Friday Open Thread
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62 comments:
Great find dukes,
Yeah, the other myths hold false as well, especially...
Myth#4: restriction on development in the suburbs ensure low supply, and guarantee rising prices
This is horse pucky. I keep bringing up the following article on Tokyo's Bust and how land restriction DID not keep its real estate bubble aflout. It folded faster than superman on laundry day, and continued for 15 years...
Once Sea-town gets flooded with Condo's, inventory spikes, watch the whole house of cards tumble. Land restriction's got nothing to do with it. And if its too pricey here and the jobs too mediocre (which they sort of are at the moment) people will move someplace else, like Salt Lake, Boise, Spokane... somewhere cheaper. There's no gates out of town, people can just up and move out of here...
is it hold false, or hold true? .. whatever
"In this boom, prices soared to such extraordinary levels that builders kept churning out new homes, and owners of existing houses threw a record number of units on the market to cash out. The supply grew so fast that demand, even in strong job markets, simply couldn't keep up."
Well, the problem with this analysis is that it fails to address the core truth about Seattle: Seattle is different, plain and simple.
Take today's article about rentals in the PI this morning:
"Aradia Correnti waited outside of the Phinney Ridge house, but did not apply because the owners would not allow her dog. Correnti said she moved to Seattle from Atlanta four weeks ago, got a job at Microsoft and has been sleeping on couches or in her car while hunting for a place to live.
'It's a race,' she said. 'If you're not there first, you're pretty screwed.'
Correnti said she called one landlord within two hours of an apartment listing and the place was already rented."
There is simply not enough housing in Seattle for the amount of people that need it; people will pay ridiculous amounts of money for what housing is available; employment is strong; and despite massive amounts of new condo inventory coming on-line in the Seattle area, people will throw silly amounts of money on the table with a level of zeal ordinarily reserved for celebrity poker. This includes both buying and renting.
Take, for example, the following quote from the same PI article mentioned above:
"Shelley Santone of Coldwell Banker Bain & Associates owns three rental houses and manages others, including a Magnolia house that got 12 responses the day she listed it at $2,100 a month.
'I really thought $2,100 was going to be a little bit high, and we rented it in a day,' she said. "
Well, the problem with this analysis is that it fails to address the core truth about Seattle: Seattle is different, plain and simple.
Ha! Nice one peckhammer... No this is a typical temporary bubble-phenomena seen in other markets, includding Washington D.C. and is a result of the condo-mania stage of the housing bubble which we're heading into, firing on all cylinders.... Yes, greedy condo developers convert, reducing available units, rents go up, units don't sell, then go back on the market as apartments... rental rates drop, etctera...
The only thing different about Seattle is its time-scale... (and apparently is inability to learn from example)...
But if far more houses are pouring onto the market than can be absorbed by households lured by the new jobs, and if the sellers are pressured to sell, prices will fall.
Hi Dukes....the problem is we're missing the "houses pouring onto the market" part. It goes without saying that ANY market will go into decline if there's way, way more supply then demand. However, that's unlikely here because we simply can't sprawl out in every direction and now, more then ever, people want to live closer to the city (i.e. shorter commute, less gas)
We're not even at 2004 inventory levels yet...which still puts at very historical lows for inventory.
July 2006 King County Inventory: 8,545
July 2005 King County Inventory: 7,066
July 2004 King County Inventory: 9,833
July 2003 King County Inventory: 12,009
It's still a tight market, we need to double the current inventory to see any real reductions in price.
Hey P-Hammer,
You have to admint that the one quote from the paper is kind of a weak.
"Correnti said she moved to Seattle from Atlanta four weeks ago, got a job at Microsoft and has been sleeping on couches or in her car while hunting for a place to live."
This chick has to be on left hand side of the bell curve. I am looking at rentals...it is not bad enough where an employed single would be living in a car. True, Rents are increasing...by <$100. Plus, who relocates without having a clue of where they will live (especially for 4 weeks after the fact)? When the paper quotes the village idiot, the rest of the article loses a bit of value.
