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Tuesday, July 25, 2006

Memories: Stale Listings & Low-Ball Offers

Here are a couple of blasts from the past for you, courtesy of the Seattle Times archives and real estate Q&A columnist Bob Bruss. Our first question is from November 1993:

Q: Our home has been listed for sale with several different realtors for almost two years. We have reduced the asking price by about $35,000. It still hasn't sold. All the realtors who inspect our home say how nice it is. But we have received only two purchase offers and they both involved taking other houses in trade. We want to sell for cash and move to a better climate. However, we're not going to give our beautiful home away. Any suggestions how to get our home sold?
Wow. It's pretty hard to imagine that same column being written in 2006. Even if a home listed in 2004 was overpriced, it probably would have looked like a bargain by late 2005, without any reduction in price. When was the last time you saw a nice, relatively well-priced house sitting on the market for more than a few weeks? I don't think it used to be such a rare occurrence, and it seems likely that it will soon be common again...

The second question is even better, coming at you from August 1991:
Q: How much below the asking price should we offer for a home which we want to buy? Last week we saw a home which will be perfect for us. We are now in the process of pre-qualifying with a mortgage lender to be sure we can afford to buy it. If we decide to make an offer, how much below the asking price should we offer? The real-estate agent says it is a bargain at its full asking price. We agree. Once this house hits the multiple listing book in a week or so I'm sure it will sell quickly. Should we offer the full price to be sure we get the house?

A: Never offer the full asking price. Well, almost never. Unless you offer less, you will never know at what price the house could be purchased. Please believe me there is no worse feeling than to have the seller accept your first offer. If that happens, you know you probably could have bought for less if you had offered less.
It's almost funny to imagine that there was a time when "always offer under the asking price" was considered sound advice. Of course, real estate enthusiasts would have us believe that we'll never see such a time again—that double-digit appreciation will slow to 4-6% appreciation, demand will be strong, and prices will keep going up, up, up, forever and ever, amen!

I predict we'll be reading columns that bear a striking resemblance to those above within the next five years.

(Bob Bruss, Seattle Times, 11.14.1993)
(Bob Bruss, Seattle Times, 08.11.1991)
Please read the rules before posting a comment.

53 comments:

ProudPropertyOwner said...

Can someone explain the difference between these two scenarios:

Buy house for $250k. Houses goes up to $400k in 2 years.

1) Sell house and put equity into a 500k house. New house drops 15% (75k drop in value) over 3 years.
2) Stay put and house values drop 15% (60k) over 3 years.

Let's ignore the cost of moving, closing costs, increased interest deduction, etc. I don't understand how Option 1 is that much different than Option 2.

chris said...

I don't know but I think we'll see these sooner rather than later...

http://www.therealestatebloggers.com/2006/07/25/top-10-hottest-markets-for-second-quarter-2006

matt said...

Wait a minute, I'm totally confused... wasn't there a raging housing market back in the early 90's? Meshugy?

This article makes it seem as if it was a bit of a slump... well maybe not actually, considering the scenario they're describing is probably what buying and selling houses used to be like in the good ole days. Its just now, the Greenspan induced asset inflation is making me see the world through a glass darkly I suppose. (An MLS Darkly?)

Peckhammer said...

> the scenario they're describing > is probably what buying and
> selling houses used to be like
> in the good ole days.

When I bought my place in '98, I offered less than the asking price, and further bargained the price down after my inspector looked the place over.

I recently put an offer in on a house. The realtor advised me to wave the inspection, and to offer more than the asking price. I did offer more than the asking price, but put a 2 day inspection contingency in the contract -- IOW, we had two days to inspect the house, and if the seller didn't want to fix anything, they could void the contract.

I was not outbid, but someone else waved the inspection and got the house.

I then looked at a house in Georgetown. The listing agent told me that if I asked for an inspection, my offer would be rejected. She said that she had a client that lost out on seventeen different offers because they refused to wave inspections. Another of her clients wanted an ispection on a $750K property. The seller said, "sure, so long as you give me a $100K non-refundable deposit." The buyers agreed to those terms.

