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Wednesday, May 17, 2006

Let's Talk Jobs

Let's talk about jobs for a minute. Not the iPod selling, Pixar-owning kind, but the working for a living kind. I'm going to keep this really basic. Jobs make people money. People use money to buy things. One thing that people buy is houses. Therefore, in my opinion, one good indicator of what the housing market is likely to do is what is happening with jobs. Are people in our area making enough money to buy the houses in our area? Are there enough jobs for everyone in our area, or are there not enough? Or perhaps there are more jobs than there are qualified people, so new people are being brought in. Depending on what specific segment of the market you look at, many of these may be true.

What I believe is most useful is to look at overall trends. Incidentally, there happened to be an article about that very topic in this morning's Seattle Times.

Washington added jobs last month, but at a slowing pace, while the increased number of people entering the labor market nudged up the unemployment rate.
...
So far this year, each month since February has seen fewer jobs added than the month before.
...
Despite the slowing pace, job growth continues to run ahead of predictions.
Okay, so our general jobs picture looks pretty good, although the rate of improvement is slowing. So which specific industries are responsible for the most new jobs?
Driven by a sizzling housing market and a resurgence in commercial real estate, the construction industry added 1,100 jobs last month and has grown by 20,000 jobs, or 11.4 percent, over the past year.

In addition, the real-estate sector of the financial-services industry added 800 jobs last month and 1,600 over the past year.

Professional and business services, a motley category that includes everything from architecture to waste disposal, added the most new jobs in April, 1,700.

Aerospace added 400 jobs last month.

It has grown by 6,700 jobs, or 10.3 percent, over the past year.

The strength of the real-estate and aerospace industries particularly benefited the Puget Sound region.
What do you know... construction and real estate are among the leading sources of new jobs, together accounting for 21,600 new jobs in just the past year. Interestingly, while "aerospace" is probably mostly Boeing, one thing I did not see in this article was any mention of the darling of the real estate cheerleaders—Microsoft. Didn't we just see an article yesterday about a humongous Microsoft expansion? Aren't they bringing thousands of high-paying jobs to our area every year? Well, not quite. While the headline shouted Microsoft plans big expansion, the article tells [insert Paul Harvey voice here] the rest of the story.
Overall, Microsoft said in February that it would spend $1 billion to add room for 12,000 employees in 3.1 million square feet of additional space over the next three years. That plan includes the space at Lincoln Square, company spokesman Lou Gellos said Monday. But not all of the space is slated for new hires. Part of the goal is to alleviate overcrowding, Gellos said.

The Lincoln Square lease will also address the fact that Microsoft's sales team is spread across a number of buildings, Gellos said.

"This is really an effort to consolidate and get the whole sales group together in one spot," he said.
...
Microsoft isn't altering its employment projections for the current fiscal year, which ends June 30, Gellos said. The company, which employed 61,000 people as of June 2005, has said it expects to add a total of 4,000 to 5,000 employees worldwide this year, 40 percent of them in the United States, and most of those in the Puget Sound region.

That would be in line with the steady but relatively slow growth that Microsoft has experienced since the 2000 tech bust.
Let's see, 40% of 4,500 is 1,800 new MS jobs in the USA. "Most" could mean as low as 51%, but I'll be generous and assume that 75% of those jobs will be in the Puget Sound. 75% of 1,800 makes a whopping 1,350 new jobs that Microsoft is predicting they will bring to our area in the coming year.

Hey, 1,350 is almost enough to balance out the 1,600 real estate jobs that were created in the last year. Hmm, but what about the 20,000 construction jobs? "But wait," you say. Microsoft hires highly paid professionals. Surely 1 job at Microsoft is the economic equivalent of at least half a dozen construction jobs, right? Well, maybe not quite.
Base compensation has become a bigger issue since the value of Microsoft options fell with its stock. In 2003, the company phased out options and began using smaller stock awards to supplement salaries, ending the era of the fabled Microsoft Millionaire.
...
[Internal Microsoft pay documents] indicate that in Microsoft's current fiscal year ending June 30, the company budgeted for average merit increases of 3.2 percent for workers in technical positions. It also budgeted for a 1.7 percent rise in promotion-related compensation.

