Local Radio Looks at the Bubble

AM Radio station 710 KIRO is in the middle of a 5-part series titled CloseUp: Housing Bubble. Here are some notable highlights from the first two parts:

Brooks: When the bottom fell out in 1990 home prices in Seattle stayed flat, and in some places dropped, but eventually rebounded. He believes Seattle has some things going for it that could protect it from a bigger burst other parts of the country may see.
Conway: "We're growing twice as fast as the nation, and that-that will certainly act as a buffer. If we-if we do see a downturn in the housing market, it shouldn't be as great as-as what we see nationally."

What a shock. Doesn't everyone tend to think that their own area is somehow immune? It's what we want to believe, anyway.

Brooks: A growing economy however doesn't act as a bullet-proof vest.
Conway: "The real concern is the mortgage rate. If we see the mortgage rate rise abruptly, then we could see a significant turnaround in the housing market."

Bingo. Don't forget how many new home loans are being taken out on unsustainable loans. If anything, our area is more susceptible to the financial damage that could will be brought by rising mortgage rates, since our area is relying more on "creative financing" than the nation as a whole.

Bosch: Figure out what kind of home and financing you can afford long term. Remember, some loans are risky.
Codise: "Otherwise, what I fear is that we're gonna see some record foreclosures."

The trouble is that a significant number of people in Seattle aren't doing that, because they want a nice home and they really can't afford it if they think long term.

Bosch: Tara Cummins with Coldwell Banker Bane says it can take time to find something that suits your life and your budget.
Cummins: "The shock of what they're gonna get for their money, that's probably the biggest surprise."
Bosch: So, be flexible, consider a longer commute, or a smaller space to save costs. Don't give up. She says a good realtor can guide you through the process.

I've got some advice for you: Maybe you should give up. Renting isn't that bad when houses are as crazily overpriced as they are around here. I'd rather pay a reasonable rent for a place close to work than an outrageous mortgage for a house I have to drive 45 minutes from every day just to get to work.

I'm interested to see where 710 KIRO is going with these reports. Hopefully they provide a realistic, balanced picture of the overall real estate / housing situation here in Seattle. I've transcribed the first two parts of the report below for future reference when/if KIRO takes the audio feeds off their website.

View/Hide the full transcript of Part 1.
[sound of a power saw]
Brooks: Builders can't put up homes fast enough. "Sold" signs go up quicker than realtors hang the "For Sale" sign. The housing boom has taken Seattle by storm, with values going up at double digits each of the past couple of years. But how long can a good thing last?
Conway: "I am concerned about a-about a price bubble."
Brooks: Seattle economist Dick Conway uses what he believes is a fairly accurate gauge of how the market's going: the home appreciation rate over the mortgage rate, which right now stands at a factor of two.
Conway: "Back around 1989, 1990, that ratio got to about 2.5 before things burst."
Brooks: When the bottom fell out in 1990 home prices in Seattle stayed flat, and in some places dropped, but eventually rebounded. He believes Seattle has some things going for it that could protect it from a bigger burst other parts of the country may see.
Conway: "We're growing twice as fast as the nation, and that-that will certainly act as a buffer. If we-if we do see a downturn in the housing market, it shouldn't be as great as-as what we see nationally."
Brooks: A growing economy however doesn't act as a bullet-proof vest.
Conway: "The real concern is the mortgage rate. If we see the mortgage rate rise abruptly, then we could see a significant turnaround in the housing market."
Brooks: If you're buying a home to live in, history proves you'll win in the long run. Those hoping to make a quick buck are the ones counting on the odds staying in their favor. For the KIRO CloseUp, I'm Jason Brooks, NewsRadio 710 KIRO.
Hide the full transcript of Part 1.

View/Hide the full transcript of Part 2.
[dishes clanking]
Bosch: It's the little things that make owning a home a big deal.
Haggerdy: "It's great."
Bosch: For Matthew Haggerdy...
Haggerdy: "I have a dishwasher, and it makes life so much easier! I was think--I think that every day!"
Bosch: But he admits, buying his first home was...
Haggerdy: "scary."
Bosch: Small wonder with the price of many Seattle starter homes way in the thousands.
Codise: "You're looking, depending on what area, three hundred and up."
Bosch: Alice Codise with the non-profit group HomeSite. Her biggest tip for first-time buyers:
Codise: "Educate, educate, educate."
Bosch: Figure out what kind of home and financing you can afford long term. Remember, some loans are risky.
Codise: "Otherwise, what I fear is that we're gonna see some record foreclosures."
Bosch: Get real, get your loan pre-approved, and... [sound of car ignition] get out there.
Cummins: "People like are... after about the fifth home they've just glazed over."
Bosch: Tara Cummins with Coldwell Banker Bane says it can take time to find something that suits your life and your budget.
Cummins: "The shock of what they're gonna get for their money, that's probably the biggest surprise."
Bosch: So, be flexible, consider a longer commute, or a smaller space to save costs. Don't give up. She says a good realtor can guide you through the process.
Cummins: "The emotional rollercoaster, where you're go-go-go, and you-you're very happy and high, and then all of a sudden you actually finally do something to buy, and then you're like 'whoa, I've actually bought something.'"
Haggerdy: "Absolutely."
Bosch: Haggerdy says his new home is well worth it.
Haggerdy: "And I still haven't wrapped my head totally around the fact that it's mine yet. I haven't nailed one nail in the wall-"
Bosch: You'll get over that.
Haggerdy: "I-I will get over that soon enough."
Bosch: Heather Bosch, NewsRadio 710 KIRO CloseUp.
Hide the full transcript of Part 2.

(Jason Brooks, Heather Bosch, 710 KIRO, 08.16.2005)