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Tuesday, June 20, 2006

State's Chief Economist Warns Of Slowdown

Despite the fact that wages have basically been stagnant while daily expenses such as gasoline have been, shall we say, upwardly mobile, the state continues to rake in record revenue.

Chang Mook Sohn, the state's chief economist, said today that his outlook for tax collections for the 2007-09 biennium shows ever increasing revenues that lawmakers use to pay for public schools, colleges, prison and most other state programs.

Despite $3-a-gallon gasoline, consumers are still on a spending spree, Sohn said. That translates into higher sales and real estate tax collections for the state.

However, people are spending more money than they're making, which Sohn finds worrisome because it can't continue indefinitely. Consumers appear to be cashing out some of the value of their homes to fuel their spending, he said.

"Clearly, the consumer is over-extended," Sohn said.
Yes, it is called a negative savings rate. Spending more than is earned is no big deal anymore. Hey, the government does it all the time, so why shouldn't consumers do it, too?

Of course, the fuel for the consumer spending spree (and by extension the state revenue boom) is likely to dry up soon. Surprisingly, Mr. Sohn is very frank about that distinct possibility .
State coffers will swell by more than $959 million over the next three years, erasing a projected state deficit that had worried the governor and legislators.

Still, even with that good news, revenue officials raised warning flags, predicting that a slowdown in the construction industry will drag down the state's economic expansion before long.
The state's sizzling construction and housing sector is ripe for a major correction and other factors could hammer the state and national economies in the next few years, said ChangMook Sohn, the state's chief economist.

Sohn said the state isn't expected to dip into a recession, but that signs of a slowdown are on the horizon.

"We can't assume that this hot economy can continue into the next biennium," he told the forecast council, a bipartisan panel of legislative and administration financial experts. "My worry is that even this number could be too optimistic."

His biggest concern is that the state's recent economic and revenue expansion has been heavily dependent on a single sector of the economy, the construction and housing industry.

That sector accounts for about 7 percent of the overall state jobs, but the construction and housing surge in recent years has accounted for 20 percent of the job growth, he said.

That's not sustainable and the number will surely drop back to more usual numbers, he said.
But don't worry, Boeing, Microsoft, Amazon, and Valve will surely pick up every last bit of slack.

(Joseph Turner, Tacoma News Tribune, 06.15.2006)
(David Ammons, Seattle P-I, 06.16.2006)


Anonymous said...

"...appear to be cashing out"

Appear? Well its eaither "They are" or somehow state homeowners have found a miracle-gro fertilizer at the Home Depot that miraculously tunrs Rhodendrons into honest-to-goodness money trees...

Anonymous said...

In my opinion, we're starting into "new economy" territory right now. At the height of the dot-com mania, self-styled "experts" were yammering on about how the "old rules" were irrelevant, and how old-fashioned things like earnings and cash flow were useless in the "new world order." We were going to make money from happy thoughts and banker farts! You couldn't get a word in edgewise with those twits.

Well, they're back! Nowadays, they take the form of housing "investors," but the underlying delusions are the have to burden yourself with a truly special level of denial to think that nothing bad is going to happen to our economy.

We spend more than we make, prices are increasing by about twice the historical inflation rate, oil is at an all-time high, and isn't getting cheaper, and meanwhile, people are borrowing more than they ever have before to buy properties that were worth only a fraction of their current value just two years ago.

You have to be insane to think that this is a sustainable pattern. There's going to be a decline -- the only question is, how bad will it be?

Anonymous said...

oh please...

if the construction industry contracts, the foreclosure industry is going to absorb most of those displaced.

it's always doom and gloom with you people, isn't it?

cosmos said...

About a month ago friends tried to sell their home FSBO at a list price of $395K. At that time I noted in a post that I thought the house was overpriced by $30-50K. I see it is now listed with a realtor at a list price of $377K. That is an $18K (4.5%) reduction. Plus they now have a 6% commission fee. So within about a month's time, they have "lost" 10% of their expected net.

It will be interesting to see how long it takes to sell, and what price they eventually get...I'm still guessing it will have to come down to about $365K to sell. And based on what I see going on with listings, the longer it takes to sell, the lower the price will have to drop.

Anonymous said...

"The foreclosure industry is going to absorb most of those displaced."?


So all the house-framers, carpenters, and cement-pourers will then be working in call centers harassing people about their late mortgage payments for $8 an hour?

Is that what you mean?

If so, I don't think that such an absorption of construction jobs would be without a huge impact to the local economy - for many reasons.

If that's not what you mean, please explain your point.