Also disclosed are salary ranges for technical jobs, not including sales and service-related positions. The salaries range from a minimum $25,500 up to a maximum $285,000.
So here's my thesis: Jobs (at least partly) drive housing. The job situation in Washington (and the Seattle area) has been doing pretty well lately. However, a large amount of the job growth has been in housing-related industry. Therefore, when housing slows due to other forces (such as increasing interest rates or higher lending standards), the job market will slow, thus causing housing to slow further. Lastly, high tech jobs—including Microsoft—are not growing at a fast enough rate to rescue us when/if construction and real estate experience a significant slowdown.

Your thoughts?

(Drew DeSilver, Seattle Times, 05.17.2006)
(Todd Bishop, Seattle P-I, 05.16.2006)
(Brier Dudley, Seattle Times, 03.09.2006)

52 comments:

Anonymous said...

I work in HR for an IT firm. We're in a growth phase and attempting to aggressively hire new staff, but there are few qualified folks out there. Lots of "fresh out of ITT" people, but very few senior-level people.

I attended a job fair (as an employer) at Microsoft a couple of weeks ago. There were a dozen companies, and four candidates showed up. FOUR! Not many years ago the room would've been packed.

Anonymous said...

Another Anon ;-)

Same thing at where my husband works. He has been trying to hire senior developers for weeks...can't find anyone qualified. All high paying ($90K+) jobs.

betamax said...

"...when housing slows...the job market will slow, thus causing housing to slow further."

That about sums it up. Rather than jobs propping up RE, it's the other way around. It's been a virtuous cycle on the way up and will be a vicious cycle on the way down.

betamax said...

Dukes - saw your posts on the SD site.

Nice attempt to convert the natives, but they're not interested in reality.

From their statements, they have fallen into two distinct but self-reaffirming fallacies:

1. It's not a national bubble.
2. It hasn't crashed yet, thus won't.

It's astounding that these guys spend so much time thinking about RE markets but can't see that it's a rolling bubble - it's the same bubble all over but it hits different markets at different times. And the bubble that is now crashing in CA and FL will soon crash in SLC or Boise, etc.

Come to think of it, that's the same sloppy thinking that infects Seattle speculators. They can't see the forest for the trees.

As for it not happening yet - that's been true for the last couple of years, despite the increasing disconnect from fundamentals. But what's happening in peak markets like CA and FL clearly suggest that the bill has finally come due.

GetWork said...

Drove the other day to take my kid to a high-school soccer game and noticed a real estate company with a for sale sign in the window. No, the company was not for sale, but TWO large 50" Plasma TV's centered in the window being used as company reader boards. Closer look showed they were selling them for "wholesale" at $3500/per tv. How embarrassing to be the owner of that place, it makes you look like you are making dumb decisions.

I'd rather keep the money an use it for a down payment, thank you very much.

meshugy said...

Thanks for the job run down Tim...

The surge in real estate hiring is troubling. I think we all know that can't be sustained.

But it's interesting that Washington is adding so many real estate related jobs while the rest of the country is shedding them. I guess it's true that we're are a year or more behind other bubble markets.

One thing I've noticed here in Ballard is that every available piece of land is being developed.

1) Downtown Ballard is one huge construction site which will result in at least 1,000 condos. I think there are now six huge constructions sites down there right now....all broke ground in the last year and more to follow.

2) In the residential neighborhoods small dilapidated houses are being bought up for top dollar, torn down, and replaced with 3,000 sq. ft McMansions selling for over 1 mil. Every single one has sold before construction was complete. In fact, a crappy little house behind me was just bought by a developer. It's only a matter of time before my back yard is engulfed in the shadow of a huge McMansion.

Anyway, it seems like developers in Seattle are very bullish right now. How long can it last?

Peter Taylor said...

Hey there 'meshugy'. With regard to those 1000 condos, do a Google search on "British Columbia Leaky Condo".

Here, I've save you the trouble. Just click here.

Back in the late 80's, early 90's we had a massive building boom very similar to what's happening here in Seattle now. The link above should give you some insight as to what the future holds for the Seattle area.

Anonymous said...

It has already been established by the housing boom that job growth has little to do with it. Double digit appreciation for the last two years, has our income even came close by such increase?

meshugy said...

thanks Peter...I had heard about the situation in B.C.

