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Thursday, June 01, 2006

Government Hinders Affordable Housing

For all the grandstanding that Seattle's city government loves to do about "affordable housing," you would think that they would want to make it as easy as possible for builders to actually build housing. Of course, if you think that, you're quite wrong.

"We must dramatically increase access to decent, affordable housing," said Mayor Greg Nickels in his State of the City speech March 6. "Most of it will be produced, not by government but by the market through private investment."

The mayor is correct. Most lower-cost housing is old private housing. The best way to open up old private housing is to build new private housing. The city should encourage that — but the people who create new private housing do not believe this city does. They say Seattle is unfriendly. If you want a place that welcomes builders, go to Spokane. Go to Tacoma. Go to Renton.
...
In each of these stories, money matters, but in each of them time matters more. It's harder to put a number on it, but it's real. The builders are the supply side of the economic equation. The denser the regulatory air, the slower they work and the fewer units that get built. Over time, that affects the supply of housing and its price city people have to pay to move to Seattle.
I can think of more than a few city government habits that aren't very friendly, toward businesses, tourists, drivers, homeowners... pretty much everyone. It's almost as if Seattle's government would be happier if everyone just left Seattle and never came back. So hey, at least they're putting a crimp on both the supply and the demand side of the equation—that way it all balances out.

I love Seattle, but when I think of the government around here I have to hold back the bile.

(Bruce Ramsey, Seattle Times, 05.31.2006)

33 comments:

Anonymous said...

Here is a nice little CraigsList Seattle tidbit: (thanks to sleepless_in_seattle, over at Ben's blog) -

My question is this:
If everything is so rosy (hey Meshugy), why do we have listings like this?

http://seattle.craigslist.org/rfs/166619649.html

___________________________________
$675000 - INSTANT EQUITY IN THREE OF MY HOMES

--------------------------------------------------------------------------------
Reply to: caseyc@nwloancenter.com
Date: 2006-05-31, 2:25PM PDT


I have three homes for sale!!! I am a real estate investor that needs to liquidate. I will do a FSBO for your benefit. This way you can enjoy instant equity! I own a mortgage company and will do a no fee loan for you as well.

All three of these homes are newly remodeled, just look!

7529 Braemar DR., Edmonds, WA 98026 listed originally for $850k, now listed for $800k, and I will sell to you for $770. This house will appraise for 850k! 170k in this remodel.

19939 SE 27th PL, Sammamish, WA 98075 listed aggressively for 705k, dropped to 699k, I will sell to you for 675k. This house will appraise for 735k! $150k in this remodel!

907 E Howe Street, Seattle, WA 98102, listed for $1,500,000 and just dropped to $1,400,000. This house has comps going up to 1.8 million but was originally listed for it’s true value. $350k in this remodel!

Please call or email if you’re serious. All homes can be found on MLS.


Casey Camby
Mortgage Consultant
Northwest Loan Center, Inc.
President
CanBe Investments, LLC
P: (206) 660-2039
F: (425) 650-6764
caseyc@nwloancenter.com

Anonymous said...

A friend's brother is an infill developer. I drove by one of his houses in North Seattle that he bought in 2004 with plans to subdivide the lot.

It's been sitting vacant for 8 months, and I noticed a "For Rent" sign.

Apparently he's been unable to get any permits issued, so he's stuck holding well beyond the time he'd intended. This has happened alot.

Why is this the status quo? My best guess is 1) the city knows this will push up prices and tax revenue, and 2) it'll do so without them needing to spend money on infrastructure.

biliruben said...

The Edmonds house went for $360K in 2004, and he looks like he overpaid for it in 2005 at $630.

The Sammammish house was flipped 3 times last year:
425K
540K
638K

Again, if he's the final purchase, he vastly overpaid, and wants you to as well.

The Howe St. Property looks like a junkie duplex that is the detritus of a subdivide, though I can't be sure. In any case, it's half a million over-valued.

I don't know if he's really distressed or not, but these are not bargains. If he paid those prices, he may be just stupid enough believe they are, however.

