The "Real Seattle"
The guy running Burbed.com (which generally posts amusing reviews of terrible, extremely overpriced houses in Silicon Valley and environs) has been having a lot of fun with the concept of "The Real Bay Area" - any part of the Bay Area where real estate prices are dropping is excluded from the Real Bay Area, and the few remaining areas where prices are not dropping constitute the Real Bay Area. The size of the Real Bay Area gets smaller every month.
As Seattle follows the Bay Area down, we are starting to see the "Real Seattle" concept applied on the P-I "Real Estate Professionals" blog. Along with increasingly bizarre attacks on bubble bloggers, and further exposition of the theory that it is impossible to forecast future real estate prices when prices are going down (of course, you can always forecast future real estate prices when prices are going up), we are starting to see the development of the "Real Seattle" concept. RE types apparently are no longer going to focus on King County or Seattle averages (except for using historical data proving that RE in Seattle always goes up) - instead, you will hear that real estate is hyper-local and ***look!!*** areas 705, 710, and 700 are going up!! Houses are being sold in Maple Valley and Kent (albeit at lower prices)!!
http://blog.seattlepi.nwsource.com/real ... 130882.asp
Ardell on RCG pioneered this months ago with her theory that house prices could collapse across the rest of the Puget Sound region without affecting RE prices in the Microsoft Fortress in the slightest. It might be interesting to map out the "Real Seattle", and then observe its shrinkage over time.
Along these lines, considering where we are now, what sort of rhetoric will the RE types be using six months from now, as the market continues to slide? I expect that you are going to hear more of the "Ken Lay defense" - the late Mr. Lay explained that Enron was a wonderful, flourishing company that was in great financial shape, and then the Wall Street Journal printed a couple of nasty articles about Enron, and then the company collapsed because of those nasty articles. In a similar fashion, I expect that the bubble bloggers and other skeptics will increasingly be blamed for the bad market - there are hordes of buyers just waiting to snap up Seattle houses; but evil naysayers somehow have implanted their robotic mind control devices in the potential purchasers, keeping them from seeing that It Is A Great Time To Buy.
An quote regarding bubble blogs (this is too good not to quote - a variant has been posted a couple of places):
Heh, heh - just relax while we implant the robotic mind control device. Bwaa ha ha!!! Resistance is futile!!!
As Seattle follows the Bay Area down, we are starting to see the "Real Seattle" concept applied on the P-I "Real Estate Professionals" blog. Along with increasingly bizarre attacks on bubble bloggers, and further exposition of the theory that it is impossible to forecast future real estate prices when prices are going down (of course, you can always forecast future real estate prices when prices are going up), we are starting to see the development of the "Real Seattle" concept. RE types apparently are no longer going to focus on King County or Seattle averages (except for using historical data proving that RE in Seattle always goes up) - instead, you will hear that real estate is hyper-local and ***look!!*** areas 705, 710, and 700 are going up!! Houses are being sold in Maple Valley and Kent (albeit at lower prices)!!
http://blog.seattlepi.nwsource.com/real ... 130882.asp
Ardell on RCG pioneered this months ago with her theory that house prices could collapse across the rest of the Puget Sound region without affecting RE prices in the Microsoft Fortress in the slightest. It might be interesting to map out the "Real Seattle", and then observe its shrinkage over time.
Along these lines, considering where we are now, what sort of rhetoric will the RE types be using six months from now, as the market continues to slide? I expect that you are going to hear more of the "Ken Lay defense" - the late Mr. Lay explained that Enron was a wonderful, flourishing company that was in great financial shape, and then the Wall Street Journal printed a couple of nasty articles about Enron, and then the company collapsed because of those nasty articles. In a similar fashion, I expect that the bubble bloggers and other skeptics will increasingly be blamed for the bad market - there are hordes of buyers just waiting to snap up Seattle houses; but evil naysayers somehow have implanted their robotic mind control devices in the potential purchasers, keeping them from seeing that It Is A Great Time To Buy.
An quote regarding bubble blogs (this is too good not to quote - a variant has been posted a couple of places):
But, do not mistake: if the sky-is-falling-crowd captures too much of your attention, they gain footing and credibility. You have got to choose your sources of information, and news.
We are certainly in a changing market and a changing world. Do not hover too long on these blogs, they will eat you alive.
Heh, heh - just relax while we implant the robotic mind control device. Bwaa ha ha!!! Resistance is futile!!!
Comments
There will inevitably be neighborhoods that fare best in a downturn (and where prices indeed may not fall at all) because neighborhoods transition and become relatively more desirable. But those improving neighborhoods are inevitably offset by those that become less desirable (think Compton, CA or remote Pierce or Snohomish Co, WA). As a buyer, you can try to identify these neighborhoods, but it's a crapshoot.
How many 'up and coming' neighborhoods have been 'up and coming' for 20 years?
Yes, I saw that too.
The person speaking is telling us to be afraid of people with contrary opinions, yet this person is using fear to persuade the reader.
I find this ironic in that much of the debate at sb has used rational logic to inform readers and NOT fear.
About twenty years ago, when multiple-level marketing was very popular, I thumbed through a book written by someone involved in one of the MLM schemes. One of the big themes within the MLM organization was "Don't Let Anyone Steal Your Dream" i.e. don't listen to those negative people who tell you that getting a MLM distributorship is a bad idea, but only listen to people who think that MLM is the path to riches. Commentary on some of the RE blogs is increasingly channeling that attitude.