The Tim said...

oh please...

if the construction industry contracts, the foreclosure industry is going to absorb most of those displaced.

it's always doom and gloom with you people, isn't it?

I was assuming that post was meant to be completely sarcastic/funny. I actually laughed out loud. Was it not meant as a joke?

Anonymous said...

if the construction industry contracts, the foreclosure industry is going to absorb most of those displaced.

Yeah, because swinging a hammer is basically the same as working with banks on financial matters.

I gotta laugh at this naive economic optimism. You suggest something that "could" happen theoretically, then just assume because it's remotely possible that it will happen and the transition will be seamless.

It's the same kind of reasoning used when housing heads declare that we'll go from a market fueled buy low interest rates, low of lending standards, and speculation to one based on solid fundamentals like job, income and population growth.

It might happen. the probability of it happening smoothly is very, very low.

Anonymous said...

^anon above. Ugh, Tim, I think I just got Punked.

Anonymous said...

yes, Tim, a joke. the two anon posters are so fucking dense that even the foreclosure industry wouldn't have them.

seattle price drop said...

Thanks for the great article Tim.

You know it's bad, and unavoidable, when even the guys in charge start acknowledging the problem.

CNBC is doing a one hour special on the housing market this Thursday at 8PM Eastern. (RE Survival Special)

Just yesterday, they started talking about the possibilty of a hard landing for RE.

Here's how the announcer introduced the Thursday night special:

"Will your house EVER be worth as much as it's worth right now?!" (Emphasis on "ever" is theirs, not mine).

This sounds curiously close to what I have been thinking all along: we will never, in our lifetimes see such high RE prices again.

So much for the 5 or 7 year "buy and hold" strategy that the industry is touting.

Time will tell.

softwarengineer said...


See the FAIRUS.ORG Dan Stein Blogger article on Georgia, as they just shut down all homeownership for illegal aliens:

I'm softwarengineer on Dan Stein's Blogger too

seattle price drop said...

CNBC does a daily segment called "Realty Check".

Today they interviewed the CEO of KB Homes (builders) and the pres. of the NAR.

The home builder CEO was pretty pessimistic (big surprise!) and NAR pres. was more of an optomist (another big surprise!).

However, even the pres. of the National Association of Realtors did say this: "if you're not going to hold for more than one year, do not buy now." Huge concession on his part, don't you think?

The caption across the bottom of the screen said, in bold letters:


It's in the news now folks, everywhere. No longer just obscure articles from economic journals that you have to hunt for on the internet.

No longer just foreign economists fretting on the financial news about the US housing market.

Anonymous said...

News Flash:!!!!

Phoenix, ground zero for the housing bubble and in denial now for the past year, has finally begun admitting the truth to itself.

See todays "Housing Panic Blog" for article.

synthetik said...
This comment has been removed by a blog administrator.
seattle price drop said...


Thanks for the report. I suspect we'll be hearing "status quo" from most industry members until we're well into the slide.

Much like the Phoenix news above.

It's the American way: Don't plan for the future, just bank on the past.

Anonymous said...

This may be off topic, but I heard a commercial on the radio for 50 year mortgages... This seems like some sort of last ditch effort on behalf of the mortgage companies. The whole thing seemed shady to me.


Anonymous said...

They rolled out the 40 year last winter and now the 50 year.

It's a last gasp effort to keep the monthly payment "affordable".

I guess we'll see just HOW stupid buyers are with this latest effort.

Get a 50 year loan to buy into a crashing housing market- brilliant!

I'm sure they'll sucker in a few last idiots with this but, on a daily basis now, more and more people are wising up to this fake housing party.

Anonymous said...

Just checked the "Seattle Bubble? Blog" to see if our friend has a report on this new news.

Not yet. Maybe later today?

synthetik said...
This comment has been removed by a blog administrator.
Anonymous said...

Eliz- Also have friends in Issaquah who tried to sell a few months back at 380 when it seemed they just might pull it off at 335/340.

It sat for 50 days and they went immediately to 330 and sold that sucker a few weeks later.

Just in time, IMO.

Other friends are "wondering" whether to sell or not in Columbia City.

They actually kind of need to sell. Not that they cannot afford their mortgage, they just don't want to live there anymore.

I told them this could be their last chance to sell at a decent price. They bought in '03 so can't take too much of a downward hit. But they are in denial and dragging their feet.

I've got a feeling they're going to be in Columbia City for a good long while.

Anonymous said...

Check out this national foreclosure report for Q1 '06. It gives stats for each state.

I was shocked to see how high on the list WA. is. We keep hearing about Ind., Colo., etc.

WA. seems to be in a middle /high category with one foreclosure for every 443 households.