What I've noticed about the building boom in Ballard is that the McMansions and Townhouses seem to be the most cheaply built and aesthetically suspect of all new construction. Many of them look like they'll topple over if the wind blows too hard.

An inspector we worked with said that after the 40s, builders stopped caring. That's one reason the older houses are so valuable...it's really hard to find that kind of quality anymore.

The condos built in downtown Ballard actually seem to be built to a much higher standard. Partially because the historic feel of Ballard is an issue.

'm

Anonymous said...

between 2002 and 2004 there were roughly around 17,000 real estate agents, in dec 2005, there were 26,000. the slow down in real estate has been happening, but I suggest more solid evidence than what is obvious and floating around media with numbers that have not really been connected to the housing boom.

Anonymous said...

btw, I meant happening as in WAMU dropping close to 10,000 workers, and the fact that so many new agents in the market, it can only mean few things, which is going the other way around.

btw, that number was for WA # of agents.

However, these are still not solid numbers. Other than April, which is too soon to base anything off, nothing is offline yet.

Anonymous said...

I've seen 3 condo buildings in Seattle that are undergoing or have undergone major restoration of the outer wall. They are less than 10 years old. How sucky is that to live there while the process takes 1-1.5 years?

Anonymous said...

look at that previous post about remember the insanity. he said the story took place in 2003? bullcrap. I don't know where the hell that story took place, but certainly not Seattle in 2003. 2003 was huge buyers market, if you had buy a home by then in places like Bellevue, you have easily doubled your money since then. You guys somehow all bought into the story, which is as full of crap as how you guys are perceiving the numbers on the surface.

I am a believer of the bubble, but come on, bring in some solid numbers not simply refuting the news...

Anonymous said...

Stable job market or not, prices keep rising faster than incomes - why? The big elephant in the corner that everyone will be staring at in the coming months is named "mortgage fraud". Buyers willing to pay more than they should is only a small part of the reason for this bubble. See "Mortgage fraud growing rapidly, agencies say"

http://www.jsonline.com/story/index.aspx?id=423984

"We're arresting people left and right," David McLaughlin, assistant attorney general of Georgia, said at a Mortgage Bankers Association fraud conference. "But the problem is still growing off the charts - and it's morphing. As we chase them down, the fraudsters change."

Schemes vary widely, as do the participants, McLaughlin told a crowd of more than 300 at the meeting sponsored by the Washington D.C.-based trade group. He said he sees deceptive sellers, overtaxed buyers, builders desperate to unload inventory, greedy loan officers and other housing professionals pushing iffy sales deals to get their commission, plus an assortment of criminals seeking quick and easy profits.

The losers from the fraud include home buyers, mortgage lenders and financiers, plus neighborhoods skewed by inflated values and hurt from foreclosures, McLaughlin said.

Mortgage fraud has grown more sophisticated and dangerous, the prosecutor said. "But its basis always is a fraudulent property appraisal," he said. By pegging values higher than warranted, he said, "the fraudsters pocket the extra cash."

Karen Spangenberg, chief of the FBI's financial crimes section, called mortgage fraud "the fastest growing white-collar crime in the United States." Losses topped $1 billion last year, her agency's records show.

"Dollar losses almost doubled from 2004 to 2005," she said. Bank allegations of fraud, known in the industry as suspicious activity reports, are running 33% higher this year than last year, she said."

People were shocked in 2000 when the stock bubble burst when they realized that all the stock analysts making buy reccommendations and setting stock targets and company valuations were a bunch of crooks. Well here we go again - once this becomes mainstream knowlege all hell will break loose. There will be lots of finger pointing and congressional hearings after prices adjust to reflect this reality.

Anonymous said...

A recent national survey of homeowners by the L.A. Times shows 'widespread faith in the real estate market.' The worst possible scenario, that prices would 'stay the same' over the next three years, was selected by just 5 percent of homeowners. That total was less than the 6 percent who said they expect to see a rise of 31 percent or more. No matter how much talk of a bubble there may be, homeowners continue to demonstrate that they have no clue about the ramifications of one. And this is in an environment in which prices actually are falling! The denial runs so deep, it's not even denial anymore. It's some kind of epic disconnect between the reality of a newly falling housing market and an unwritten social contract that says home prices do not fall. [The Elliott Wave Financial Forecast, April 2006]

Dukes said...