Anonymous said...

anon 9:09-

I'm not familiar with the Edmonds or Seattle areas, but I can tell you that Sammamish house is overpriced at $675K. It would have been overpriced at $675K last year. It is just a tired tri-level. Looks like some flipper overpaid for it last summer and now realizes it.

Anonymous said...

This Craigslist guy is just looking for a Greater Fool (GF) to come along and bail him out.

Frankly, it is disgusting. American's thought patterns over the past few years has been to "borrow our way to riches."

This is NOT how the world works, does anyone remember the saying: "There is no free lunch?"

My dad used to tell me that all the time. I am looking forward to the day when some sanity returns to the thought patterns of smug Americans.

We will have to go through a tough recession to get back to sanity, but we will be stronger for it in the end.

biliruben said...

The mayor is correct. Most lower-cost housing is old private housing. The best way to open up old private housing is to build new private housing.

I do not agree with this. The best way to demolish old, affordable housing is to make it easy to replace it with crappy, over-priced, new housing.

I'm not one to repeat the canard that they don't build new land, but in the city's core, vacant land is certainly very very rare.

So where would new, expensive properties go? On top of old, relatively affordable, often very well-built old houses.

Anonymous said...

Interesting (and discouraging) post!

Hmm, but maybe some of these decisions are what differentiate Seattle neighborhoods and density from Renton, Tacoma, Spokane? Not to come off like some sort of snob here, but sorry, I'm not going to move to any of those other places even based on their affordability -- which I'm not convinced has much to do with lack of regulations. How much cheaper/easier is it to do these kinds of projects in say, Renton, anyway? I'd actually like to see the comparison, which was left out of the article.) In fact, some of the decisions that have lead to those places becoming what they are are precisely what make them less desirable than Seattle.

I'm not always a fan of the government around here, but they *are* attempting to balance some complicated things, trying to retain what makes Seattle er, "Seattle", while trying to aim towards responsible growth and some measure of "affordability".

Some of the permitting and things sound fairly ridiculous in the article -- and I don't mean to defend those. But I do believe that a well-managed city does need to keep an eye toward environmental/neighborhood quality/traffic management issues in order to avoid having to fund very expensive solutions in the long run. Look at some of the developments in regions that did not take traffic effects into account. In the past decade, it at least *appeared* that developers crapped out a bunch of toothpick structure subdivisions in the middle of nowhere, sold 'em off, and sat back to let the state (ie, the rest of us) sit back and deal with the ensuing traffic nightmare and redesign of roads that weren't up to the capacity. I can think of a couple developments in surrounding areas.

And really, nothing a local government can do matters one iota against a massive, rotting bubble of cheap credit -- easy debt -- when even the average numbskull can take out loans to buy a house approaching $500k (half a MILLION dollars, can you believe it?) and gladly does so.

"Deregulation" is gonna change anything? The city is awash in rental property, and will have even more when some of these non-owner-occupied luxury condos come online in the next couple years. (Can't wait for the panic to set in on those)

Also, I'd like to know what kind of "hassles" someone like Paul Allen gets when he brings his megabucks to bear... does stuff like this just trip up the little guy? Could be interesting to know.

Anonymous said...

I'd love to see additional thoughtful posts on the state of affordable housing in western WA -- not just future projects, but the state of various nonprofits, state agencies, and other entities that tackle this sticky problem. Can they survive the bubble? Do they even have a place anymore in an economic spaz-out zone where affordability of even the median home is basically nil for a "working" family?

Capitalistchristian said...