Other states that are in the 400's are: PA., N.C., N.M., MO. and CA.

cosmos said...

I just ran the numbers on homes for sale in Seattle, using the Windermere site for Seattle areas 2 thru 9. Up 27.8% since I last ran them on 4/10. This aligns with "Housing Tracker." Interestingly, the biggest increases were in West Seattle (up 48.4%) and the NE sector (up 32%).

cosmos said...

p.s. In my post above, I am referring to increases in INVENTORY.

Anonymous said...

Got it Eliz. Hard to think that prices would be increasing by 27-48% at this point!

However, some on this blog might beg to differ so good call on the clarification.

Anonymous said...

Personally, I applaud Mr. Sohn for being so candid and conservative. Perhaps the State has some hope of surviving the downturn if they follow his advise.

meshugy said...

Hi Eliz,

I've found reports generated from commercially available MLS sites are not that accurate. If you compare results for the same area from several different MLS sites (i.e. Windermere, John L. Scott, Zip Realty, etc) you will get radically different readings. They will often be off by hundreds of the public MLS sites are a very general indicator at best.

The monthly MLS reports are the most accurate. They show that NE Seattle had a -2.96% drop in inventory and a 4.39% rise in sales last month.West Seattle had a 16.05% rise in inventory and a 9.22% rise in sales.

Anonymous said...


Damn, and all this time I was blaming Gay Marriage and Osama.

meshugy said...

Here are some recent sales in Ballard (all within the last month). All addresses are NW. These are all 3 bedroom houses, mostly in the Loyal Heights area.

The first price is asking, the second is the sold price.

7316 16th Ave 499,000 442,500
8038 26th Ave 424,950 460,000
7735 20th Ave 400,000 458,000
7310 17th Ave 475,000 481,000
8049 26th Ave 459,000 449,000
2832 NW 73rd 449,950 515,000
2849 NW 66th 439,000 435,000
7554 25th Ave 395,000 426,000
7547 23rd Ave 439,950 506,000
7053 26th Ave 409,500 506,500
7056 Dibble 475,000 450,000

Three of these houses were underbid...but they were obviosly overpriced. Dumps on crummy streets so I'm not surprised. All the others saw significant overbidding. The house on 7053 26th went for nearly 100k over asking!

At this point it's pretty clear to me that Ballard is actually more competitive then last year. I thought we might see a slowdown this year, but instead I'm finding that there are less single family homes for sale. The few that are for sale are getting 10 or more offers and going for as much as 100k over asking. I've also noticed lots of landlords are dumping their crummy rentals for big $ it's getting harder and harder to find anything to rent around here. Pretty crazy...I'm not sure when we'll see the end of this.

Anonymous said...

the housw for over 100k on 26th belonged to my wife's coworker. He told us it was up and we had been there for a party before. We were questioning if it was even worth 409. It had no kitchen whatsoever, nice living room small bedrooms.

Well he told us in the first weekend he had 3 inspections from seperate buyers set up, we had no idea though it would go over 100k..

this market makes me sick sometimes, we are staying on the sidelines for a while.

Anonymous said...

Obviously, Ballard seems to be the last hold out for the fools...

Anonymous said...

to add to my comment above, me and wife are making around 140k and still renting, I have a hard time believing all the people buying up these homes are bringing that home, we are young and income will rise but like i said this market makes me ill when i see some of the homes and what they are asking.

Anonymous said...

I am starin to think so, who is buying the 450k townhomes that are built around apts in Ballard? Do they really think those will appreciate more so costing 500k one day??? No way in my book.

Anonymous said...

I've also noticed lots of landlords are dumping their crummy rentals for big $ it's getting harder and harder to find anything to rent around here.

I also notice alot of new townhomes and condos for rent on craigslist. And every street I drive to work and back has both for sale and for rent signs.

There are also a consipicuous number of vacant homes, both new and old just sitting. I'd imagine these will be back on the market or replaced with higher density units at some point.

Anonymous said...

"Pretty crazy...I'm not sure when we'll see the end of this."

Well Meshugy, I guess since you joined the flock of overbidders just like the saps that paid over 100K on a price listed at 449K, I'd say this'll end when you take a look at your monthly finances and realize you were an utter fool for dumping so much silly money into an overvalued asset...


Anonymous said...

Whooooo-eeee...there are going to be a lot of depressed people walking around the streets of Ballard once this thing blows and they realize they got taken, big time.

these are just the folks capitalist christian is talking about on the next thread.

can't sell/can't move..doomed to live forever in a teeny tiny "house' with a humungous mortgage.

Anonymous said...