Betamax, yeah, I spent an entire afternoon disputing people over there and attempted to shine a little bit of light on real occurences. It didn't matter.

Jeff (one of the posters over there), he cracks me up, he will be destroyed financially, I can't say that I didn't warn him...many times.

For my hard word, I was booted from the site, if I try to access the site (http://www.websitetoolbox.com/tool/mb/sdcia), it gives me this message:

"Access Denied
You do not have permission to access this service. Please contact the administrator if you believe you should not be receiving this message. Be sure to mention your IP address, 67.185.2.45."

Funny, is there a way around this?

Anonymous said...

Housing Bubble Fact or Fiction?

http://www.foxnews.com/story/0,2933,187831,00.html

"Like the rest of America, most of the time I don't think about the housing bubble that's about to pop. We ignore the coming storm.

But when it gets up close and personal — like my family's home — well, suddenly I'm shocked out of my denial.

The shocker? I just learned we live in a metro area that could see a devastating 55.8% decline in home prices in the next five years. Worse yet, most of the real estate north and south of us — from San Francisco to San Diego — is predicted to decline 50% in the next five years. Ouch!

That dire prediction was made by former Goldman Sachs (GS) investment banker John Talbott in his new book, "Sell Now! The End of the Housing Bubble."

Warning: Chances are you're in big trouble, or in denial.

And folks, this is not just an isolated West Coast phenomenon. Talbott points out that America's top 40 cities are facing a average 47.2% decline: Boston is 49.4%. Miami 44.8%. New York 44.6%. And Chicago is 27.3% overpriced. Yikes!

But "so what?" you say. You've heard it before. Right? Warnings reported month after month. For example, Talbott reminded me of an editorial in The Economist last summer: "Never before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stock market bubble burst in 2000 ... This is the biggest bubble in history."

Yes, the irrational exuberance of our failed stock market simply shifted over into a new irrational exuberance in housing. In five short years an estimated $30 trillion was added to housing prices worldwide, an unsustainable 75% increase to $70 trillion, largely due to then Fed chairman Alan Greenspan's cheap money policies.

Greenspan dismissed the global bubble, telling Congress it was just a little "regional froth." Happy-talk, while our housing and mortgage industry has been taking advantage of naïve home buyers and sellers with loose underwriting practices: Low-interest home equity loans, and interest-only, low-equity loans feeding housing price inflation.

Curse of Cassandra

My files are full of warnings from America's top economists predicting a housing market collapse and a widespread global disaster: Gary Shilling, Bill Gross, Jeremy Grantham, Robert Shiller, Robert Rubin and others take exception to the deceptive happy-talk of self-serving spinmeisters in Washington, Wall Street, realty brokers and homebuilders.

Lately, powerful voices are challenging the happy-talk. In his latest "Investment Outlook: The Gang That Couldn't Shoot Straight" Pimco's Bill Gross takes direct aim at President Bush's Economic Report prepared by ex-CEA boss and now Fed Chairman Ben Bernanke. He bluntly accuses them of outright lying: "It's not so much that the report was a compilation of untruths or even half-truths. It's just that it failed to tell the truth," hiding the fact that we have "borrowed from the future to pay for today's party."

The party's about over. Economist Gary Shilling recently wrote in Forbes: "The current housing weakness will develop into a full-scale rout ... It's clearly a bubble and is nationwide ... The house price collapse will induce a painful recession that will send U.S. stocks into a tailspin ... China will suffer a hard landing ... and weakness in the U.S. and China will spread worldwide."

Unfortunately, bubble warnings are routinely dismissed. Our brains can't handle all the bad news. Besides we've been brainwashed into short-term thinkers, incapable of long-term planning. Witness the collective denial and paralysis toward mounting deficits from out-of-control federal budgets, foreign trade, war debt, state, municipal and consumer debt, under-funded pensions, Social Security and Medicare shortfalls.

Still, experts like Gross, Shilling, Talbott and others are dismissed as "crying wolf" one too many times. The housing bubble hasn't popped, warnings accumulate, we're overwhelmed, confused, numb, feel helpless, so we fade into denial. And our leaders are even more oblivious, hardened and ineffectual.

inseattle said...