Is the market different today? Yes -- stupidly different.

Anonymous said...

proudpropertytroll:

Option 1) You're under water.
Option 2) You're not.

Any more questions?

meshugy said...

Wait a minute, I'm totally confused... wasn't there a raging housing market back in the early 90's?

There was a raging market in the late 80s...as I mentioned earlier it flattened out in the early 90s. These little anecdotes that Tim posted are cute, but if you look at the data, houses were still appreciating in the early 90s. They just slowed down, but never went backwards. Sure, certain houses or certain neighborhoods probably slid more then others. But over all, houses gained in value. So I wouldn't get too excited wishing for an early 90s scenario. There wasn't really a crisis...

Again...here's the data:

King County Median Price (Residential)

July 1989: $126,472
July 1990: $166,844
July 1991: $180,434
July 1992: $182,647
July 1993: $188,798
July 1994: $192,242
July 1995: $201,268
July 1996: $211,898

Etc...up and up to the current median of July 2006: $434,950

It just slowed a bit around 92.

matt said...

The listing agent told me that if I asked for an inspection, my offer would be rejected.

This is a scary scenario and probably worth a topic all its own. Especially nowadays. Anecdotaly (sp?), I've heard stories about some really really shoddy 'remodels' going on by flippers, one right across the street from some friends of mine in fact, trying to turn 100K profit in a year (alreday reduced). And if people are forced to wave the inspection, lord knows what kind of money pit they're getting themselves into once the sealant goes on those ubiquitous granite countertops and the countertops start warping.

A girl that sits across from is trying to remodel and flip, she's never done any home improvement in her life! Some of the things she's doing to her place is shocking, on-the-fly plumbing, loosey-goosey electrical, etcetera.

Never waive the inspection, NEVER!

ProudPropertyOwner said...

Anon @ 12:35 Thanks for being a prick, but perhaps you could answer the question with a little more detail. From the way I see it, I lose money in both situations.

Please explain...

Anonymous said...

Most sellers have no problems with pre-inspections so that you can make an inspection-free offer but only after you know exactly what you are getting into...

jcricket said...

We purchased our current house in 2002, for 10% under the asking price, after that asking price was already reduced byt the seller.

The home I purchased (brand new) in 1998 I also purchased for around 5% less than asking price (and I got a couple of extras thrown in).

In neither situation did I get involved in bidding wars, waive inspections, or pay over the median price for the neighborhood. It's possible, even in a "seller's market" to pay a reasonable price for a home.

I think the archived Q&A is really interesting. As the data meshugy posted points out, through the period in the 90s where people were placing offers at less than asking price (and getting those offers accepted) you still saw YOY median home price appreciation.

This, once again, points to the fact that listing price increases/decreases are not a reliable barometer YOY housing price trends. I would agree that when we're in a buyer's market, there's no way you'll see the kind of appreciation you see in a seller's market. But buyer's markets don't automatically mean YOY housing price drops.

Look at recent data, with huge drops in YOY sales activity, accompanied by large reductions in listing prices, followed by YOY median price increases. Can't rely too much on any one statistic to give you a picture of the market.

I for one long for the return of a balanced market, because I'm not someone who will cheer foreclosures or people being underwater. I think waiving inspections is insane (and I would never do so). I think getting in a bidding war is nuts. I also think that anyone waiting for home prices to be 50% or 20% of their current value is going to be waiting forever.

richard said...

houses were still appreciating in the early 90s.

There were some pretty big gaps in WHICH houses were appreciating.

A friend's dad managed to lowball a Lake Washington waterfront home in Juanita - paid $1,050,000 for a place assesed at $1.38M.

Unless you owned a mixed basket of properties at the time, there was no guarantee that you'd see "average" appreciation.

In low appreciation markets, some homes still manage to depreciate since they age or go out of style faster than the land increases in value.

The Tim said...