Rental housing turns in landlords' favor
"It hasn't been this strong in the last five or six summers," said J. Michael Wilson, an associate broker for Windermere Property Management.
The vacancy rate for buildings with 20 or more units in King County dropped from 6.7 percent in March 2005 to 4.7 percent this March, according to Dupre + Scott Apartment Advisors. The company's latest estimate is about 4.4 percent, Mike Scott said. The average rent for a one-bedroom Seattle apartment has risen from $829 a month in spring 2005 to $861 this spring and a projected $895 this fall.
A rebounding economy has heated up demand for all housing, while rising interest rates have made it harder for people to buy, Scott said.
This reminds me of when I moved to Seattle in 97...apartments were impossible to find. People were lining up at the door for tiny rat holes. That all changed after the dotcom bust....but it looks like were headed back to an ultra-tight rental market.
"However, that's unlikely here because we simply can't sprawl out in every direction and now, more then ever, people want to live closer to the city "
Ummmm, and they can sprawl more in New Jersey? New York? Washington DC? LOL.
A quick search of rental properties in Magnolia on Craigslist turns up 35 rental units. This is pure media pom-pom waving over the non-story of rapidly rising rents.
Agreed, this is Realtor bubble-booster article masquerading as a viable story... Nothing like inducing a little fear into the market to spurn sales. Since the whole "get in now or get priced out forever" mantra's spent, they've moved on to "hey you bubble sitters, you might as well buy because you'll be sleeping in your car!"
The P.I. can go hang.... nothing but a giant marketing tool for Realtors
This reminds me of when I moved to Seattle in 97...apartments were impossible to find.
Unless you were willing to make the sacrifice and move to Ballard.
Interesting that the Seattle Times quoted their OWN advertised listings for the number of apartments available for rent.
Note the source at the bottom of the graphic
As usual, this article was written with the primary intent of bringing in classified ad dollars. "At the Seattle Times, we can guarantee your apartment listing will appear on a page adjacent to a vague emotionaly charged article about rapidly rising rents - you can't get that on Craigslist!"
Interesting that the Seattle Times quoted their OWN advertised listings for the number of apartments available for rent.
Yeah, this a complete joke of an article if they're using their own listings as a barometer to test the rental market....
God knows why you would pay $65 bucks to post your apartment for rent for 14 days on the PI website when you could post it on Craigslist for absolutely nothing...
All's this article shows is that Craigslist is rightfully sucking away advert dollars from the dwindling PI classifieds section...
I doubt most people living in California would move up here to save $70 or $100K on a house knowing what kind of weather they would be facing during the winter months here.
I suppose when the SFBay median is 2X of Seattle, a few might consider moving, despite the winter daylight issues. Surprisingly, my winter weather here (on SFBay) is just as intense as my hometown on the Sound. Believe it or not, we get 50% more rain than Seattle(!). Still, that's the exception for most Calis, who might be discouraged to leave their "perfect" weather here.
On that note-- driving through Sequim last Fall, I got a laugh from realtors touting the area as a "unique" spot of "mediterranean california" weather. You don’t say? I guess that doesn’t apply to winter.
A 4.7% vacancy rate is historically neutral -- neither landlords nor tenants have room for negotiation.
When I moved to seattle (in late 2000) vacancy rates were below 1% in some neighborhoods. I still found a nice apartment in less than 3 days.
The woman in the PI article must either be a certified moron, or her dog is a horse. Landlords exploit both classes of people. My guess? She's an idiot with a big dog, she moved here with no job prospects, and found out that it costs real money to let marmaduke crap all over a 1906 craftsman....
Interesting that the Seattle Times quoted their OWN advertised listings for the number of apartments available for rent.
Yeah...that seemed silly to me.
However, the vacany rate stats are really the thing to look at. They've dropped like a rock. They got those stats from another source: Dupree and Scott Aparment advisors.
Sorry Meshugy, but I have to disagree with you on this one. I moved here around the same time and there were plenty of nice, new, clean and reasonably priced rental units - especially on the Eastside.