Ballard (98107) IS the last holdout.

It's the ONLY part of Seattle where the price-reduceds are under 20%.

I'm watching Ballard closely now because when Ballard goes, this baby's sealed.

It's the last card in this House of Cards.

Anyone who's looking at Ballard in any other way is delusional.

Anonymous said...

Ballard (98107) IS the last holdout.

It's the ONLY part of Seattle where the price-reduceds are under 20%.

I noticed the same thing. Even 98103 (greenlake, wallingford) has around 20%, and I'd rather live there, and I have for years.

Anonymous said...

Actually, not to quibble, but 98103 is more like over 25% reduced: 112/29- right?

Anyway, either way you slice it, things are looking better all the time!

Anonymous said...

Check out what happens if you type in "Must sell" on Craigslist Seattle houses for sale.

Over 160 entries! astonishing. Last time I checked was late winter and there were like 20.

Anonymous said...

meshugy - that certainly is an astounding number of bid-ups. are the samples you gave proportionally representative? can you provide all the sales over the last couple of months in the same area? i was just outbid in the wedgwood area and my agent seemed surprised to see that kind of competition.

erica said...

Wedgewood is one of the NE Seattle areas where most stuff has been selling UNDER asking since last winter at least.

So I'm not surprised your agent was surprised. Probably been a while since she'd seen that in that area.

But Ballard is still pretty hot so I think M's stats might be correct.

I also think it's just a matter of time (weeks now?) before Ballard joins the rest of Seattle in the "under-bidding wars".

That's my prediction: 3 weeks tops and Ballard's going under.

Can't wait to see if I'm right! End of July and it's all over for Ballard.

Anonymous said...

So can the celebration of the mother of all crashes start yet? Who is popping the champagne? Don't be shy! Lots of RE piggies will be roasted. You can call me blood thirsty but what fun would that be if the blood isn't flowing?

Anonymous said...

Check out the Bubble markets inventory tracking.

seattle/snoho is ratcheting up quickly. Took us a few months to go frm 8K-9K and now barely a month to go from 9K to 10 K.

Anon above- my only celebrating will be buying a house i can afford w/o a suicide loan.

cosmos said...

I agree with erica -- the end is in sight. I think we are at the crest, some areas have started sliding and the rest will follow. It will only get worse as the economy moves into an inflationary recession, followed by probably the worst depression since the middle ages. The next 10 years or so are going to be an interesting, albeit difficult, ride for the U.S.

meshugy said...

meshugy - that certainly is an astounding number of bid-ups. are the samples you gave proportionally representative?

I have data going back about a year...i generally track 3 bedroom houses in the Loyal Heights area of Ballard. Overall, what I've seen is that prices exploded last Spring, then leveled for a while and the exploded again this Spring and are still rising. Houses in this area are about 70K more then this time last year.

The best data to look at is the NWMLS monthly reports. They correlate with my own findings. Ballard's median price is over 50K higher then last year and rising.

that certainly is an astounding number of bid-ups.

Just about everything gets bid up...probably about 90% of the houses around here go for more then asking.

meshugy said...

Here's the latest from UCLA:

UCLA Anderson Forecast Calls for Real Estate Slowdown in California; No Statewide or National Recession Seen

Leamer, who does not expect real estate prices to fall significantly, notes that sales volume is what typically drops, and drops more precipitously than prices, as the price cycle lags behind the volume cycle. The number of homes sold will drop as owners decline to sell in a weak housing market. Prices, however, should hold. The real decline in the housing market, Leamer says, will come in "residential investment," which includes construction of new homes, repair and remodeling, and brokerage commissions on the sale of new and existing homes.

"We do not predict a recession, nor do we predict a substantial decline in average nominal home prices," Ratcliff says. "This forecast it based on two arguments. There is not enough vulnerability in the usual sources of employment loss to create a recession, and the historical record suggests that average home prices do not usually fall without this kind of job loss."

meshugy said...

Wedgewood is one of the NE Seattle areas where most stuff has been selling UNDER asking since last winter at least.

If you look at the Wedgewood stats from the MLS you'll see that it's one of the tightest markets in Seattle. Last month there was a -2.96% drop in inventory and a 4.39% rise in pending sales. The median price is up 35K from last year. Definitely a seller's market...

meshugy said...

the housw for over 100k on 26th belonged to my wife's coworker.

What a conincidence! It probably went for so much because it's a craftsman style house on a nice street. Nice landscaping and seemed to be in good shape...but did look small.

synthetik said...

San Diego and Seattle, really that different?

From Bubble Markets Inventory Tracking, yesterday.