Meshugy,

Something's wrong with the numbers you provided. They do not match the available data from the NWMLS. For instance, the median sales price for "Residential" in July 1996 is reported at $182,350. The average is closer to the number you provided, at $218,409. However, your earlier years don't match up with the average, and I don't know where you're getting the median figure from, because it's apparently not the NWMLS pdfs. Here's what the NWMLS pdfs show:

Month: Average / Median
July 1989: $145,420 / N/A
July 1990: $185,778 / N/A
July 1991: $180,939 / N/A
July 1992: $198,721 / N/A
July 1993: $188,345 / $156,424
July 1994: $201,308 / $164,950
July 1995: $208,561 / $170,000
July 1996: $218,409 / $182,350
July 1997: $239,541 / $195,000
July 1998: $270,867 / $220,000
July 1999: $312,556 / $242,000

In fact, the average (which is the only figure I have available pre 1993) did go down, twice. Once beetween 1990 and 1991, and again between 1992 and 1993, ending barely above the 1990 level.

So what gives?

Eleua said...

The seller said, "sure, so long as you give me a $100K non-refundable deposit." The buyers agreed to those terms.


I always liked to think that I could not be shocked by human stupidity, but I guesss I was wrong.

matt said...

houses were still appreciating in the early 90s.

Actually this isn't wholly true, according 'Shugy's numbers around 92'-94' year to year appreciation was below 3%, therefore the infation adjusted prices showed some deflation in median housing prices

meshugy said...

I just noticed a long term trend in Seattle housing...prices at least double every 10 years.

From the article I posted earlier from 1987:

average price in King County jumped from $40,311 to $102,084, up 153 percent.

These are average prices, which are usually higher the median. Still gives us some ball park figures.

So,

King County Average Prices:

1977 $40,311
1987 $102,084
1997 $227,425
2006 $759,689 (median is $434,950)
2007 $900,000?? (median $500,000???)

meshugy said...

Something's wrong with the numbers you provided.

I pulled the numbers out pretty fast...on a few I think I put the Jan. price instead of the July. Thanks for the more accurate list.

Can you put all this into excel? It'd be easier to compare.

Still, doesn't look like much of crisis in the early 90s. 91 was 5K down, then 92 was 18K up! Then 93 10K down..after that up, up, up. So If you bought at exactly the wrong time , say 92 and then sold at EXACTLY that wrong time in 93, you would have lost 10K. The chances of that happening are next to none...I think it's pretty clear housing was still a very good investment at that time.

matt said...

Ho-hum... housing, since 1890 has tracked inflation on average, always does, always will... there will be a return to the mean.

Peckhammer said...

Most sellers have no problems
with pre-inspections so that you can make an inspection-free
offer but only after you know
exactly what you are getting into...


This strategy only works if you have time on your side. In situations with multiple offers, you are often throwing $350 out the window on a house you aren't going to get. Do that a half dozen times and you'll have made 6 months payments on your home ispector's Mercedes.

This scenario is especially true of entry level homes on the market -- the one's that probably need the most inspecting but are snapped up like free drinks at a Vulcan sales event.

It would make more sense to me require inspections for all sales, thereby leveling the playing field and protecting consumers.

Peckhammer said...

I just noticed a long term trend in Seattle housing...prices at least double every 10 years.
At 7% interest (compounded), money doubles every ten years. It comes as no suuprise that real estate appreciating at a similar rate would double every ten years.

matt said...

Trying to put to bed the long-term house appreciation arguement

http://politics.guardian.co.uk/economics/comment/0,11268,1461424,00.html

... with the quote:

Real house prices in the US, for example, rose by an average of just 0.66 per cent per year in the 114 years between 1890 and 2004 - and most of that was thanks to the boom of the past few years.

Seattle was a part of the US last time I checked, and the 90's did occur sometime between 1890 and 2004...

biliruben said...

According to the MLS docs, inventory in July 1999 for King County was just 2334, and for the June 2006 was 8011.

Did they measure inventory differently back then, or are we totally screwed?

biliruben said...