In an earlier post I was asked to support my opinion (by Seattle Price Drop - I think) that I don’t think our market will see a price decline of 40% or more. My background (for your info not to hype myself up as there are many smarter than I), is a BS in Personal Finance, currently an investor (though not buying any more property until after the correction), will become a mortgage broker upon exiting the Army as I have wanted to be in this finance field since college and currently in training to do so, and my wife is a realtor in Pierce County. So I have some knowledge of how the system works and would enjoy sharing from time to time if the bloggers so desire.
I do not believe that the Seattle/Tacoma area will see a 40% price drop or more, and not just because I would feel the equity pinch in my own investments which personally would be unpleasant, but for two reasons.
1) Historical data. There is just no historical data that justifies this happening – especially in the local area. We are not in the crazy markets of SoCal and Florida where median home prices are over $500,000 and up, but many areas are overvalued. What history tells us will happen is that prices will level off, and appreciation rates will reflect your average inflation rates (on average) until wages catch up with home prices and the fundamentals start to match back up. There are several reasons why a housing market won’t decline substantially and rapidly like the dot.com bust. First, everyone who bought during the dot.com bubble was either an investor or a speculator. Therefore when fear took over and everyone sold, the market had to collapse until the fundamentals (stock price reflecting its actual earnings ratio) were back to reality. Now the housing market consists of MAYBE 30% investors in the Seattle/Tacoma areas. So for the homeowner who is actually living in the home, they may or may not need to sell if prices decline. Some may need to because of the loans they took out (I/O neg ARMS etc), but even if their payment increases, most people will still pay the higher payment and spend less money elsewhere. Why? Because I’d rather give up my cable tv, internet connection, restaurant and movie budget, luxury spending, etc than lose the home that provides shelter over my head. And this is assuming that they couldn’t just refinance into a lower payment. This is also a big assumption because many will have that option, those who won’t are the ones that bought at the peak of the market and now their home won’t appraise for what they bought it for. So for those homeowners actually living in the homes – yes we will see an increase in foreclosures, but it isn’t going to bring the market down 40%. Also, many people will simply choose not to sell their home if prices are going down and wait for the rebound. So you will see less people choosing to move for secondary reasons (desire, want bigger home, want better location). You will see many homes on the market, and when people realize they can’t get the price they thought they could – they will reduce a little, if they still can’t get it, they’ll just pull the listing, and wait for prices to come back. That is unless they need to sell due to job relocation or other primary reasons.
So now we have to look at the investors of the market. If 30% of the market are investors and speculators than they have several options. Some will choose to lose money and sell the home for a loss to get it off their books. Others will attempt to rent the home out, for most likely a loss, for as long as sustainable until they can sell and attempt to break even, or hold for the long term and try to weather the storm. Understand that not all these investors are going to “fire sale” the property for whatever they can get which would have a significant hit on the market. This isn’t the dot.com bubble and these homes aren’t as easily sold. You can’t just call a realtor and say I want to sell my home today at a $375,000 strike price. So just understand that when many people can’t get the price they hoped for, they will take the home off the market and hope to wait it out and refinance at the earliest possible option if necessary.

Now some will disagree here saying that historical data is an inappropriate comparison this time around due to the very relaxed lending standards we’ve seen in the past five years. To this I can only say – I agree. So if there is a new trend, even though not supported historically, because of the crazy lending standards of recent years then that leads me to point #2 on why I don’t believe we’ll see a 40% decline of housing prices.

2) Government Bailout. If we start seeing a 20% decrease in prices nationwide (which I don’t think will happen since the bubble is primarily in investor markets and other desirable areas – not middle America) then the government is going to take action. I’m not sure how the government will go about bailing out average joe homeowner or investor but I don’t think the govt is ready to see the economy take the biggest hit since the great depression. Home prices affect the entire economy. The mortgage/lending industry will go through some serious regulations. I will keep the readers abreast of the industry regulation changes if they so desire.

PepeDaniels said...

I'm more familiar with South Florida than here but I'm beginning to see many of the same signs.

One issue in Fort Lauderdale is the need for substantially more affordable housing there. There was and probably still is a long standing pissing match between the City of Ft. Lauderdale and Broward County. Until recently, the folks running the city have slowed the rush to high income condos as much as is possible but seem to continually be pushed into another 500 units here/1000 units there etc. None of this was done with much planning for all of the costs that no one likes to talk about. The county loves the revenue. It looks like everyone's just balancing the books and makin' things happen! (insert smiley face photo-op of a local politician of your choosing - either party may play!)