"RIP: San Diego

It has been just 2 months since the post, Code Blue San Diego, when we passed the historic inventory height of 19,250. 2 months and 3,000 additional homes later, we now pronouce our Canary officially dead.

It took 6 years from the peak of last bubble in late 1989 to the previous peak inventory in July 1995. This time it took 27 months, just a mere 965% increase from historic record low to the current new population adjusted record high inventory, 22,203. This increase averages out to a 35% increase per month. Of course, this is helped tremendously by 23 straight months of sales decline.

Meanwhile, percentage of reduced listings on the MLS is now 36.4%. In addition, median home price has been falling since November 2005, and year-on-year appreciation is now 0.4%, finally edging on negative territory.

Soft landing? Well, there's always cryogenically frozen canaries, I suppose."

synthetik said...

I say that because someone I met last night was saying that we weren't going to have a decline in prices in Seattle due to the lack of space. The fact that people didn't want to drive an hour to work each morning.

They were saying that in San Diego a year or two ago too.

San Diego is borded to the south by Mexico and to the north by Mountains. The only area to build out is to the Northeast (the desert baby!).

If you've ever been to San Diego, you know it has near perfect temps year round, about 65-79F, but ONLY near the coastline.

The other areas near downtown (Escondido, Oceanside, Vista, Fallbrook, etc), all require a 1-2.5 hour commute into downtown. And if you live in those areas, you are still paying $550K for an average house.

My point is that while we would like to think Seattle is different, it's just not. It was just late to the game and is going to experience a similar downslide soon.

While Seattle was slow to the party, it'll most likely follow the other drunks out at the same time. Ok, maybe he forgot his keys - but he's not staying the night either.

So you can blather on about supposed bidding wars that aren't happening, and imagined price increases - but what we obviously have here, folks, is a day of reckoning.

And no, it won't be different here either.

meshugy said...

Hi Syn...

So you can blather on about supposed bidding wars that aren't happening, and imagined price increases - but what we obviously have here, folks, is a day of reckoning.

We all have our predictions....but no one really knows what will happen. I respect those on this list that could have bought over the last few years but firmly believed prices will come down. Sticking to your guns is an admirable trait...and you could profit from it in the end.

What I'm most interested is in what's going on NOW. That we do know, it's reflected in both the monthly MLS reports and casual observation of what is selling and for how much. There's no doubt that the Seattle market is very hot right worst it's just a hair behind the record #s of 2005. In some areas, such as Ballard, it's gone far beyond 2005. The only place things seemed to have cooled off are more remote areas of King County. The bidding wars are happening and prices continue to climb at a rapid pace.

Looking at the "price reductions" listings on Zip realty doesn't tell you much...the most important think to look at is the relationship between the market value of a house and what it sells for. In every part of Seattle that is going up right now, some faster then others. Someone mentioned Greenlake/Wallingford....that area had a 23.83% increase in sales last month and the YOU prices are up 14.89%. So you can see that "price reductions" on Zip Realty don't tell you much. USualy the houses are insanely over priced and get shaved down. But still sell at huge profits...

From my own observations in Ballard,it's clear we're going to see another month of big gains when the June MLS report comes out. Fall might be when this whole thing starts to cool....but that's what happened last year and look were we are now!

emcityjill said...

What's going on at in Seattle at this instant is pretty congruent with what experts expect a bubble looks like from the inside. Prices are, for the most part, absurdly high, way out of line with fundamentals, there's a pronounced "wealth effect" that has swept the nation, and still people are scrambling to get into a mortgage before "it's too late".

I speculate (tee hee) that inventory is low because poised sellers may be waiting to see how this all shakes out. Those that aren't in a hurry to sell (probably because they only just bought within the last three years) are digging in and hoping for another run up in appreciation. They might get it. They also might not. Thems the risks when you buy anything and consider it an invesment. Additionally, if you have dollar signs in the eyes, you might not be seeing things so clearly either, in my opinion.

Watch as the Fed, expected to raise rates yet again (and again, and again), combined with rising inflation pops this bad boy bubble. **Mandatory Buffet Quote of the Day**: It's only when the tide goes out that you learn who's been swimming naked.

P.S. I see so many condos going up around town, it's starting to scare me. Who is expected to purchase all of these? People who wouldn't dare buy a two bedroom 380K pit in Loyal Heights? The paranoia! I feel like I'm being targeted as a demographic: Young apartment dwelling single income urbanite with no kids!

Ack! The siren song of the REI!

meshugy said...

Yeah...those condos aren't cheap. Usually you can get a 3 bedroom house with a nice yard for less. But I guess they're targeting retirees and busy singles who don't want to deal with a yard.

