pain is starting to bite in Bellevue...
I am starting to hear personal cases of hardship in Bellevue from friends and acquaintances.
Case 1: We have friends in the Newcastle area who have been trying to sell their house for almost a year now, and have already reduced the price by $90,000. They already moved into a new custom home (which cost a fortune) and are now stuck with 2 mortgage payments. These folks are really hurting, and turning to professional stagers and doing all manner of upgrades in an attempt to finally sell.
Case 2: Some other friends with a home in central Bellevue are really hurting from both mortgage and credit card debt, so much so that the husband is now working part-time as doing pizza delivery, despite the fact that he has a good full-time day job.
Maybe it's just me, but I seem to hear fewer people talking about the fortunes they've made in home appreciation around the water cooler, and am hearing an increasing number of somber tales with people trying to deal with tough circumstances. Could the over-all bullish feel of the last 10 years finally be on the wane? Not in Bellevue!
Case 1: We have friends in the Newcastle area who have been trying to sell their house for almost a year now, and have already reduced the price by $90,000. They already moved into a new custom home (which cost a fortune) and are now stuck with 2 mortgage payments. These folks are really hurting, and turning to professional stagers and doing all manner of upgrades in an attempt to finally sell.
Case 2: Some other friends with a home in central Bellevue are really hurting from both mortgage and credit card debt, so much so that the husband is now working part-time as doing pizza delivery, despite the fact that he has a good full-time day job.
Maybe it's just me, but I seem to hear fewer people talking about the fortunes they've made in home appreciation around the water cooler, and am hearing an increasing number of somber tales with people trying to deal with tough circumstances. Could the over-all bullish feel of the last 10 years finally be on the wane? Not in Bellevue!
Comments
From what I know, the scene is going to get interesting when those new bellevue downtown condos come on line (where a studio costs 500K and up). I am trying to think who those bellevue condos are targeting?
1) The 20-30 years old single profile. I am single and 28 and work at MSFt. I cant possibly afford a studio that costs 500K. And this doesnt even include the HOA which costs 500+
2) the 30+ up with a family wouldnt possibly consider living in a studio / condo. For 500K and up, why not just buy a home instead?
3) the investor? How can they cash flow with the high HOAs?
Peronsally, I think the scene is going to get ugly no matter what retailer (neman marcus, jimmy choo) comes to down
Agreed. Don't the kind of hipsters that want to live in an overpriced, modern-looking downtown condo absolutely despise the eastside?
Yes, they do (along with a normal, down-to-earth guy with a dog who rents a house north of the University district). The hipsters are all in Belltown though.
High net worth retirees who like to shop shop shop, that's who. More high end stores are planned for Bellevue in the next couple years. Disgusting I know. But there are certainly plenty of folks who like that sort of thing and can afford it; the question is whether Bellevue can attract enough of them. I bet a good number of the studios will be used as pieds-à-terre.
I hear that a lot - but when I went to check it out, the only real study I could find on this "phenomenon" put it more in the realm of urban legend than urban migration. Still, it's the mantra for every condo builder in seattle
http://www.housingamerica.org/Publicati ... oomers.htm
Couple of their conclusions:
#Despite anecdotal evidence, the rate of second-home ownership among 50–60 year olds—the peak demanders for these properties among older households—has remained flat over the 12-year period from 1992-2004. The Early Baby Boomers were no more likely to own such homes than older cohorts of homeowners. # At the national level, empty-nest retirement-age suburban homeowners are not flocking to urban areas in great numbers. In particular, based on the last decade's experience, in a given five-year period, only two percent of all empty-nest retirement-age suburban homeowners can be expected to move to an urban area. # Suburban empty-nesters are just as likely to move to a non-metropolitan area as they are to an urban area. # The suburban-to-urban flow of homeowners represents just 5 percent of the stock of all retirement-age empty-nest homeowners located in central cities. When the urban-to-suburban flow of empty-nesters is taken into account, the net migration effect from the suburbs to urban area is –7.2 percent. Any return of empty-nesters to the urban core is not enough to stem the tide of urban-suburban flight.
But put yourself into the mind of a high net worth retiree who lives to shop: Seattle and urban cores like it are off your list; you're 60 years old and getting mugged could be the end of you. You didn't get where you are by giving money to panhandlers. And the urine smell whenever you pass an alley is unacceptable. So how do you get your Cartier and Tiffany's fix? Places like Bellevue. It's clean, low-crime, and bum free. It's the Rodeo Drive of the Pacific Northwest (or will be soon), where the summer weather is the best in the nation (and you'll be staying only for the summer anyway).
My neighbor greatly overpriced his house last spring and then followed the market down for the next six months, finally selling after dropping the price to well below that of comparables.
Very true.
The problem is that this flush-with-cash retiree is largely a myth. Our Baby-boom generation spent pretty much everything they made. The subset that do have some savings have much of it tied up in their depreciating homes. The final sliver that meet this profile you present are few and far between, certainly not enough to gobble up the exploding inventory of new luxury condos.