Mesh - stop spewing numbers unadjusted for inflation.

Housing goes up less than 1% a year. Stop salivating.

meshugy said...

According to the MLS docs, inventory in July 1999 for King County was just 2334, and for the June 2006 was 8011.

Speaking of # spewing...if you bothered to look at the 90s data closely, you would have noticed that it doesn't show inventory. Tim also just pointed this out.

The # you just quoted (2334) is the # of closed sales....not iventory.

Inventory in 1997 was super tight:

HOME PRICES COULD HIT THE ROOF AGAIN
DEMAND IS THERE, BUT SO FAR NOT THE HOUSES


Inventory for King in 1997: 7,778

Real-Estate Sales Heat Up In June Despite High Prices

biliruben said...

Thanks for answering my question, no matter how rudely. That makes more sense then. I assumed units were units on the market, but couldn't find any footnote to clarify.

That doesn't get you of the hook for absurdly rah rahing what amounts to a high inflation rate.

Repeat after me: houses are not a sound long-term investment. They are, however, often a nice place to live.

ProudPropertyOwner said...

I'm not trying to be a troll, I really don't see much of a difference between the two scenerios I laid out. Would you guys mind educating me?

The Tim said...

ProudPropertyOwner,

Allow me to take a look at your two scenarios.

Assumption: 20% down ($50,000) on original house.

Scenario 1: Sell house, walk away from sale with (roughly) $200,000 in actual cash ($50,000 down payment + $150,000 equity). Put all of that money into the new $500,000 house (40% down). New house drops 15%, you're now sitting on an asset that's worth $75,000 less than you paid, meaning that if you had to sell, you'd walk away with just $125,000 in cash (versus the $200,000 you had when you sold the first place). You just lost $75,000 in actual cash.

Scenario 2: Sit on the house, value drops 15%, and you're sitting on an asset that's still worth 36% more than you paid for it. You can sell and walk away with $140,000 in cash ($50,000 down + $90,000 equity). All you lost was $60,000 in "paper profits."

So there's the $15,000 actual dollar difference, but I think what's more important to most people is the psychological difference. Losing paper profits that you never actually cashed out is entirely different than losing actual cash. As soon as you sell the first place in Scenario 1, the money becomes real, so losing it is that much harder.

So to summarize my answer to your question: The actual financial difference is $15,000 (not exactly pocket change for most people), but the biggest difference is psychological—paper money vs. actual cash.

biliruben said...

PPO - Beyond the fact that moving costs, if you go full service, will not be insignificant (25K-30K)), you are correct. 15% of 500K isn't that much more than 15% of 400K.

That makes several assumptions that may or may not be true, however.

First, that the market will only drop 15%. Obviously the higher the percentage, the more you will comparitively lose.

Second, it isn't clear that the drop is going to be uniform across the spectrum of housing. In the last downturn, the median stayed pretty flat not adjusting for inflation but the mean appears to have declined. That suggests to me that the high-end houses took a much bigger bath than the low-end homes (I've heard this anectdotally as well). Between 400K and 500K may not be much of a difference, but who knows.

Third, declines may differ by region, as well as temporally. I imagine the bubble as a rock (or handful of rocks, if you imagine multiple cities) thrown into a still pond.

The waves push outward, inflating prices first at the epicenter then steadily effect prices further and further out.

I think that the reverse will also happen; prices will deflate first in Bellingham, then Mount Vernon, then Edmunds then finally Ballard. Probably not evenly either. I think the closer in you are the more likely houses will be able to retain some vestige of their value.

Just idle speculation, based on a bit of bubble reading. That and a $3.50 will get you a Double Grande Iced Mocha.

Why take a chance, however? Why not ride it out in your more reasonable home, and see where the market goes?

Anonymous said...

ppo,

In scenario 1, you owe (or have already paid) $500,000 on a house that is worth $425,000 at the end of year five.

In scenario 2, you owe (or have already paid) $250,000 on a house that is worth $340,000 at the end of year five.