Unfortunately, no one's thought about how an extra 5000 people are going to park, poop and shop and drive in such a small area. Oh, and all of that extra plumbing, concrete and added bus routes aren't free!!!

Eventually it's gotten overbuilt and there's a glut of high end housing (developers don't give a crap, they'll be living good somewhere well outside the city or hire people to do the long trips to the store etc.) People who need affordable housing can't find it and leave. It's interesting when all of a sudden you see an 18% vacancy rate in places like city government, high vacancy rates for teachers, cops etc.. These are jobs that normally are good career options and build a stable society for all of us.

When it gets bad enough you start getting things functioning like you do in the third world as S. Florida can often look more like than people imagine.

I realize Seattle's not S. Florida but slippery slopes are everywhere.

meshugy said...

Capitalistchristian,

Your analysis concurs with mine...I think what you said makes a lot of sense. Thanks for taking the time to write that...

'm

PepeDaniels said...

Capitalistchristian said... Government Bailout. If we start seeing a 20% decrease in prices nationwide (which I don’t think will happen since the bubble is primarily in investor markets and other desirable areas – not middle America) then the government is going to take action.

No problems there (?)- I guess maybe the %30 of people losing their shirts on bad investments can team up with students,immigrants and those without health care to pay that bill?

I'm not sure where you get the idea that "the government's going to step in and take action"?

Like they handled Katrina maybe?

Much of the current problem is due to our current government's actions!!!

There's the rather large issue of other countries holding our debt for us. Given our recent relations with most of the rest of the world it's hard to see that going only as we'd like it in the near future?

It was just this last week that (if I remember correctly) one of our mideaster partner was making a move to sell oil in Euros not dollars.

Venezuela's Chavez will be chairing the next OPEC meeting and is pushing for vastly higher prices on crude.

FMac is edging toward it's on Enron-like version of corporate fraud.

Honestly, not to be overly harsh, but I would read the recent Harpers article on the housing bubble or see the excellent video lecture linked under another thread on this board. The lecturer is the senior economist at USC (I believe).

The housing blogs are filled with stories about insanely inflated prices in places like the "war zone" section of Philly etc. Honestly, the housing bubble is happening in places that aren't probably rated all too well. That's part of the phenomena.

Our current government's tendency to disregard people's real problems as a "lack of moral fiber" notwithstanding, I'm not sure there's going to be a pot of money to bail anyone out.

Anonymous said...

No, housing prices won't bust like the stock market did in 2001...it'll take a year or so. That's what the "stickiness" of the housing market buys you. But it'll be just as painful when it happens.

CC, your analysis makes a number of questionable assumptions, but one thing that you consistently assume is that all of those people who aren't out spending money (because they're bogged down in mortgage hell), won't negatively affect the economy.

If the housing market does start to turn on a large scale, and that, in turn, slows the economy, it's going to be a bloodbath. Imagine the post 9/11 economic slowdown, only this time, everyone will be carrying an additional $500 grand in mortgage debt.

You simply can't draw parallels between this housing bubble and those of decades past...there's just too much excess liquidity in the market right now.

meshugy said...

see the excellent video lecture linked under another thread on this board. The lecturer is the senior economist at USC (I believe).

You're talking about Christopher Thornberg...he said in that video that prices will go flat and not drop.

'm

biliruben said...

Meshugy - I don't recall him saying anything of the sort.

In fact, in one of the few unscripted moments, he allowed himself a wicked smile as he talked about the OC getting walloped.

The Fed will have a choice: lose control of the economy (i.e. hyperinflation), or bail out homeowners.

The choice will be obvious.

If you look at LA's last downturn, it took years to find a bottom, not months.

I think we have been in a long-slow bubble for 20 or so years. Up until the last few years, however, incomes were rising enough to sustain it.

Not any more.

I think we see a fall. In Seattle, 10-30% real price drop stretching from 2007 to 2010, and flat for a few more years after that.

Anonymous said...

CC and Meshugy, two peas in a pod. Freakin, incredible...

Real estate will drop forty percent and even more here. CC says it hasn't gotten crazy here, no??? How about over 400K for a Ballard piece of shit? Crazy...???