Anonymous said...

Check out CNBC "RE Survival Guide" one hour special Thursday 8 PM Eastern (5 PM Pacific?).

Find out how this thing is being directed and how it'll play out.

Jackson Wallace said...

Just last Weds, a friend of mine told me that a mutual friend of ours was 'tired' of his good-paying job and was getting into RE investment full-time. I assume he's going to do this at a gradual clip. I tried to tell thie friend of mine, who runs a business, that we've already had an insane run-up and that
things were teetering in other parts of the country, and his response was,
"people around here get the outdoors, and the Sound is so beautiful."

Yeah, thats a rational economic argument. Everyone that has bought a house in the last ten years, or the last five years, is rightly patting themselves on the back, because they have seen incredible appreciation. Dont expect these people to think the party will end. I think its interesting that the state economist is sounding an alarm. he knows his future reputation is on the line, so he prob feels he has to call it as he sees it. Corporate earnings just drove the stock market back up today, and
oil is still at $70 a barrel, so depreciation is not a foregone conclusion yet. I predict oil will drop like a rock this winter though, and with it,
all commodities and maybe some economies, and definitely Vancouver BC RE.

Maybe we will stumble our ways through all this without a recession,
but with RE valuations the way they are and various markets hurting, it would stand to reason we're all gonna eat the dirt. The fact that its not totally clear yet is very similar to the way it was in the dotcom boom.
The difference is that then it was just the stock market. But there ways a day when it was crystal clear to everyone that the NASD was finished,
and by then it was way too late. Also dont forget that when it started dropping, people kept jumping back in, thinking they were buying in, and they also got creamed. Dont forget that we got out of that debacle through borrowing and RE appreciation. Dont forget all the coomers counting on their homes for retirement. WERE DONE.

synthetik said...

>We all have our predictions....but no one really knows what will happen

I could care less what is happening RIGHT NOW in ballard, or anywhere else in Seattle. That data only matters to the person who is a homeowner RIGHT NOW and is considering selling their home.

I don't think it takes a rocket scientist to predict what will happen. The market will drop. The ONLY question is, by all reasonable standards, HOW MUCH.

Your monthly data about what the housing market is doing in this zip code, or that zip code - really has no meaning.

If people aren't informed enough to see that NOW is the time to get out of their home (unless they have good equity and don't want to be bothered, kids in school, etc, I understand and respect that concept fully); well, that's just darwinism.

My greatest fear now is how well the economy will sustain this down cycle event - most likely to be one of the worst in history.

It's nice to KNOW that housing will return to pricing in line with incomes, however it's frightening to think what MIGHT happen when you realize how much of our economy is tied into RE/construction.

If I were to predict, I'd say by 2008 the drops in RE values will be:

Pheonix: 30-45%
Las Vegas: 30-45%
San Diego: 25-35%
Ft. Lauderdale: 35-45%
Wash DC: 25-30%

Seattle: 20-25%

San Diego had losses of nearly 40% in the early 90's, but that was due to a military base closing. I don't think there is a precedent for a nationwide housing increase of this proportion.

We've had increases of 160%+ in some areas of USA since 2000. Why is it so unreasonable to think 30-40% pullbacks are possible? God knows it could be MUCH worse.

Hold on to your asshats.

Anonymous said...

Your monthly data about what the housing market is doing in this zip code, or that zip code - really has no meaning.

byt synthetik's unsubstantiated projections are GOSPEL.

anyone who calls people "folks" are liars or hucksters, usually both. and "asshats"? that is so 2003. which rightwing blogs were you trolling on back then, Syn?

seriously though, we are lucky to have someone who is so obviously enlightened to share their wisdom here. not only have you lived in Florida and San Diego, but you have moved to the Emerald City to rent an overpriced downtown condo and post patronizing crap on weblogs. ding, ding, ding. winner!

jj said...

Anon 1;04-

Phoenix has already had 50% reductions on some properties.

I'd call that a pretty good forward indicator on what MIGHT happen anywhere.

Read the news.

synthetik said...

Hey anon, I never said I was an expert, but I do have a pair of eyes. I truly hope you are able to sell whatever hovel you purchased with creative financing recently.

For the record, I am not a republican. Having money does not make one a republican or right wing. I moved up here to get away from asshole Right wingers.

While my apartment is expensive and overpriced, it has a very nice view and keeps my wife and 2 ugly dogs safe. Even at these prices, I'm still saving thousands of dollars a month on some dumpy condo downtown. For the record, it is my wife that prefers to live down here. I'd rather be in Fremont, Ballard or Cap. hill. No grocery store and the tourists drive me nuts.