What is this about WAMU letting 10,000 Washington workers go?

Is this a rumor or is there a link where we can read about this?

That's an awfully high number.

Also, does anyone have any info on mortgage fraud in WA state?

seattle price drop said...

That's pretty funny that you were banned from that site Dukes. Sounds like you gave it the ol' college try tho. Their loss.

Has anyone here taken a pay CUT in the past few years?

In particular, a pay cut while working at the same job?

This has happened to a friend of mine who works at a bank (in loan compliance- maybe the banks don't care about that anymore?!).

I wonder how widespread it is in other industries.

betamax said...

dukes: "Jeff (one of the posters over there), he cracks me up, he will be destroyed financially, I can't say that I didn't warn him...many times."

Jeff is the poster boy for cashflow negative speculators who are going to crash and burn. He owns 12 houses, all bought within the last year, 5 of which are in Florida markets already dead in the water, with the rest to soon follow.

I can't help you with site access, but I'll keep you posted when the tears start flowing over there.

Anonymous said...

Meshugy,

Couldn't agree more about the Ballard townhouse/condo quality. There's a lot full of sh*tbox townhomes going up near my apartment, and the construction techniques they're using are appalling. They went from empty lot to a couple of multi-story buildings in less than three months. You just can't build quality buildings that quickly.

Anonymous said...

the layoff in WAMU was a while back, the huge portion of it back in 2004, 7500. They're expecting another 2000 some layoff, which puts the combine number at around 10k for the whole layoff period after refi boom.

Ameriquest and Merit is something else, they were never clean people, so I wouldnt put too much on their incidents right now.

Eleua said...

Has anyone here taken a pay CUT in the past few years?

Yeah, 23% in one chop back in 2003. The vacation also got gutted. The CEO stashed away millions for himself, in the event of bankruptcy, and he is the one that drove the company into the dirt.

I lived in an area with a lot of people that also took the same paycut, and the amount of houses for sale in the following months was breathtaking.

I moved out, bought in another area, then sold and now rent.

Most CEOs should be killed and eaten.

Eleua said...

There was also a 20% reduction in the production workforce, with the remaining 80% taking anywhere from a 23% to 45% paycut.

Management just rewarded themselves with a 9 figure bonus - for the 5th consecutive year of massive financial losses.

Eleua said...

Moral to the story:

The only "profession" remaining is that of a financial fraud. Destroy companies, people, and the general economy to enrich your position. The law will never touch you (save a few high profile cases).

I think the toxic loan industry is exactly that.

Dukes said...

Betamax:

I had no idea that he owned 5 houses in FL. All he talks about is SLC and ABQ, and I think I remember him talking about Boise.

Did you read his posts? It amazes me how god damned cocky and clueless he is.

He epitomizes a true believer dot com type investor who refuses to see what is staring him in the face.

I am loving learning that almost half of his houses are in FL, LMFAO!!!!

Anonymous said...

It IS interesting that the whole housing bubble rests on financial fraud of a sort.

The lenders planning to make gazillions "helping" to squeeze people into unaffordable homes with loans that are stretched so far out into the future that the "buyer" has little to no hope of ever paying it off...just keep paying that interest on the loan for ever and ever and ever....and...

Dukes said...

spd: Yeah, I was cracking up when I could no longer see my posts. The thread I was on had like 4 pages and I think I made some really good points.

But, they don't want to hear ANY of it.

I was hoping some of our tech savy readership over here could help with the "access denied" status. It looks like they are blocking me via my ip address, I tried to release and renew my ip address but it did no good. Who knows.

Dukes said...

eleua:

I couldn't agree with you more. The loan industry is so rife with fraud it is truly criminal.

I told this story before, but a few weeks ago I was in CarQuest in Fremont, talking to the manager and he tells me that: "Yeah, I do loans on the side, mostly sub-prime."

Well, if the manager of an auto parts store is writing sub prime loans on the side I think it is pretty obvious what is going on.

Anonymous said...

It's going to be rough going ahead. The positive outcome would be if the rot can somehow be cleaned from the system and we can start new on a firmer footing.

I'm going to pray that's what happens.