Also, CC is in the biz, so is his wife, so what do we expect him to say?

This entire episode has been so blown out of proportion because of the underlying structural lending imbalances, these will reverse when lenders start to lose on borrowers, already happening.

As for a govt. bailout, good luck. The Fed is on record as to TARGETING asset prices for a decline. They realize that they let the cat get WAY out of the bag with runaway asset prices.

You guys truly crack me up. It is as if you have NEVER seen what a boom/bust cycle looks like. Well, look around, you are about to live through the latter part of that cycle...

T.S. said...

I'm losing faith, fellas! I just got back from a long vacation and am shocked to see LESS houses on the market and undeniably higher asking prices. I'm really wondering if we should start bargain shopping before the interest rates go any higher. The bubble is not popping, and it should have by now if any of our logic holds water. I'm beginning to feel foolish.

My number one, super-duper, extra vital, big kahuna question: why is inventory this terrible? Prices will never go down without an extraordinary increase in supply. What is going on, and when will it change? I don't think it's like this anywhere else.

Anonymous said...

ts, you need to chill out. This is classic bubble blowout nonsense, this type of foolishness always ends in tears.

Simply, the math doesn't work and people are simply speculating in real estate, sit back and enjoy the fun ahead.

P.S. This is taken from Doug Kass, it came out yesterday, Kass is one of the smartest investors out there:

"Many (myself included) have cautioned that the growth
and size of the hedge fund industry represents a
significant bubble-like market risk.

I have repeatedly written that bubbles are almost
always based on the same set of conditions:

1. Debt is plentiful.
2. Debt is cheap.
3. The egregious use of leverage becomes commonplace
and accepted.
4. A new and growing asset class raises asset prices.

The above circumstances led to the Internet stock
bubble in the late 1990s, to the real-estate bubble in
2003-2005"

meshugy said...

bili,

Thornburg does say many times that prices won't drop and will remian flat. He spends a lot of time on that actually...explaining why housing is different then stocks. Watch it again..you'll see.

'm

Anonymous said...

I found this amusing:
Low-income families who want to escape poverty face a barrier in Federal Way: Rents often swallow up too much of their monthly income.

Moderate-income families, meanwhile, have few opportunities to make the leap from renters to homeowners because home prices are too high, according to a city report.

...

`I think we're (the city) probably going to have to bite the bullet and look at subsidies, at helping people make down payments to get into housing," Stead said.

According to an earlier study, only about one-third of the city's households could afford to buy the average home in Federal Way at today's prices.


Sound familiar? The really funny thing is that came from a Seattle Times article October 17, 1991.

Capitalistchristian said...

Lots of good comments, though I don't know how I got lumped into the Meshugy category? My anaylsis was that the market wouldn't drop 40% or more. I forsee a correction in prices I just don't see it at 40%. I also see it taking a long time (and therefore with no gigantic price drops in any one year). And yes our economy will definitely be adversely affected due to people buying less product as they need to now "save more" to afford their overpriced homes.
My analysis is also slightly different than many of you because I operate in Pierce County, not King. Therefore while some areas are slightly overvalued here, many more areas are to the north, and this I will definitely concede.
I think there is also an issue at hand that is being overlooked because of the recent housing boom - wages.