I'm sorry, ppo, but if you can't do this basic math, you should not own property.

jcricket said...

In what I thought was an otherwise great comment, billiruben wrote: Beyond the fact that moving costs, if you go full service, will not be insignificant (25K-30K)), you are correct.

Wha! Moving costs $25-$30k? What movers have you been using? Dewey, Cheatem and How?

I've moved across the country, including a car, for $5k. And I've moved using full-service companies in Seattle twice for under $3k.

Someone's getting gouged :-)

Just as a side note, any consideration of moving costs also applies to renting (where you will likely move far more often than when you own a house). Renting has a lot lower transaction costs, but they're not zero (non-refundable deposits, moving costs, security deposit, etc.)

Anonymous said...

Paper money vs. actual cash!

This is exactly happen to some friends of mine recently in Seattle. After selling their second/rental house, they all get cold feet and keep the cash and pay hefty tax instead of plowing it into a new “real estate investment” as they planned earlier. It’s psychologically easier to loose paper money than hard cash.

Anonymous said...

Wha! Moving costs $25-$30k? What movers have you been using? Dewey, Cheatem and How?

Agreed. Pikop Andropov gives a slightly better deal on in-city moves.

meshugy said...

Repeat after me: houses are not a sound long-term investment. They are, however, often a nice place to live.

Exactly....they are a good "quality of life" investment. Few people ever make real $ off their house...they just keep trading up. If all I cared about was making $, I'd live in a tent.

biliruben said...

6% baby. That's what Realtors charge on the sell side now, don't they?

Anonymous said...

It isn't "cold feet" to want to keep real cash out of your home. Real estate is a bad long-term investment, and it makes no sense to funnel extra money into a home, when you could but it into a true long-term asset.

For god's sake...you could take that cashed-out equity and put it into a Roth IRA, where it would grow tax-free for decades, and would be a liquid asset at retirement! Why in the world would you consider placing the same money in a dubious physical asset that gains historically at only about the rate of inflation, and requires you to sell your home to gain liquidity, only to be taxed at the capital gains rate?

Homes are boxes that you live inside. They are not investments.

jcricket said...

6% baby. That's what Realtors charge on the sell side now, don't they?

Ah, not moving costs, but the transaction costs associated with selling your house. Yes, those eat into whatever profit you might make from the sale, and are often around 6%.

I consider moving costs what you pay to a moving company.

Repeat after me: houses are not a sound long-term investment.

Housing is not an investment, but I would say, if done right, owning a housing asset is a good long-term strategy. Owning a RE asset is a hedge against inflation, it is a way to keep your housing costs down over time and is psychologically beneficial in many ways renting isn't, especially for those of us with families.

It's just as easily said that renting is not a sound long-term strategy. There are a small number of people for whom renting will always be better (move a lot, freak out about being tied down, don't have a family, don't care about rent increases), but on the whole, owning a house has been a better strategy over the last 100 years than renting.

biliruben said...

I don't disagree. Every cricket needs a hearth.

Anonymous said...

Owning a home is a good long-term housing strategy.

It is not an investment.

ProudPropertyOwner said...

Thanks Tim for taking the time explain it…

Maybe I'm retarded, but losing money (paper or real) sucks and either scenario I didn’t come out ahead. Maybe I'm just too stupid to own a house (as some anon coward said) but when an asset (which I think we've agree a house is an asset but not an investment) loses value, regardless of what the cost-basis was, your net worth goes down.

Maybe it doesn't come straight out of the cash in your pocket, but the equity in your house is yours and has value. If that equity goes down, your asset isn't worth as much anymore. I'm not a finance-wiz, but just because it isn't a realized gain doesn't make it any less valuable. 100k in equity can be transformed into 100k (90k+ after transaction costs) in cash. Sure you can’t instantly convert it into cash, but even stock transactions take days and incur fees to finalize.

