and say 'sounds too high, let's drop it 10%'. That's my thinking in supporting the poisson distribution.
Of course, we can't trust that Zillow or any agent will be so accurate. Typically, you would assume a Gaussian distribution for inaccuracy. Gaussian distributions produce bell curves, which would support the theory of a normal distribution for housing prices.
Obviously, both models are filled with uncertainty and probably wrong, but they both also seem to contain some truth. But the thing is, if you combine them (assuming they both contribute somewhat to price) what you get out is still more of a poisson distribution than a normal distribution.
I guess this is all pretty esoteric, but I am personally interested in it, because it might help me predict what kinds of real deals to expect.
I'd agree that it may not be obvious when we hit the bottom, but it appears to me we just found the top. C/S just turned negative M2M in August. Median price is flat Y2Y. R/E bulls would argue even that is not a real signal (merely a flesh wound!). Anyway, IMO, I don't think we're even past the knee in the curve on the way down at this point so it seems premature to be worrying if one might be missing the bottom.
This is REdiculous. I don't know where you get your information deejayoh, but one expert in real estate has already called the bottom - at least four times. His name is David Lereah. Maybe you've heard of him?
And unlike the posers on this site, he used to be paid for understanding real estate. In my book, that's as good as gold.