The biggest housing issue for Americans is affordability. Wages need to catch up with home prices in one way or another. Here is why they have not. The consumer price index (CPI) is what the government uses to advertise how well the economy is doing. When job growth is healthy and prices are increasing this index goes up as it should. But instead of increasing people’s wages in accordance with this accurate index, the govt chooses to use the core rate. The core rate excludes “volatile” prices (like food and energy costs) and instead of taking the costs of owning a home which 65% of the U.S. population does, the core rate uses the cost of renting as its measure. This is why the core rate is normally significantly lower that the CPI. Unfortunately Joe Taxpayer can’t just not pay for his food, gas, and mortgage or he would either not be able to drive to work, not be able to eat, or not pay his mortgage. So why does the govt do this? Well do you know how large our government is and how many people they employ? Think about the millions of people that are currently employed, retired, and the number of baby boomers about to be on social security. These people are all cashing their checks from Uncle Sam (heck – me too). How do you keep costs down when we already have the largest deficit the world has ever known? Pay them less with lower than reality cost of living adjustments – that’s how! But how do you justify it? Make up an index that you can use in place of the CPI that isn’t a reflection of reality but sounds really good – thank you core rate. Meanwhile consumers are getting hoodwinked thinking that their incomes are adjusted for inflation when in reality they are adjusted for about half to two/thirds of that. Think about how gas prices and home prices have increased over the last five years – more than likely they’ve doubled. Most of us can surely say that our wages have not doubled. But that is what happens when the index measure uses things like household items, computers, and other goods and services that aren’t necessarily vital to our survival like food, oil, and homes. Due to the fact that these other goods and services haven’t doubled in price allows the govt to track these items (using the core rate) and then adjust these millions of paychecks using that cost of living adjustment. One would think that with more taxes coming in due to the expanding economy (according to the accurate CPI), and paying less out as a percentage of actual inflation – our govt would actually be able to balance it’s budget and pay off some debt. Oh well. I think the govt is fully aware of this problem and that is why the fed is continually raising rates. They have to keep this inflation under control or we are all going to be priced out of the market the way that our wages increase so slowly. And they make these increases even after Greenspan and Barnake concede that the housing market is in for a “soft landing”. They have to concede at least this though with the actual housing data. And can they really say anything else? How would the public respond to the Fed saying that the economy is about to decline by 50% due to the housing market taking a 20% dive? They couldn’t say that even if they knew it to be fact. What do you think it all means? Just throwing it out there for you. I think we’re definitely in for a recession right around the corner, even with these low unemployment numbers.

meshugy said...

Here's some news from Boeing:

Boeing continues to add jobs in Puget Sound area

biliruben said...

'Shugy -

"...we're being asked to forecast what's essentially an irrational market."

"...don't think trends, think fundementals."

"...a year after peak in unit sales, prices begin to fall."

"Is the OC different? Yes they are. They are going to get hammered when this thing breaks."

"It looks a lot like the beginning of the end, folks."

"This is the peak, and we are starting to come down the back side"

S&L crisis in the 90s = high risk lenders today.

"What goes up, will come down"

He does go on to say that he thinks the nominal price will be the same in 2011 as it is now, but will drop in real terms.

He says nominal values could actually decline if we lose jobs.

"We have never been there before."

"If I don't have any past patterns, I'm running blind. That's where we are right now. I'm running blind."

biliruben said...
This comment has been removed by a blog administrator.
meshugy said...

Lots of good comments, though I don't know how I got lumped into the Meshugy category?

CC, you'll find that if you say anything on this list other then "MASSIVE PRICE REDUCTIONS," you'll get labeled a troll. I'm not a housing bull, I believe there are serious problems with the market. I just don't believe there will be a huge crash. It will go flat, and some less desirable areas might see some small reductions.


But I'm open to other opinions.....even economists admit it's very hard to say exactly what will happen. I respect the opinions of people who think there will be a crash. It could happen, but I don't think it's likely in Seattle.

'm

biliruben said...

...some less desirable areas might see some small reductions.

Like Ballard? ;)

I think you are confused about that. The one thing that has been pretty consistent in past downturns is that high-end takes the biggest hit.

My estimate is for 2006->2010 (real)

Houses:
$200-400K, 10% decline
$400-700K, 20% decline
$700-10 million, 30% decline

Condos:
$100-300K, 20% decline
$300-2 million, 40% decline

Anything in Ballard, 90% decline. ;)

softwarengineer said...

IS THIS BLOGGER MADE UP OF REAL BUYERS WITH AVERAGE INCOMES OR IS IT ALL REALITORS AND SHYSTERS HOPING TO KEEP FLIPPING OVER-PRICED LAND LIKE PANCAKES?

I can't belive the garbage I read in this Blogger, have you guys forgotten Economics 101?