Otherwise known as "stinkin thinkin"
If I'm reading this right... did he just say "buy high" because it's 'more likely to go up for a time' and "buy low" because 'it's more likely to go up'? Buy buy buy!
and
I don't read it. I just know it's wrong
uh huh....
Hey, don't mock it. I'm about 90% sure this quote was originally taken from Adam Smith when he described the 'invisible hand' of markets.
It's also clear that our unnamed scholar is versed in physics. If you shoot a cannonball up, you can be certain it will come back down. Unless the ball is really really high, in which case it's unpredictable...the ball could continue to rise, or it could start to fall. Also, when a cannonball crashes back into the ground, it's a good time to anticipate how it will go up again.
It's true - if the ball is really, really high, and going really, really fast, it could go into orbit - like Seattle real estate prices.
Yes, the scenario you describe is actually quite common. Most cannonballs gain altitude until they escape the influence of the earth's gravity.
I heard some cannonballs fail to achieve escape velocity. These are called 'Black Swans' because you can't anticipate them and they usually crush somebody else's house.
Bears are only right once for a short period over a long period, and don't make any money, who are people suposed to look to?
I predict that in two years anyone who is waiting for 50% declines in seattle is going to be perminantly renting and bitter.
Garth
Anyone bearish right now has always been and will always be bearish. This is the fundamental 'truth" that garth is trying to communicate to us they we just don't get.
I am bearish on all markets, and will be forever.
Housing? Bah!
Stocks? Nu uh.
Metals? Don't think so.
Internet? A loser's game.
Food? Nobody needs that.
Cure for cancer? I don't think so.
Garth, I'm now adding you to the list of things I am perpetually bearish about. You've been put on watch. I expect your value to decline forever...just like the cure for cancer.
Damn, and here I thought 2009 would be a good time to buy a house. I guess my "stinkin thinking" will damn me to a life of perpetual penury.
Except that it isn't a truth. I bought a few years ago because I expected the market to go up. It did. Then I sold because I expected the market to turn. That has started, and I expect declines over the next couple of years. By definition, this makes me "bearish" on the RE market. However, I expect it will eventually turn back up again, and when I think that is likely, I will buy again. Hopefully I will make a correct prediction.
There are some "perma-bears" who have a habit of predicting RE disaster around every corner. But every type of disaster, be it economic, environmental, military, etc., has some Cassandra predicting it. That doesn't mean that every specific prediction of a downturn in a specific economic area is from someone who is permanently bearish.
Same comment I made to Ubersalid that if you don't understand something I said, post where I said it. Don't hide out somewhere else.
I wasn't referring to anything said here in my comment. As explained, Bubble Bloggers is a generic term I use to describe people who post on websites with a "The sky is falling!" type attitude. It doesn't refer to any one person or any one site.
FWIW, I didn't raise the issue of your post, but the subject was brought up here and I have no misgivings about commenting. I don't feel the need to come over and register at the PI in order to get your blessings.
Bubble bloggers are only saying the sky is falling as much as realtors are saying that real estate always gains 50%/year.
You could just work two jobs at MSFT. Work your normal day job, and then get a second job there on nights and weekends. If you work the system right, you might even be able to overlap the two jobs a bit. See, that's called thinking outside the box.
Krismer went on to say, "You also should only post things about other public figures on their own website. Have a problem with Richie Sexton? Post it on his site. Don't hide out somewhere else. Don't like George W. Bush's policies? Post on the whitehouse site. Don't hide out somewhere else. I think I've made my point."
You're 100% correct--local housing prices are so far out of whack from the median income that it's not even funny.
I live 0.8mi from the Red West campus of MS, so I guess I am living in the Inner Circle, the Golden Triangle, Pink Pony Central, AKA Ardell's favorite neighborhood.
Median income in Redmond (home of Microsoft, Nintendo, and a whole host of other hi-tech companies) from the last census was $69K, which I'm also guessing is close to what a lot of MS employees make. Median housing prices in this area (around MS, not the city as a whole)--around $700K (1970s split-level for $500K, 3500sf McCrackerbox for $1M). So you can get into a house for somewhere between 7-14x median income for the area. Hmmm. Does that sound affordable to you?
And you're right about the commute--I reverse-commute northbound 405 from Kirkland up to Bothell (then east to Monroe) every morning, and I am so thankful that I'm not sitting on the other side of the divider! Renting is a far preferable 'hell' to sitting in traffic for two hours a day.
As anecdotal evidence, I make quite a bit more than the median income you quoted for Redmond, and I was looking for small rural houses out I-90 -- 2 bedrooms, 1 bath, more trees than immediate neighbors. The only one I found I really liked from the listings (aside from the 30 mile commute) was 5x my salary. Most were priced above my even exaggerated upper limit. And that's for a very small house (by today's standard) pretty far from the metro. Not your typical home fare these days.
Running approximate numbers, my rent is about half the monthly cost of buying that house, and it was one of the cheapest I saw. And my commute is literally 10x shorter. As much as I am aching for my own place, it just doesn't come close to making financial sense for me right now. And there will have to be some serious changes to the equation parameters for it to make sense any time soon.
I think that depends on your definition of crashing. To some, 10% is crashing. I think that's pretty much a given now. To others, 50% is crashing, which isn't so given.
I think we should name that region the "Pink Pony Corral"
No, no, no. Don't look at the whole thing.
There, now isn't that much better? I'd fly on that plane wouldn't you?