When I see a house go off the MLS list, my heart sinks for that person. They obviously have no idea what's ahead.

shakaboom said...

how long has the housing bubble theory been going on? It's been around for almost a year now. It's obvious that rising price cannot sustain itself, but if you bought in the bubble theory last year and walked away from a decent buy that you weren't planning on living for a long time anyway, you should be smacking yourself.

There's an end to all things, so far you guys are just screaming the obvious. Let's hear some better analysis...

Oh btw, comparing market to previous month or same time last year is foolish comparison, like I mentioned few posts up, there is a surge of 10,000 new agents between Dec 2004 and Dec 2005. Having a slowdown in the market to me says the end of the boom is near, but says nothing about a bursting bubble.

Of course I think there could be a bubble, but I do my hard data research instead of quoting people left and right.

Anonymous said...

so what if your auto part sales and doing loan on the side? he's not the underwriter, he doesn't have the last say. if he's quoting high profit rates, who's fault is it? him being foolishly greedy causing the consumers to look elsewhere, or consumers being stupid and close with him?

Anonymous said...

It's not as if one can go from being a roofer or a plumber to being a game writer or software tester -- not without a heck of a lot of schooling and training, anyway, and education costs money. Lost jobs in the housing sector will not translate into gained jobs in the high-tech sector. Lost jobs in the housing sector will only translate into a higher unemployment rate for the area.

Dukes said...

anon 2:11

You missed my point which is: Only in a credit induced lollapalooza would the manager of an autoparts store be writing loans.

My post was in response to Eleua talking about the "toxic loan industry"

emcityjill said...

I agree with Shakaboom. It’s probably not wholly illuminating of this problem to compare two years worth of data. I’ll tell you what, Shaka, let’s take a look at 100 years worth of data, compiled and analyzed by Yale professor (of economics, go figure) Robert Shiller. He’s titled his latest paper “Long Term Perspectives on the Current Boom in Home Prices,” he says homeowners are in deep $@3!* and I, for one, believe him.

Incidentally, Shiller also asserts that, since the turn of the century, house appreciation has been rather scanty once you eyeball the numbers after adjusting them for inflation. I think that's very interesting. Okay, so I'm quoting. It's just the guy is way smarter than I am. He can do algorithms. And he has access to the raw data.

I get increasingly frustrated trying to cull data myself. It seems, to a large extent, so elusive and proprietary.

Anonymous said...

Shakaboom-

The housing bubbble "theory" as you call it, began in earnest last spring and summer when many economists, presumably a LOT smarter than you, took a close look at what was actually behind these rising prices and sounded the alarm.

Be ready for a lot of fallout. Or don't. Keep your head in the sand if it's comfortable there.

shakaboom said...

ok, so it has been going on for a year according to your timeline. so let's say you're an investor and you were looking to bought houses last spring and turnaround and sell them a year later to avoid capital gain. but instead, you end up with no houses while other investors racked in another double digit profit from appreciation.

no shiet genius, the end will be near, you guys are simply stating the obvious. it's not whether or not the end will hit, it's when it will hit. so far you guys are ONLY providing information that it will end, isn't it obvious?

Anonymous said...

So why in the heck, when you know it's just around the freaking corner, would you buy now?

Look, the smart investors that I know have not bought property in this area for the past 8 months.

The even smarter ones, have all sold out in the past year.

They ALL did that because they sense the top. And did their research to back it up.

Again, the only home owners who are visiting this blog are the scared ones. A homeowner who is not scared of the burst would come here only for amusement, not for info or to provoke an argument.

Dukes said...

shakaboom you make a decent point. But, what I would be nervous about is that real estate is a terrible asset to be holding if you do get caught.

It is not like a stock, if you make the wrong decision, just sell it. But for those of us who see the light that this thing will end it is one damn scary proposition to try and game this bubble.

Like I said above, if someone is trying to get the last year of appreciation out of this thing, but they are off and get stuck in the downturn, they are REALLY stuck. Being upside down in real estate is the absolute worst thing that can happen to you.

emcityjill said...

Can anybody tell me why the same condo has two DIFFERENT MLS numbers? Same unit, same pics, two numbers: 26010331 and 26010077.