In 2004 I was caught up in the frenzy to purchase a home too - it was by sheer luck that we didn't buy.

When the market tanks, I'll have enough cash to buy your house, your neighbors' AND give twice your yearly salary to the DNC.


meshugy said...

I could care less what is happening RIGHT NOW in ballard, or anywhere else in Seattle. That data only matters to the person who is a homeowner RIGHT NOW and is considering selling their home.

Obviously you don't, because you keep saying that overbidding and price increases aren't happening. But all the data we have on the Seattle market shows that it's still by far a seller's market. Please be honest, you do care what the market is doing right now. You're waiting to see signs of a the absence of such signs you're just ignoring the data or worse, making a false assessment that bidding wars and price increases aren't happening.

synthetik said...

Sorry, I don't care what is happening right now. I don't plan on buying until we are in a buyers market.

You are correct, now we are in a sellers market. Anyone that is lucky enough to sell at this moment will come out ahead. This market has reached a plateau and is about to go into the next stage (yeah, the ugly one).

As for your bidding wars, that is a total joke. I have been going to open houses all around N. Seattle for the past few months since I got here - to try to understand the market.

Not a lot of foot traffic from what I've seen, and a lot of neophite realtors telling me about all the wonderful features and benefits without asking me what I care about. For the most part, they all seemed desperate.

I don't need weekly ballard figures to understand what to do.

Trust what you SEE, not what you want to believe.

I will buy when we are in a buyers market. That will occur when:

1. It is common knowledge that RE is now a bad investment.
2. All news from MSM is reporting gloom and doom 24/7.
3. New home permits are near all time lows.
4. It's now difficult to get a loan, lenders have tightened.
5. The economy is sluggish and unemployment has risen.
6. Construction activity is way, way down.

While all those factors may not happen at once, it will still be obvious to observe it happening around you - if you care to look. Once RE negativity is super high, the media hates RE and property values have retreated.... then it will be a buyers market. It may actually happen more quickly than it has in the past due to all the unprecedented funky lending.

Buy when everyone is selling. Sell when everyone is buying. Not rocket science.

meshugy said...

As for your bidding wars, that is a total joke. I have been going to open houses all around N. Seattle for the past few months since I got here - to try to understand the market.

You must be going to the wrong ones at the wrong time. I take my son on walks during the weekends and every open house is packed with bid crazy buyers. This is reflected in the huge over bidding we're seeing in the selling prices and the quick rise in median prices. If seller's and realtors were desperate we'd see inventory piling up and prices dropping. But that isn't happening...houses don't get overbid unless there are multiple buyers. And nearly every house is being over bid right now.

synthetik said...

If that IS happening, those people are obviously lemmings. Uncontrolled emotion. Exactly what you were seeing in the other bubble markets a while back.

Again, I don't give a shizzit either way.

"I find it more and more that it is well to be on the side of the minority, since it is always the more intelligent" - Johann von Goethe

matt said...

You must be going to the wrong ones at the wrong time. I take my son on walks during the weekends and every open house is packed with bid crazy buyers.

Friggin' liar Meshugy, you've been saying this same damned thing for the past 6 months... and if you're taking your son to open houses every weekend, you either need to get a life, or take some Xanax to cool your nerves over the Ballard bidding war you jumped into feet first... just because you're desparate to find a shred of rational for your silly purchase is no need to get all passive-agressive on the bloggers. Gimme a break!

meshugy said...

Hi Matt...I spend a lot of time walking around with my son. It's a pretty nice life actually.

It's hard to miss the open houses....6 months ago and now. And my son likes the free cookies!


emcityjill said...

I too have been taking walks and attending open houses in my neighborhood(Fremont/Queen Anne) and I am not seeing the same frenzy that Meshugy has been describing. I've also been following a lot of houses in Q.A. on Zip and I'm seeing them NOT MOVE unless they are aggressively priced to sell.

Ballard's not a good deal anymore, nor has it been, in my opinion, since 1998 when the bulk of the yuppie migration took place. It's become cute enough (as a result of the yuppigration), but I remember when it was largely occupied by old folks, rabblerousers and weirdos. Kind of like Beacon Hill is now. Hmmm...

DISCLAIMER: Before I get flamed by folks defending rabblerousery, I consider myself a menace in my own right. I think rabblerousing is, by and large, amusing and makes an important contribution to a diverse and rich culture.

sarah said...

M's a liar, pure and simple. He takes his immediate Ballard neighborhood and extrapolates out to the whole of N Seattle.

A walk from Ballard to Bryant is pretty far to go on a Sunday, especially with a youngster in tow.