You must have gotten lucky...vacancy rates were 1-2% in the late 90s:
HOLD RENT INCREASES, SCHELL ASKS LANDLORDS
`DESPERATION' CITED IN CALL FOR 10% LIMIT
With vacancy rates in many Seattle neighborhoods falling below 2 percent, Schell said he had talked to young families who'd had to move ``over and over" and to seniors ``who face an uncertain future" because of rent increases or condo conversions.
Having said that, Seattle's median housing price is only $70,000 LESS than San Diego!!
I think you've got the #s wrong....San Diego's SFH median price in July was: $612,000
See: July 2006 Regional Sales and Price Activity
The King County SFH median in July was $435,000.
"This is pure media pom-pom waving over the non-story of rapidly rising rents."
Another day, another bought-and-paid-for screech about how rents must go up. As Joseph Goebbels knew, the key is constant, unvarying repetition. Indeed, I wonder why these papers continue to annoy their masters in the Real Estate Mafia by wasting valuable front-page space on something as silly as news? They should just print big, black headlines that read:
IF RENTS DON'T GO UP, THE TERRORISTS WIN
NEW NAR STUDY: RENTING CAUSES CANCER, IMPOTENCE
BERNANKE DECLARES WAR ON RENTERS
LOCAL PEDOPHILE ALSO FOUND TO BE RENTER - Law Enforcement Officials Not Surprised
WE HATE RENTERS - SCREEEEEEECH!
The accompanying story should be:
"It's a new paradigm, and anyone who doesn't buy, now, will be priced out forever. Anyone who does buy will be rewarded with a lifetime of riches as their property gains 15% annually for life.
Renters, and those born in future generations, will be unable to afford a $10 million starter home in 5 years. They will live in tent cities, and Hondas.
This asset bubble is unlike any before it in history - it will never slow down, or pop. The gains are permanent."
Will these papers still be here after the bubble implodes? Who will pay their advertising revenue? What will they talk about?
Meshugy, that's an article about the lack of low income housing.
Right...caused by very low vacancy rates. The reason I picked that article is because it states that vacancies were below 2% in the 98 and that people were desperate for rentals. That was my experience back then too...it led me to buy a condo instead which turned out to be a great investment.
See, Meshugy, you're wrong. Sorry.
Uh...I don't think so. All you did is post some random articles about apartment construction. I don't see anything saying that vacancies were high in the late 90s, because they weren't. That happened after the dotcom crash. But now we're heading back to low vacancies again.
And all you did was post a random article about a lack of low income housing.
No...it wasn't randon. I picked it because it said vacancies were below 2%. That was what I was trying to show...
The Great American Housing Slump
by Tobin Smith
August 25, 2006
When the real-estate market started to really slow late in the summer of 2005, it was nine months later that we started seeing the breathless accounts of a housing Armageddon hitting the mainstream press.
Bob Toll of Toll Brothers fame came out this week and basically said that in his 40 years he has never seen a downturn in housing without a downturn in employment or some nasty macroeconomic condition that took housing down with the rest of the economy. This time we have low employment, a stable stock market and relatively low interest rates.
So What’s Going On?
Come on people, this is not a tough one to figure out.
The psychology of buyers and sellers has changed. Fear of not getting your offer accepted has been replaced with fear of offering too much or, for sellers, not getting an offer at all. This is the classic end-of-a-bubble mentality, because fear is one of the root causes of bubbles in tradable assets. (A bubble is defined as a rate of appreciation two or more times the standard deviation of long-term asset appreciation trends.)
The fear of not getting your offer accepted in the hottest markets in the U.S. was very well-founded—the supply/demand balance in the market was imbalanced, with too little supply to meet demand.
Where did the extra demand come from for houses, outside of new household formations? Investors. More specifically, new buyers at the margin, just like the new investors in Internet stocks brought new marginal demand to a finite inventory of Internet stocks.
Where has this marginal housing demand gone? Away—or at least away from the previously hot markets.
So, sports fans, take away the marginal buyer who was also the most aggressive bidder at the margin and whose eagerness to buy tipped the purchase and sale of anything sold in the market, and you get falling demand.