Instead of telling everyone that staying put is the answer; shouldn’t we be figuring out how to preserve the value of our assets? I’m not sure how to do that. I guess the selling the asset and putting the money into something more stable is one way. Sitting around waiting for the crash so I can watch the value of my equity drop while sitting around in a house I want to get out of isn’t my idea of a good time...

biliruben said...

Well... there are some ways to hedge on housing. Shiller started a market to do just that on the Chicago Merc exchange, though it hasn't really caught on yet.

You can short housing indexes, or specific stocks associated with housing. Presumably they will go in the opposite direction of your houses value, though that's a big presumtion and a bit of a risk. I have done this and made a quick 25% on a couple builders before covering last week.

Unfortunately there is really no easy way to short your particular house's value.

Perhaps bet Meshugy. Offer him any equity in your home, beyond inflation, from x date to y date. Agree on a non-partisan assessor (maybe Zillow). If it goes down (after inflation), Meshugy pays you the difference + inflation, so you can never gain nor lose money on your house. If you pay Meshugy, that means your house is worth more.

Of course, Meshugy could make a bundle if he's right that housing never goes down. Make him the offer and see what he says.

meshugy said...

Of course, Meshugy could make a bundle if he's right that housing never goes down.

Sorry bili...please don't put words in my mouth. I never said that...in fact I think it's a pretty sketchy time to buy right now. I'd only advise someone to buy something they can afford (no exotic loans) and that they can stay in for 5 years, preferably 10. Investing in real estate for profits sake is way too risky....I think the huge appreciation we've seen over the last few years is coming to a close. So short term flipping is a losing proposition. Smart long term investing might work...but you really have to be careful.

All I've said is that under the current circumstances I don't think prices will go down in Seattle over the next 5-10 years. There will be a slow down...either to a flat market, or more likely to more normal 3-6% appreciation. The economy is too strong, the demand is too high, and supply is too tight.

If the jobs go, then we'll see a drop in prices...but so far there's no clear sign of a huge economic shock to this region. So a soft landing is in the cards for us....

Anonymous said...

Just curious Meshugy:

You really think that Seattle being in the top 5 or whatever for neg am loans in the country is no big deal? That it won't affect the market here?

Am curious how you rectify that fact in your mind.

matt said...

If the jobs go, then we'll see a drop in prices...

Back in 00'/01' the jobs DID indeed 'go' and bigtime, but there was no drop/slowdown in Seattle housing? any reason why?

Anonymous said...

"Maybe I'm retarded, but losing money (paper or real) sucks and either scenario I didn’t come out ahead."

Wrong. In both scenarios, you're in debt to the tune of hundreds of thousands of dollars. You don't have a dime until you sell.

"Maybe it doesn't come straight out of the cash in your pocket, but the equity in your house is yours and has value."

Wrong. Until you've paid off the loans, the "equity" belongs to the bank. They will happily lend it back to you, however (for a fee).

"100k in equity can be transformed into 100k...in cash. Sure you can’t instantly convert it into cash, but even stock transactions take days and incur fees to finalize."

Good god, man...what broker are you using? I can liquidate my entire stock portfolio in less than 15 minutes. Try that with a house. And transaction fees? When you can get through a home closing for a fixed commission, you let me know.

Call me a "coward," if you must, proudpropertyowner (that's your real name, right?) but I stand by my original assertion: you should stay far, far away from real estate. A little knowledge is a dangerous thing.

Peckhammer said...

If the jobs go, then we'll see a drop in prices...but so far there's no clear sign of a huge economic shock to this region.

Except for the fact that WAMU is throwing cargo out the escape hatch to make themselves a less bulky purchase for the likes of Citicorp or Chase.

WAMU recently outsourced part of its mortgage servicing business which eliminated at least one entire department (Recourse Administration -- a place that gives you a true picture of how shakey many loans are). And as we read elsewhere in this blog, they have sold a mortgage related unit to San Francisco-based Wells Fargo.

The Seattle Times reported that "Washington Mutual sought to reduce its dependence on single- family mortgages... Demand for new home loans slowed as the Federal Reserve increased short-term interest rates 17 times in the past two years, forcing mortgage lenders to seek growth elsewhere."