Never mind Green Lake/Wallingford. Way closer to Ballard but apparently you haven't made it over that way yet on one of your Sunday strolls.

Hard to imagine why you come on this list M. If you think you're going to single-handedly hold up Seattle RE values with your pablum and lying on a bubble blog, it ain't gonna happen.

You'd accomplish much more over at the "Seattle Bubble?" site. People there would actually LISTEN to what you have to say and BELIEVE it.

Think about it.

You have a willing audience who are still thinking now's the time to buy and wantin encouragement for their shaky decision.

synthetik said...

>It's hard to miss the open houses....

It's definately hard to miss them since they are popping up over the place.

Listen, I know what it's like when properties are in very high demand. The realtors can totally ignore you when you walk in. They might even be reading a book, not giving two sh*ts.

That is not the case here now. Now they act more like car salesmen, ready to pounce. Falling over their left feet trying to hand you a flyer.

Anonymous said...

I went to one a few weeks back that was a very unexpected experience.

The realtor was so dejected that she wasn't even trying anymore.

It was 3PM (supposed to close at 4) when I walked in. She was packing up to leave and seemed a bit bothered that I wanted to go through.

Maybe she hasn't closed a deal in so long that she's given up? It was wierd.

meshugy said...

M's a liar, pure and simple. He takes his immediate Ballard neighborhood and extrapolates out to the whole of N Seattle.

I mostly walk around loyal heights....that's it.

If people say they're seeing desperate realtors, unattended open houses, and unsold houses sitting on the market for months, then we should see this reflected in the monthly MLS reports. Price Drop and Dukes (what happened to him?) had been saying these same things since Jan. And since that time we've seen the median price for Seattle sky rocket from 376K in Jan 06 to 415K in May 06. Back in Jan I was pointing out that the market still seemed strong, and was met with the same sort of denial I'm seeing now. I guess people are going to believe what they want to believe...but the #s don't lie. Prices have gone up immensely in the last 6 months and will probably continue to do so until the fall.

If we see big drops in the June MLS report, then we'll know the open houses really are empty. My guess is that the June #s will still be very strong.

Anonymous said...

meshugy isn't lying. He is reporting what is happening in his neighborhood. If he has been saying sales in Ballard is slowing to a crawl, you guys wouldn't be calling for his head.

You have as much control about where the housing market is going as meshugy. Don't get all wind up, you can always rent.

Anonymous said...

Sorry Anon, M is lying. Ballard IS strong but the rest of Seattle is not like that.

And BTW, a lot of us here are homeowners.
Unlike the recent breed who bought in the last few years with "creative financing", us homeowners who bought pre 2000 can afford, both literally and figuratively, to cast a more even eye on this ridiculous market.

Telling people who would like to buy but refuse to buy into an out of control credit bubble to "go and rent" sounds a bit sour grapes to me.

Do you have a bit too much "invested" in this shakey market and fear it, like every other pie-in-the-sky dream of riches, is about to explode?

Then go and sell and rent til it's over. I'm serious, it's the only way out if you're scared right now.

Otherwise, stick with the rest of us property owners who are now paying higher property taxes so a few could "invest" in RE that "always goes up".

Anonymous said...

Meshugy = Desperate Realtor

observer said...

Yeah, I've often wondered if M was a part-time realtor. If he isn't, he should be. Missed his calling IMO.

You know, the discussion here is interesting.

Here's how I see it: we've been given multiple clues from multiple directions (the Fed, economists, the news, etc) that we're in an RE bubble and that bubble is about to burst.

It's not liked we haven't been warned. So now it's up to the individual what they want to do with that information.

Has anyone noticed that a lot of major players have sold their RE this year and gone to renting?

The latest was that guy from PIMCO.

Those are some heavy clues. These are people who, techinically, I would think, do not even NEED the money and could afford a "loss" when RE goes the way of every other speculative mania.

Or they could have sold one mansion and bought the next.

But they sold their mansions and are RENTING!....CLUE!!!

meshugy said...

I'm not a realtor...I'm a musician and an author. Real estate is a little too hustle and bustle for my taste. I think it's a very turbulent time in the housing market and wouldn't advise anyone to buy unless they:

1) Can afford it (no exotic loans)

2) Can live there for at least 10 years.

Otherwise, it's safer to rent. If you bought something too expensive and had to sell in the next few years it could be dangerous.

Anonymous said...

I'm not a realtor...I'm a musician and an author

No wonder you're scare sh*tless about depreciation there Meshugy, especially with those 'lucrative' gigs, how's those white knuckles doin'?