This is what we have today in most real estate markets, a lack of the eager buyer at the margin of supply and demand. Now we have real buyers, as in the people who need homes for actual use as a home. And the removal of the buyer at marginal demand has allowed the real buyer to not make the escalator clause/no-inspection offers that drove real estate prices to overzealous heights.
The new owner of my building dropped rents after he bought it in 2003. So far no rent increases for sitting tenants. This is the cheapest apartment I've had on the west coast since moving west in the late 80's.
BTW - craigslist shows 3354 rental listings for the Seattle-Tacoma area.
Remember, Seattle real estate always goes up! well, sorta.
sorry, what I meant to say is that real estate has fallen regionally. however, it has never fallen nationally. well, sorta
That article used their own classifieds section (NWSource.com) to show there are hardly any listings and I posted a link to Craigslist showing 3 or 4 times as many.
Yeah...as I said before that doesn't tell you much. However, vacancy stats do...and they've been falling like a rock. There's been tons of out of state investors buying up apartment buildings around Seattle...they're all banking on the low vacancy and big rent increases.
From the NY Times:
Rents Are Rising Rapidly After Long Lull
Mike Gain, the co-owner of a property management firm in Seattle, took a step this spring that he had avoided for years: he raised rents. “We had been afraid to do that,” Mr. Gain said. “Over the years, we were actually reducing rents. But we increased rents by 3 to 5 percent and there were absolutely zero repercussions.”
The waiting game is now turning into a triple threat:
1) Higher Home Prices
2) Higher Interest Rates
3) Higher Rents (while you wait)
1) Higher Home Prices
2) Higher Interest Rates
3) Higher Rents (while you wait)
Dude, didn't you forget about all those high paying jobs Microsoft and Boeing are throwing around? Hell, you get on one of those gravy trains and you'll have way more than enough to by that flipped moldy craftsman near 65th and 15th NW!
I don't think anyone here has made the comment that survivng the housinb bubble induced great 2007 recession's going to be fun for everyone. It'll drag everyobdy down, down to the non-complicit renting at the margins. We're all going to have to pay for the F'd Barrowers transgressions, right down to you Meshguy, paying your taxes to bail out Freddi Mac and Fannie Mae when we have to bail them out, ala the Savings and Loan scandal...
Wow, you got up a pic? still too scared to drop an email address apparently...
Peter Taylor-
I couldn't agree more, this is pure media hype, same as they did with the housing market.
there's no shortage of rentals and you don't have to overpay to get one.
Friends of mine just found a great rental, reasonably priced. They took their time - no mad dashes to "get into rental or be priced out forever."
There have been years when rentals were tight in Seattle. this ain't one of those years.
What a bunch of bull.
You're getting desperate "shugy, slipping.
the 10% thing from Schell I remember well.
It was the late 90's ('97, '98??). The price of homes begun it's skyrocket. Everyone was selling homes to cash in. People were buying homes they could NOT afford and then jacking up rents to cover the mortgage payment.
MANY people saw their rents nearly double on a month's notice from a new lanlord.
Seattle, unlike other cities, did not have any laws as to how much a lanlord could raise rents on a yearly basis. It was a free for all.
Ideas were bandied about and finally Scell came up with his whimpy request to property owners: "Please don't raise more than 10% a year".
that was the end of it.
On Zip, since May, inventory has increased almost 40%. 40% in less than 4 months. How can anyone argue that we're not headed for a huge change in direction? Anyone can look the numbers up, I can't see how anyone can disagree unless they have a vested interest in prolonging business as much as possible. We're in the short run now, there's no way this goes on until 2007. By Christmas everyone in Seattle will know what's obvious...
Oh, and I just closed on my condo 2 weeks ago (walked away from 4.85% 15 year) and had over 20 apartment listings to choose from right in the 5-6 block area I was interested in. All of them priced competitively. And most available immediately.
