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Monday, January 09, 2006

Realtors: Bubble Talk Not Trendy

This article doesn't really relate directly to the Seattle area, but it was in a Seattle area paper, and there's a tidbit in there that I thought was rather amusing, so I decided to post it here anyway.

Mark Nash, a Coldwell Banker broker and real estate author whose book "1001 Tips for Buying & Selling a Home" is a helpful guide for consumers considering the residential market, has compiled a list of what's in for housing this year - [and] what is definitely out.

The list is a result of input from Realtors around the country who, in turn, have solicited feedback from home buyers and sellers as they visit homes.

Leading the out column had nothing to do with tasteless interiors or boxy exteriors. Topping the chart was any further discussion about a possible housing bubble. Most analysts concur that no national bubble exists, including David Lereah, the National Association of Realtors' chief economist, that any bubbles must be regional and point to poor local employment figures as the reason.

There will be flat appreciation in some areas, but sales will remain strong nationally, Lereah said.
How sad for me. I guess this and other bubble blogs are "out." So says the all-knowing Realtor big wig David Lereah and his "Realtors around the country." What a shock that Realtors would be tired of hearing about a bubble. What a complete shock.

(Tom Kelly, Everett Herald, 01.08.2006)


marin_explorer said...

Topping the [out] chart was any further discussion about a possible housing bubble.

I suppose if we plug our ears and think nice thoughts, the bubble's impending crash won't happen? The events in spring may prove otherwise.

Linda said...

Waiting for people to get to the point where they are willing to face reality on this thing is making me want to scream.

Let's let this thing burst so we can clean up and get back to sthg that's sustainable, realistic, and connected to some fundamentals.

Anonymous said...

hmmm.... just checked out the craigslist listings for Seattle and found something interesting:

An open house where they are giving out free Starbuck's gift cards to the first 20 people and a drawing for a $100 Nordstroms giftcard. This house is also listed on the regular MLS, starting today.

Looks like they want to make extra positive sure they get some foot traffic at the ol' open house.

I think this may be a first of many signs to come of "Desperation in Seattle".

Liz K. said...

I've been keeping track of a certain neighborhood's listings on the "" site.

The number of pages that gets shot up with "houses available" has nearly doubled in the past 48 hours.

Anonymous said...

Yet inventory has gone DOWN from around 2300 in November to about 1700 now.

Anonymous said...

There is certainly some bubble present. Seattle remains relatively affordable city.

inseattle said...

"Relatively affordable" is not the same as affordable.

Seattle is in the high percentage of cities in the US for those who have taken out "creative" loans.

ie. "There's no way I can afford this house w/ a 20% downpayment at a fixed rate so I guess I'll just have to commit finacial suicide and get one of these "creative" loans."

Check out the "Another F@cked Borrower" blogspot for more info.

Dukes said...

I wanted to post this here, I am amazed by this. I wrote a realtor here in Seattle asking why I should line the pockets of a greedy seller, who is basically trying to flip for 100K. Here is his reply:

"If you don’t own real estate, you should. You have to live somewhere and if you own you will make a minimum of 10% on the total purchase price for every year you live in the house. Most people can buy with no money down and in some cases ask the seller to pay their closing costs out of the purchase price. I’d recommend you use my website or any website to search for properties and find something you can afford and have me or another agent help you buy a home. Don’t wait for prices to come down, they will not come down. They will go up more slowly, but they will not come down. That has nothing to do with agents; it is simply based on the growth in population and a fixed amount of land."

This blew me away, so here was my response:
Wow, Mike telling me that I will make 10% of the total purchase price for every year I live in the house is one of the most irresponsible things that I have ever heard from a realtor. I used to have my WA State real estate license and never did I remember that telling clients they will make 10% a year was part of the classes I took. I was also a financial planner and I could get prosecuted for saying something so matter of fact regarding an investment.

You amaze me, this is the reason why bubbles exist, here do a little research for yourself as to what is going on in the world outside of Seattle, it is coming here soon: Just read some of the posts, they are not opinion, they are actual news articles.

You cannot state that prices will never come down, this is simply incorrect? Also, we have a Fed which is on record that they are targeting “asset prices” – what assets do you think they are talking about? I will give you a hint, it is your home. You also have tightening lending standards, buyers who are priced out and most everyone who was going to buy a house has already done so. Oh yeah, we also have increased inventory and soon the so called “investors” will realize how unprofitable their strategy has become and even more inventory will hit the market.