Start reading what the NEUTRAL LENDING INSTITUTIONS are stating about the NATIONAL HOUSING BUBBLE that hit Seattle recently, turn your Pravda (Seattle Times) propaganda off and TELL US THE TRUTH for once, but of course you won't, what's a few lost retirement accounts and foreclosures to you WOLVES.

Tell us about the rental houses packed with 18 renters and van in the driveway to take them to their sweat shop. Tell us about the property landlords that have to pay more to repair the damage these "GROUP TENNANTS" do to house investments than the equity is worth.

I do get straight stories from realitors, after I get a martini or two down them; they all tell me the same thing, housing sales have slumped!

HOW COME I WATCH FOR SALE SIGNS COME DOWN THIS SPRING ALL OVER THE PLACE, WITH THE SAME OWNER CUTTING THE LAWN A MONTH LATER????????

I think if you want to cover up the current housing bubble in Seattle, keep your mouth shut and hope we're blind and deaf.

softwarengineer said...

MORE HOGWASH IN THIS BLOGGER: BOEING HIRING MORE PEOPLE IN WASHINGTON ST....HA HA

http://www.boeing.com/employment/employment_table.html

http://www.boeing.com/employment/employment_table_2000.html

Since the hogwash authors don't offer written proof (verbal allegations), I did, open the proof up, it came from Boeing.

In 2000 we had 77,900 Boeing Employees in Washington State.

In 2006 we're 64,175, that's an 18% drop in Boeing employment in Washington State the last 6 years.

Oh, for you hogwash bloggers with your head in the sand, I'll toss you a bone. We did see a modest 2% "hiring back" of the 911 layoffs since January of this year. Hopefully they weren't all temporary green interns with Boeing salaries that wouldn't rent a Studio Apartment in Seattle.

Oh, have you heard Boeing is closing down its Wichita facilty and opening up an outsourced India Plant. I know you hogwash bloggers don't believe me, so here it is in writing:

http://www.rediff.com/money/2006/jan/31boeing.htm

I hear an engineering degree in India and China is comparable to one from the University of Washington now, of course wages are 80% lower for engineers in India. Ask Bill Gates too, he'll agree with me.

Welcome to the Housing Bubble Seattle, whether you like it or not.

Oh,

PepeDaniels said...

meshugy said...
see the excellent video lecture linked under another thread on this board. The lecturer is the senior economist at USC (I believe).

You're talking about Christopher Thornberg...he said in that video that prices will go flat and not drop.


It's considerably more complex than that.....

Peter Taylor said...

Interesting article from the WSJ reprinted on MSNBC today:

Ruling imperils home buyer 'gift fund' charities

The unexpected IRS edict throws into question a practice that has helped boost national home ownership rates to a near-record 69 percent in the past six years.

Under the system, sellers provide cash to the charities, which then give it to home buyers for their down payments. The sellers, who pay the charities a service fee, often recoup their money by charging a higher price for the homes -- usually 2 or 3 percent more, or an amount equal to the down payment, says a Government Accountability Office study.

seattle price drop said...

Capitalistchristian-

It was not me who took you to task for saying prices would not drop 40%. I'm the one who thanked you for your insughts into the lending industry, I believe it was, or maybe the realtor industry.

I have never been so bold as to state how far I think Seattle prices would fall. That said, I certainly would not be shocked if they fell 40%. When a 300K home sells for 600K the next year, probably anything is possible. Talk about destabilizing a market!

If the market drops considerably, I will be one of those who will be more than a little angry at ANY gov't bailouts.

If depression is needed to wash this mess clean and get this "get rich quick" (for doing NOTHING!) garbage out of the American psyche for the next few generations, then I say bring it on.

Do I want to HELP these bozos who CAUSED this mess?? No Way!!

Anonymous said...

softwarengineer-

Welcome aboard! this blog NEEDS more people like you!

Anonymous said...

t.s.-

there are a couple of places where inventory is actually LESS than seattle. Check out the bubble markets tracking site on front.

Orange Cty is one I think. And, if I'm not mistaken, the median is going down there.