(Oh, and I made out quite well on the condo, I've owned it since '98)
Hi folks,
Anybody care to share their expert opinion on the following:
I am planning to sell my current home (North of Redmond downtown) and buy a new, somewhat larger one, in 2-3 years. The old home has appreciated significantly in the last years, and I am concerned about this coming to an end, so I’m thinking about the following possibility:
1) Sell my current home
2) Rent for a few years and invest the money from the sale into something reasonably secure (say, CDs or bonds)
3) Buy a new home
My initial calculation shows the current costs (mortgage interest, property tax, maintenance, and the interest I would otherwise get from the CD) to be roughly equal to the rent. And as I want to sell it at some point anyway, the closing costs would be there anyway.
Obviously, if the prices keep going up over the next few years, I would lose, but if they come down instead, I would win, and it seems to me from recent news that the latter is more likely.
Now, is this a stupid idea? Am I missing something obvious?
it's over $700 extra a month to buy in seattle than to rent.
Right now you are far far better off renting than buying. In 12-18 months people who bought this summer will be crying.
Having been looking for a rental home the past 2 months (my wife is extremely picky) and I can offer these observations "from the field":
1) Rentals are up from 6 months ago (last time we had to blitz KingCo looking..) only in the "elite" areas of town (Madison Park, Denny Blaine, etc.) and then only slightly. Talking to folks in Madison Park I have found out that the Madison Park, Denny Blaine, and Leschi areas all were major targets of CA equity locusts and new MS employees. Hence the largest price increases have been in these areas (e.g. Denny Blaine was #1 on that Zillow analysis posted here last week)
2) In some of the places (Kirkland, Viewridge) the owner literally begged us to rent. In every case it was a flipper (one in Japan, one in CA, and a Seattle "soccer mom").
3) There are decent rental properties on the market that HAD TO REDUCE THEIR PRICE because the owners (in every case a flipper, mostly from CA...could tell from contact area code) initially asked too much and found out that the Seattle market will not bear overpriced rentals. Say hello to negative cash flow.
4) Many rentals languish for over a month or more and the claim about people "lining up at the door" has simply not been observed by this writer....not even once.
We have had no problem finding nice rental houses. The problem has been choosing. Happy to say that we have found a place and are moving in Sept 15th.
There is a "battle of perception" being waged in Seattle by those who are trying to keep Seattles RE "wine and cheese party" going forever.
This same type of battle took place in CA, AZ, ME, and FL and in each case the battle was lost. It will be lost in Seattle as well.
The only thing "different" about Seattle is that in the falling line of dominos it is one of the dominos at the very end of the line.
Seattle will lose too....big time. It's "in the bag".
"The only thing "different" about Seattle is that in the falling line of dominos it is one of the dominos at the very end of the line."
Indeed. I read the other blogs and everywhere is dropping big time, horror stories are starting to come out, and Seattle, well, it hasn't happened yet.
hey, I'm looking for Mobile Marketing Evangelism roles - in Seattle start ups - I'd like to come prop up your housing market. :)
http://www.daviddalka.com/createvalue/about
Looking back, I'd like to thank this blog for the info it gave me... although I ended up buying, I under-invested rather than stretching my budget into a bigger home because of the warnings from this blog....
Unfortunately I can see this blog being empty in 6 months... much like other blogs in other states... it's only useful when the bubble was still sight unseen...
now that the bubble is staring us in the face and even public media is unable to deny it (note their sugarcoating still admits the obvious)... the party here and in the actual market will soon be over...
once again thanks Tim for saving me a bundle...
Heres a Family Story... Grandparents one passed away and the surivor moved into assisted living.
One Realitive/Aunt got into some Tax problems with the IRS. IRS Took everything they owned. Probably that persons IRS bill will follow for many years to come. This person held a six figure income for years. Her husband worked in a bank and was fired. He was bank vice-president.
Grandmother feels sorry for this person because she thinks that it was her husband that created the mess. When really the two of them did it together. Why should Grandmother reward her and her husband for there lack of money management.
I lived at her house for about 6 months and bill collectors kept calling the house.
After Grandmother moved out of the house my sister and I tryed to make a deal with Grandmother to rent the house this was blocked by the Aunt because she said we werent responsible.
