EastSide Prices in free fall?

edited April 2008 in Housing Bubble
Been tracking properties on the East side (been tracking mainly redmond) since mid 2007. What a tremendous change. There have been some tricks on the part of sellers to make price reductions magically reappear as new listings on redfin... but here are a few examples:

A listing was at 549K now down to 499K
Have seen 3-4 listings in the same area dropping from 600s to 570s
And there are so many examples in the Redmond Ridge development its just a joke.

One thing is sure, at these prices (all these sellers are still looking at around 100K increases from 2006) no one is going to buy. Its been a long time but finally price declines have hit the "impregnable" east side.

Comments

  • With all these news about bailouts...I personally would try to hold on for as long as I can. Eastside is rough, but still holding on.
  • A large fancy Kirkland house was bought in 2005 for $725K. Listed in February or so of this year for $810K. Sold in about two weeks, so I figured some profit was made, or at least not a loss. Nope, it sold for $685K.
  • Ubersalad wrote:
    With all these news about bailouts...I personally would try to hold on for as long as I can. Eastside is rough, but still holding on.
    If you mean for the seller, I don't think it will work. The total dollar amount is far higher than the gov't could even borrow. The politicians will only pay lip service to the bubble popping, since that's all they can do. The best hope to keep upward pressure on house prices is plain old optimism. A pullout from Iraq would go a long way toward that.
  • Markor wrote:
    If you mean for the seller, I don't think it will work. The total dollar amount is far higher than the gov't could even borrow. The politicians will only pay lip service to the bubble popping, since that's all they can do. The best hope to keep upward pressure on house prices is plain old optimism. A pullout from Iraq would go a long way toward that.

    I agree optimism is about all the government can try to provide, but I don't see how pulling out of Iraq will help. A lot of our budget deficit is from the war. On the one hand it hurts us having a deficit at all, but on the other hand it is often smart for governments to run deficits during major economic crashes. What's best is for the government to pay off their debts during good times, and run up new ones (or spend budget surpluses) during bad times. I think if we pulled out of Iraq today, we would just cut spending, which would add further downward pressure to the economy. Of course, it could help stabilize the dollar, but I think it might be too late for that anyways.
  • What's best is for the government to pay off their debts during good times, and run up new ones (or spend budget surpluses) during bad times.
    Agreed. But our gov't has run up debt during good times & bad, to the point where it is getting difficult to borrow more. I think from the standpoint of an investor thinking of buying US debt, the US is a bad risk and getting riskier by the day, in large part due to astronomical Iraq war expenses, money that is mostly wasted. Ending our involvement would send a signal that the US intends to clean up its financial house and quit spending recklessly.
  • Markor wrote:
    Agreed. But our gov't has run up debt during good times & bad, to the point where it is getting difficult to borrow more. I think from the standpoint of an investor thinking of buying US debt, the US is a bad risk and getting riskier by the day, in large part due to astronomical Iraq war expenses, money that is mostly wasted. Ending our involvement would send a signal that the US intends to clean up its financial house and quit spending recklessly.

    I agree with your first part, but not completely on the last part--let's keep in mind that a great deal of the funds for the war actually stay in this country, getting paid to defense suppliers as well as salaries direct-deposited for all of the troops and paid private contractors that are over there. Most of their $ actually stays here and is paying their mortgages, kids' college expenses, groceries for their families and so on. I don't agree with the war and the amount spent on it, but one cannot ignore the benefits that this spending has on our economy in the short term (ignoring the longer term ramifications of deficit spending).
  • I think a large chunk of the money--hundreds of billions--is just plain wasted, like for buildings that are so shoddily constructed (even with huge cost overruns) that they are unusable. The part that benefits soldiers & companies & their employees does give a short-term boost to the economy, but in the long run borrowing a lot of money, and giving it to people who return back goods & services having no value, is disastrous. (If any country could prosper in the long run by simply borrowing money & spending it willy nilly, we'd all have yachts.) A prudent investor would not buy into that situation by buying US debt. Instead the investor would sell their US holdings to a greater fool, which is what seems to be happening en masse.

    China got a short-term boost to their economy too when Chairman Mao exhorted all citizens to melt their steel utensils to increase the country's metal production. But people were so busy melting their pots & pans that they had no time to plant & harvest crops, and millions died in the ensuing famine.

    I like how Ted Turner called the Iraqi insurgents "patriots" and said the war is nothing more than a US invasion. History shows that it is very difficult to subjugate a people. As Turner pointed out, the US spends more on its military than 190 other countries combined, yet we're getting our butts kicked by ordinary Iraqis spending a few hundred dollars per roadside bomb. We couldn't enslave the Vietnamese either, even though back then we had no qualms about intentionally killing civilians by the thousands daily. Iraq may well be the straw that breaks our nation.
  • To get back on topic, it would be good for me if a US financial collapse caused or helped Eastside house prices to plummet, as long I can manage to hold onto my cash. I was encouraged by my visit to the Klondike Gold Rush National Historical Park in Pioneer Square, where it is noted that the 1893 nationwide financial panic caused Seattle land values to drop 90%. (But banks folded too, and therein lies the dilemma. Can't trust the FDIC.)
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