They won't fill all the new condos in the US, but Bellevue is marketing itself as a high-end clean safe shopping district with great summer weather, and that's a small niche.
With all due respect, Markor, your mother and her possible friends are just anecdotes. Unless you have some kind of actual data to back up your assertions, they will be taken with a huge grain of salt. They certainly won't stand up against actual data or published studies like deejayoh linked.
1) Those who want to be somewhere warm when they retire, and
2) Those who want to be near family (grandchildren) when they retire.
Downtown Bellevue condos don't really match up well with either of those groups.
Just my two cents.
:oops:
I wouldn't put downtown Bellevue in the category of "urban". It's a relatively small core surrounded by residential. When I think "urban" I think crack dealers in the alleys and scary parks. Bellevue is in a different category than that.
But will they really "cut loose" enough to plunk down a half a million bucks on a depreciating asset? You can stay a lot of nights in a high-end hotel for half a million bucks...
I'm not into fancy shopping, but I do like the comfy stadium seating at the Lincoln Square Cinemas and the free evening parking there.
You have to arrive at least an hour ahead on opening night blockbuster to get a decent seat. I live less than a mile away, I think I deserve VIP seating.
Then I think about my brother and sisters (and all their friends) who are a) boomers and b) for the most part quite successful - and not one of them has bought a downtown condo.
I know it's a danger to extend our own experience too far out - but something just doesn't add up for me.
Judging from the growing inventory of unsold multi-million dollar condos in Seattle - I think we'll find out what soon.
Click on this picture to see the lineup of giant projects under construction in 2005 in Bellevue:
Here's an interesting recent quote from that forum: "Some people have no idea the size downtown Bellevue will be in 5 years. They also don't realize Bellevue is the top office market in the country right now."
For what it's worth, this may not be nearly as much as you seem to think it is. If you have no pension, and just receive social security, you can easily spend over $100k a year with $2,000,000 in savings. This is pretty good no, but how much of that nest egg is in their home? If it's $500k, that cuts into your cash. You're now looking at $90k a year.
This is an extremely comfortable retirement, and you can afford to live on a cruise boat more or less...but don't kid yourself into thinking it affords a lifestyle of shopping at Tiffany's every Tuesday and Thursday.
That's assuming these people even exist in any kinds of numbers. I tried looking for actual demographics, but didn't have any luck. Based on what I've heard in the past though, I think the median net worth for 55 year olds is below $100k. I'd like to see some official numbers, but my guess is that most retirees won't be shopping at Tiffany's, and a significant number won't even be retiring.
I can understand wanting to protect and shelter one's children from the "low-lifes" out there, but this can, in the long run, cause more harm than good. What appears to be "safe" and wholesome on the surface (i.e. Bellevue, WA) actually carries subtle (and not so subtle) expectations of perfection and elitism/isolationism.
I grew up in north Texas. There is a city not unlike Bellevue called Plano. Very affluent populace, McMansions, money, "good" schools, not a lot of "brown folk". It also had one of the highest teen suicide rates in the country, a severe teenage drug problem, mischievious crimes, etc.
Hiding or attempting to over-protect your children from reality perhaps unwittingly instills in them the expectation of perfection and lack of human flaws. All they'll see are smiling (screaming inside) people with nice clothes and cars (golden handcuffs) and yet, these kids will still detect the lack of authenticity and real happiness. If one is paying attention, you can feel the human desperation perspiring off of a lot of the people in Bellevue Square.
Those kids in Plano were expected to be perfect, like their family tried to be to the rest of the community. Keep up appearances at all costs, hide the screaming matches in the master bedroom late at night; keep the rose bushes well groomed.
Give me a humanity to show my children; I'll use it as a lesson. Hiding your children from reality is a mistake. When they get older and start seeing things for what they are, they certainly won't think dear ol' dad living in a "clean & safe" environment knows jack squat about the world.
Bellevue and these trying-to-be-perfect communities can very often be, in my opinion, cancers in America. They erode humanity in exchange for Radiohead's proverbial "fake plastic trees". Rent and watch "American Beauty" (1999) with Kevin Spacey; you'll get the idea.
I have no doubt that in the long run all the office space and all the condos in downtown Bellevue will be filled. But they are adding something like 50% increase in sq footage to the commercial office space in the "core" with the current wave of buildings, and probably more than that in condos.
I'm guessing both office rents and condo prices will fall before they rise. It just depends on your time horizon.
Things will probably get pretty bad in much of the country. There will be pockets of relative wealth though. Tiffany's might have to lower their prices. I plan to bail on the US in 10 to 15 years, and know lots of other people thinking the same.
I live on the Eastside for the proximity to work and relative security, but I have a whole arsenal to combat the "expectations of perfection and elitism/isolationism".