Then not soon after She Made a deal with the surviving grandparent to purchase the house. They didnt have a Legal contract as far as I know. Was making which sounds like rental payments. Lived there for couple years. Then used her son to make the purchase agreement because of the IRS she couldn't actually own. Now her son is the mortgage holder.
The way I see it.. why at nearly 60 years old would you really be so caught up in buying a home. At that point you might just hang up the whole notion. My Grandmother is just over 90.
Anyways when the paperwork was signed the house was actually worth about 125,000. more than the purchase price. 280,000. dollars for a 2 story house overlooking the water. That house is worth a lot more than 280,000 dollars. This house is in everett/Mukilteo area. On top of this the Aunt had borrowed money from Grandparents from years past. About 20,000 dollars which supposidly was included into the purchase price.
Talk about causing family problems.. Grandparents had several children & there is massive anger much not displayed.. Couple people are simply displaying there game faces.
On top of this Grandparents held other piece of real-estate which was given to there other daughter. She is a real estate agent that works in the Mukilteo area and the property Grandmother gave her was in Mukilteo. A piece of Raw land.
The property was owed back taxes with the IRS- grandparents held that property for years.. The Aunt the real estate agent after receiving it turned arround within a short amount of time and unloaded it for about 85,000- apparently the recievers paid the back taxes owed, then again its my idiot brother that thinks this.
(The 2 aunts that recieved both the house and the property in Mukilteo are like best of friends. My mother is sort of a outsider sitting in the middle then my other Aunt lives locally as well. She is the one that has distanced herself the furthest from the family. My mother plays like she somewhat in agreement however on the inside she's steaming from time to time.
(The way I see it that basically my 2 Aunts have taken what was the whole family wealth that was grandparents and kept it for themselves.)
the Purchasers that bought the raw land from my Aunt then turned that property within about 2 years and sold it for 1.3 million dollars. Still a piece of Raw Land with no improvments. Now the other realitives know about this. Talk about a mess...
(possibly that Aunt still had some kickback still in order coming back to her? I have a hard time believing a experienced active real estate agent would sell something for such a low price?
one nosy brother that seems to look up a lot of information on the internet. How does he get this information? Records of property transactions. Can you guys tell me?
He supposidly is somewhat supportive of what my realitive did. He claims that she really didn't have any other options. This realitive took him in as a child maybe thats why. I try to put my game face on because she is my Aunt.
Personally this all happened after Grandfather died. In my opinon Grandmother is not very sound of mind in making this kind of decisions.
Being the Granddaughter Im up in arms. Anyone else here have these kind of stories?
Here are weekly numbers for KingCo Listings (SFH, Land, Condos) since 5/7/06
Date / King Co / Delta / %
07-May / 7302 / /
15-May / 7486 / 184 / 3%
21-May / 7665 / 179 / 5%
11-Jun / 8099 / 434 / 11%
18-Jun / 8154 / 55 / 12%
24-Jun / 8352 / 198 / 14%
01-Jul / 8417 / 65 / 15%
08-Jul / 8758 / 341 / 20%
15-Jul / 9057 / 299 / 24%
22-Jul / 9139 / 82 / 25%
29-Jul / 9044 / -95 / 24%
05-Aug / 9059 / 15 / 24%
12-Aug / 9191 / 132 / 26%
19-Aug / 9348 / 157 / 28%
26-Aug / 9442 / 94% / 29%
I keep this strictly for "trend analysis".
Like I mentioned in my earlier post I have looked at many rental homes over the last 2 months and back in March of this year. All I can say is that the degree of speculation based on what I have is seen....is HUGE. Of about 30 homes we have physically looked at and about 15 others we have played "email tag" with the owner, just about ALL of these homes (with exception of maybe a half dozen), are speculators/flippers. I found one guy who had 8 properties. The kicker was that we was only in his mid-twenties. I strongly believe a large part of the runup has been the artificial tightening of supply due to rampant speculation and hording of properties by "infestors".