(Hehe, it's been on the market for 117 days!)

shakaboom said...

well Anon, your smart investor buddies obviously missed the mark. The only downtrend by plugging the data (hard data from MLS), is April so far. As far as the data shows, there's actually less new listing and active listing in 2006 than the previous 3 years (jan 2003-). So if the balloon is deflating, shouldn't the listing be rising a lot higher? For last three years total listing in Eastside have not go above the previous year, so the inventory has been lower every year. When it does hit the previous year, perhaps it is the end.

I am not done plotting the data yet, hopefully when I am done, I can better predict the end.

shakaboom said...

So far in both Eastside and 530 area, which are the two I am concentrating on. The houses are still flying off the market at highest pace in the fast 3 1/2 years. Proportion of new listing to total listing other than the thanksgiving/christmas season, have been above 50% in Eastside and above 60% in 530 area. Which means that there are very few houses in the eastside that are not being sold off the market right away.

So far, people are still buying...

Anonymous said...

Shakaboom-

My investor friends are very risk-adverse.

They would rather take a chance at missing out on 20K appreciation than risk losing 100K. Or more.

Seattle "investors" are starting to get burned as we speak. It's a slow dribble right now that at some point could turn into a gushing waterfall.

They wanted to give both the slow dribble and the gushing waterfall a miss.

You also mentioned a downtrend in April in your data collection. That is a clue that a risk-adverse investor pays attention to.

shakaboom said...

we'll see soon enough when summer comes around. Summer will be a clear indicator whether or not the fun is over.

Anonymous said...

That's right Shakaboom. We are on the same page about that! End of summer and it will be crystal clear to everybody what's going on.

Anonymous said...

no shiet genius, the end will be near, you guys are simply stating the obvious. it's not whether or not the end will hit, it's when it will hit.

So, Shakaboom...you're about 13? Because this is the sort of investment advice that I expect to hear out of my teenage cousins.

In case you didn't learn from the last bubble, it's not that easy to predict the top of a speculative bubble. That's called market timing, and it tends not to work very well, even when performed by extremely experienced people in extremely liquid markets, where the turns are sharp and easily noted. Housing markets are slow and vague, and much harder to predict.

But hey...if you want to predict when the bubble will "pop," and day-trade houses until the last minute, be my guest. Just go somewhere else to be a jerk.

shakaboom said...

that was not an advice, but if you read it like an advice...good luck to your reading ability. It was merely saying that none of you are really stating anything that isn't obvious. All the signs are there, crazy appreciation, lack of real economic growth...of course this won't last. So bottom line is this, what are we talking about if we're not trying to predict the timeline?

Anonymous said...

No matter how many MS is going to hire, their salary isn't going to supprot the price ... 5 years ago, a new hire makes $70K. Five years later, the MS niew entry level salary is $75K. I know many MS employees have been working her efor 5 years, they make < $75K now.
Does McDonald hires 1000000K employees support a median home price >400K?

seattle price drop said...

Love that!:

"Day trade houses til the last possible moment"

Very good anon.

Yup. pretty risky, that.

seattle long term buyer said...

for those of you who want to continue buying houses and speculate, be my guest...

as I have said, RE does not build wealth (xpt the actual builders), what it does is redistribute wealth (those of future generations)...

So the more you (and people like you) lose now, the better gains for us waiting at the sidelines...

and it's not an if but a when... as you said... and I don't have to predict the top... I'm just waiting when I actually see the crash... then I can jump in...

Anonymous said...

I'm also waiting to jump in with my pile of cash.

I could care HOW high interest rates go. I'll be paying that mortgage off before you can bat an eye. Three years at the most.

So bring on those skyrocketing rates and low low prices.

Anonymous said...

If one bought a house last year, gained 12% or so, and decided to sell this year they would really not be ahead in any real sense. The reason is that they'd pay a sales commission, excise tax, property tax, insurance, maintenance, etc all adding up to roughly 10%. Then you also have to factor in what they could have made on their money if they left it invested in any decent investment and subtract what all their effort was worth. In the end, timing a bubble makes no sense, particularly with an asset with low liquidity when the tide turns. When people even talk of trying, its just more clear evidence of a bubble and rampant speculation. Many people who got majorly burned in the stock bubble "knew there was a bubble" and were just trying to game it but still lost.