I just can’t believe how irresponsibly you have represented the real estate market in your email. I may call the WA State Assoc. or Realtors and report this type of action. I am sure it is illegal to practically guarantee that homes will not come down in value and that they will appreciate 10%/year.

inseattle said...

Thankyou Dukes.

Have you called to report this guy? I think perhaps it would be a good thing to not let stuff like this slide.

It is hard to blieve that there are still people who think that RE is a "good investment" at this time. It would be easy to brush this guy off as an idiot and blowhard.

The problem is, there are still people out there who think this is still a white hot market and are jumping in with the crazy loans, getting in way over their heads. My impression is many of them are young. They are basically throwing their futures down the toilet, propelled by the advice of these of these liars.

In all my house-hunting days and all the RE Agents I dealt with, I never had one suggest to me that a house would bring me a return.

This guy is a liar. And he knows it. And you've got what he said in writing, right?

Report him.

marin_explorer said...

"you will make a minimum of 10% on the total purchase price for every year...Don’t wait for prices to come down, they will not come down. "

Some people have a very short memory of how real estate has played out around Seattle.

Anonymous said...

REskeptic & others,

Can somebody who has lived here a long time give us a picture of what HAS happened in Seattle RE in the past (ups and downs)?

I'd like it to go back to mid- late 90's prices (!). Think that's even remotely possible?

A 20 or 30% slide would do absolutely nothing for me.

As you can see, I'm hoping for a big crash and frankly, at this point I don't care how we get there.

Dukes said...

inseattle: I haven't reported him yet, I am not sure if it would do any good. I wonder if someone on this blog has any ideas.

I do know for sure that in my prior line of work "financial advisor" there is no way in hell I could say something like what this guy told me.

I have his email saved with his name and web site (here it is if you are interested):
Mike Mitte
Best NW Realty

I just want shit like this to stop, I am soooo tired of people jumping into overpriced real estate around here because they are either uninformed or they are being misled.

Anonymous said...

Unless there are massive job losses, don't bet on some 60%, 70%crash. Last time I checked, unemployment is low, interest rate is still low.

Nobody puts a gun to anyone's head and force him to buy or sell. If people listen to the advice of anyone who makes his living in commissions, then they deserve to lose their ass. Hey, if everyone is smart and informed, who is going to work that $10 hour job?

S Crow said...

Seattle is not immune to price corrections - down. Any Realtor worth their "salt" will tell you that prices did drop during 1990, inventory increased quite steadily and many people sold homes at a loss. Many.

A compelling difference of then and now? Interest rates are low today. Home prices are high today. If you think this through, what will happen if rates rise and inventories rise?

Several scenarios come to mind....

You can't refinance easily with 100% financed homes.

Put the house on the market, which has it's own ramifications.

Default - which also has it's own ramifications.

We are in "credit bubble" with high home prices. When you have both, such as today some argue quite effectively and factually, it is a recipe that does not taste well.

Facts - our 2005 report is just complete. Of all the purchase transaction we were involved in 71% are financed at 100% loan programs, of which the majority are ARM's & Interest only of various kinds.

71% !

We will report on refinance transactions soon. Probably will be similar or higher we guess.

Live under your means,

Legacy Escrow Service, Inc.
Everett, Wa.

john_law_the_II said...

(An open house where they are giving out free Starbuck's gift cards to the first 20 people and a drawing for a $100 Nordstroms giftcard. This house is also listed on the regular MLS, starting today.)

sounds like a $300 price reduction to me!

inseattle said...


That 71% figure- is it for the US in general or is it for Seattle specifically?

john_law_the_II said...

HPI for Seattle

Anonymous said...

Fed is about done raising rates. 0.5% more at most.

S Crow said...

in Seattle -

No,the statistics are for PURCHASE loans closed by Legacy Escrow Service,Inc.

71% of PURCHASE loans we closed were 100% financed. It means that the borrower put next to nothing down, or nothing. This does not include refinance stastistics which we will work on later.

What is sobering is that our small firm is such a small microcosm of the market. It begs the question, what do you think the title companies are closing? It's huge.

It's staggering to think about the number of 100% financed homes out there, locally in Seattle Metro and nationally.

I sincerely hope that we are all "goats" and the market does well, because if it doesn't the tremors throughout our economy will be felt by everyone.