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Sunday, April 30, 2006

Seattle Bubble Notion "Put To Rest"

Sometimes I can't help but wonder if the local real estate reporters are being paid to push the "buy now!!!" mentality around here. For example, today's article which comes right out in the headline and urges us to act fast!

As of March 1, 29 properties were available. Three more were added during the month. All 32 sold, resulting in a sales rate of 110 percent based on first-of-the-month inventory. That's the way the real-estate industry calculates market activity.

And so it continues to go in close-in Seattle and Eastside neighborhoods, as scores of well-qualified buyers like the Maxwells outnumber properties for sale, particularly those priced under $500,000.

This is forcing buyers into lightning-fast decisions and bidding wars that reward sellers with thousands of dollars over their asking price, real-estate agents report.

It's also keeping King County prices climbing, putting to rest any notion that ours is a "bubble market" where prices will stall or even fall. That's happening in cities such as Miami, where rising inventory of for-sale properties is giving buyers room to negotiate.

In King County, however, the number of homes for sale fell 6 percent last month compared with March 2005, according to the Northwest Multiple Listing Service.
Well I guess that's it then. The bubble question has been "put to rest" because the prices are still climbing. I guess I'll just shut down this blog right now. Because who cares if home prices have soared far above most normal people's ability to pay and are continuing to rise? That's perfectly normal, natural, and good. No bubble here, no sir.

(Elizabeth Rhodes, Seattle Times, 04.30.2006)


Anonymous said...

Another ridiculous Rhodes article... especially this bizarre observation...

"It's also keeping King County prices climbing, putting to rest any notion that ours is a "bubble market" where prices will stall or even fall."

Errr, is it just me or is this a Philosophy 101 logical falacy? Due to the fact that in order for a 'bubble' to exist it must have a meteoric rise before its inevitable disastorous fall.

Lile driving on I-90 east, but temporarily going around a bend and saying "well I guess this puts to bed any notion that we're on I-90 east, because we're going sount!"

Geezus, Elizabeth, retire or something...

matt said...

I love this one...

"Buyers tend to go through making an offer on four or five homes, losing out on money or terms, until they get frustrated," Hunter said. "Then they say, 'I'm sick and tired of the game. I'm going to overbid because I just need to get into a home.' "

Hey Sheeple! I got one of you, if you're sick and tired of the game, friggin' rent!!!!! I betcha dollars to latte's you'll get your coveted craftsman with a view in the coveted North End for a 1/3 of that bloated silly mortgage you're leveraging the rest of your life to squeeze into.

meshugy said...

For a very detailed analysis of the current housing market, I'd recommend looking at the latest PMI index:

Economic and Real Estate Trends

Seattle was given a risk index of 121, which means there's only about a 12% chance of price reductions in Seattle. San Diego was rated at 598, meaning they have nearly a 60% chance of reductions.

The report also mentions:

Heading north, Seattle, WA and Portland, OR are the only
MSAs in the West besides Phoenix, AZ that are in the bottom
25 of the Risk Index ranking. While Phoenix remains No.1 in
price appreciation and acceleration rates, Seattle and Portland
also had strong price appreciation this quarter: 16% and 18%,
respectively, up from an average of 10% a year ago. With
employment growth occurring in every economic sector, the
areas’ Risk Index scores have stayed relatively low, at slightly
above 100, despite increasing Affordability Index scores.
Housing demand is expected to remain strong, buoyed by continued
solid performance of the areas’ labor markets.

Listen to a podcast of the report:

Spring 2006 Economic and Real Estate Trends Podcast

Mikhail said...

I am a believer in the general housing bubble, but I've got to admit that the market in the Bellevue area just doesn't show ANY signs of weakness yet. The number of listings are low, and I see many of the homes in my area selling quickly. I keep hearing acquaintances telling us how their homes have recently sold VERY fast for top dollar.

Anonymous said...

Well Meshugy, if you're right, I'll eat my hat.

On to other things:

David Lereah (NAR head) finally came right and said it:

Double digit drops for RE.

The article's at ""

Anonymous said...

Well, Meshugy, I'll tell you what:

If it turns out to be true that Seattle is Special (tm), and that San Diego and Phoenix and other, nicer, warmer, sunnier places will have significant real estate price drops, while drizzly, cloudy, mouldy-assed Seattle continues to appreciate, I'll gladly do my part to lower demand: I'll move somewhere nicer.

I suspect that an entire generation is preparing to move with me.

emcityjill said...

I'm with you. This housing fiasco is almost as depressing as February in Seattle. How am I ever supposed to buy a house in my own home town? I think Santa Fe is calling my name.

meshugy said...

I don't necessarily agree with the PMI report. I think we probably have more then a 12% chance of prices dropping.

Does anyone know how much we can really trust PMI? They obviously have a vested interest in the housing industry , so it makes sense they would want to portray a rosy picture.


SourMash said...

Santa Fe is worse. Looks like they had to play games with MLS definitions because the median grew to 470K.

meshugy said...

David Lereah (NAR head) finally came right and said it:

Double digit drops for RE.

I think he was just talking about Florida.....

emcityjill said...

Heh, I wasn't being serious about Santa Fe...I hadn't investigated their housing market, so, good to know!
Incidentally, I'm looking to move into a one bedroom apartment in somewhere in the Ballard/Fremont/Q.Anne areas, and it does appear that there is a bit of an increase in (apartment) rental prices. I'm thinking that the recent media attention and the water bill increase preparing to hit landlords next month isn't helping. I'm crossing fingers and hoping that rent will dip a bit once school lets out and folks move back home for the summer. Occupancy rates should loosen up, right?

Eleua said...

12% chance?

Asked another way...

What are the chances that tomorrow's buyer will pony up 50% more, ON A MONTHLY PAYMENT BASIS, for the same house?

People are looking at houses from the "total cost" point of view. This is the figure that pops into your head when someone asks how much your house is worth.

Look at appreciation from a monthly payment point of view, and you get a very different picture.

Repeat after me...

As interest rates come down, housing prices go up. This is because more money can be shifted to the "principle" portion of the payment.

As interest rates go up, housing prices come down. This is because more money must be shifted to the interest portion of the monthly payment.

Repeat as often as necessary.

Also, as interest rates rise, jobs decrease, venture capital is harder to find, and the cost of things tend to become more expensive (provided they are not purchased with borrowed money).

Just because we are getting X-Cal equity refugees that can still sell in California, does not mean we have a fundamentally healthy market.