"They've been looking to get those low-returning businesses off their balance sheet," Fox-Pitt Kelton analyst Edwin Groshans said in the interview.

The article also said, "Job cuts and other efforts to slash expenses pared an additional $52 million of earnings."

"The company said last week it planned to eliminate 900 jobs in its retail and mortgage units. The reductions, coupled with the company's February plan to cut 2,500 positions, will trim more than 5 percent of the company's workforce."

Not reported: A fleet of Business Development Managers have been laid off at WAMU. Clearly, WAMU is trying to make itself more attractive -- read: more consumable.

If Citicorp or Chase or a similar entity do purchase WAMU, there is a fair chance that they will relocate operations -- and for workers in the financial industry, WAMU is the only game in town. Even if they don't relocate, many people will be on the street. This might be the type of event that tips the scales for the region with a sudden increase in home inventory and disposable income no longer being being thrown around like bread crumbs for the pigeons.

biliruben said...

You're right, Meshugy. I shouldn't put words in your mouth. Sorry.

When you say, however:

There will be a slow down...either to a flat market, or more likely to more normal 3-6% appreciation.

That means that's all you need to believe to make the bet with PPO. If you really, really believe that, then you can at worst break even and at best own every bit of equity in PPO's house, were he to offer it.

If you really believe it, then you would be stupid not to make the bet, if offered. No transaction costs and maintanence and all the profit appreciation.

If you really believe what you say, that is.

biliruben said...

Peck -

You really think WAMUs an attractive take-over target with 109 billion in debt?

darth_s said...

“The economy is too strong, the demand is too high, and supply is too tight.”…

Meshy, it’s the same ridiculous mantra that the housing bulls were saying all over the places – San Diego, Miami, WA DC, Las Vegas, etc.(these places actually have lower unemployement and stronger job growth compared to Seattle) And look at them right now, San Diego is negative, most of WA DC is negative, Miami is approaching 0 YOY, etc. It’s just totally nonsense hogwash.

Anonymous said...

San Diego's affordability has been some crazy-low number--like 11%--for many years now. Seattle is nowhere near that.

Peckhammer said...

You really think WAMUs an attractive take-over target with 109 billion in debt?

Yes.

Could anyone have imagined that AT&T would sell their mobile phone business to Cingular, and then buy it back a couple years later.

Imagine a clandestine world where a certain blogger has inside knowledge into what a large Washington-based bank is up to... and imagine a certain fictional character named "Killinjerk" who views the sale of this bank as his retirement plan.

Further imagine an IT department leader with a specialy in systems integration -- someone that has worked in the capacity of bridging banks with unlike systems in the past -- and he leaves the bank to take a job with a large banking entity in Northern Flordia. At his new job, he is told that even if he taken a job with them, he would have eventually been working for them anyway...BWAHAHAHAHA!

O.K., so it aint all that interesting. Maybe this blogger will scrap the project and write about a world in which people believe that double digit gains in residential real estate will continue on for eternity, despite stagnant wages -- and these same people will buy with reckless abandon for sound ecomomics. I love fiction!

richard said...

The San Diego unemployment rate has also been WAY lower than Seattle over the past 6 years. When we were in the 7's they were in the 4's. SD is still half point lower than Seattle metro.
http://www.economagic.com/em-cgi/data.exe/blsla/lauMT06417403
If San Diego's price explosion looks out of line, realize it happened during a time of unbelievably low unemployment - whereas Seattle and Portland had the highest rates of unemployment during much of this period.

Anonymous said...

Matt-

the reason the cost of housing rose in Seattle 00/01 is the same reason it rose everywhere in the US:

ZERO lending standards and buyers who think the monthly payment is all that matters when buying a home.

Christina said...

ZERO lending standards and buyers who think the monthly payment is all that matters when buying a home.

Make that the INITIAL monthly payment.

thankfulrenter said...

To peckhammer

More more! More dark finance/housing bubble fiction.

Please?