As the sales cool and more "infestors" go "red" you will see the SFH market flooded with rental homes with initially outrageous asking rates for rent. Then as they find out they have to lower the price to get someone to actually rent....rental prices will come down right along with house prices. Then the only question is how long can an infestor "bleed cash" before throwing in the towel. Adding more fuel to the meltdown will be unfinished condo projects changing over to rentals as well as apartment to condo conversions......reversing.
Oh yea, and the housing meltdown induced recession.....
Interesting times are ahead.
The building I'm in was painted a few weeks ago. People in the apartments lowered their blinds for privacy. It surprised me how many of the blinds were still up - all of these units were empty.
Paul Krugman Quotes:
"The worst of the bubble is in the Zoned Zone; there are many places where prices have doubled since 2000. And that's where you expect the biggest price falls. The Northeast and the west coast contain most of the Zoned Zone."
"No, D.C. isn't bulletproof. It's somewhat insulated from those nasty macroeconomic events that Robert Toll thought were necessary to produce a housing slump, but D.C. is fully involved in the bubble and pop."
"If you look at the most leading of the indicators on housing, stuff like new home sales and applications for permits, they're off more than 20 percent from a year ago. If that translates into an equivalent fall in residential investment, we're talking about a fall from 6 percent of the G.D.P. to 4.8 percent. And this may be only the beginning; I wouldn't be surprised to see housing investment drop below its pre-bubble norm of 4 percent of G.D.P., at least for a while."
"Add to this the likely effect of a housing bust on consumer spending and you've got a direct hit to G.D.P. of, say, 2.5 percent or more. That's bigger than the slump in business investment that led to the 2001 recession. And the main reason the 2001 recession wasn't as deep as some feared was that the Fed was able to engineer... a housing boom. What will the Fed do this time?"
syn-
Data is from the "housing watch" website, which takes its data from the MLS.
Are you referring to http://www.benengebreth.org/housingtracker/? or http://www.housingtracker.net/? or something entirely different?
Moose,
I think you are spot-on with your prediction of plummeting rents as this selling season winds down. You can be certain that many that are relocating absolutely banked on selling their home within hours of the sign going into the front yard.
So, as they are now coming to grips with having to spruce up the place, and reducing the price a tad, they will soon be facing their kiddies starting school in the new city, and their job demanding more of their time. They will have to leave the house vacant, and pay two mortgages.
To help stop the bleeding, they will have to rent. Look to Sept/Oct as the beginning. When I lived in the Dallas area, this was the drill. If the house didn't sell, people usually rented it out only to try again next Spring.
BTW, if the stock market gets airsick, that will also cast a huge pall over an already skittish homeowner.
It could be interesting. There are going to be a lot of confused people out there.
REAL ESTATE DATA GAMES.
Two of the sites below are from the same source. Now they have redefined the market area and suddenly we have a new median price for Seattle and triple the number of listings. I am wary. Redefining the market area does not help us determine the median price in the Seattle market. So many games are being played.
Maybe they will keep both sites up and running. I plan to check both cites in the future.
The new site.
http://www.housingtracker.net/
Seattle Median listing price for 8/21/06 is $389,950
The old and still existing site.
http://www.benengebreth.org/housingtracker/
Seattle Median listing price for 8/21/06 is $439,900
Here is a different site and it still has Seattle median at $439,900
http://housing-watch.com/home.aspx?d=180
The best way to determine what the price of any house should be is to go back to 1996 (precisely how far back Zillow goes) and assume 4% increase up to now. THAT is what the house should sell for. And 4% is "generous".
Examples (based on 4% appreciation schedule):
100K in 1996 worth 148K 2006.
150K in 1996 worth 222K 2006.
200K in 1996 worth 296K 2006.
250K in 1996 worth 370K 2006.
300K in 1996 worth 444K 2006.
350K in 1996 worth 518K 2006.
400K in 1996 worth 592K 2006.
450K in 1996 worth 666K 2006. (yikes, bad number)
500K in 1996 worth 740K 2006.
Use this as a realistic pricing guide but start your asking prices based on a 3% increase schedule and you won't go wrong. Upgrade costs should be added on top of these estimates (e.g. if a 100K home had 20K in upgrades then instead of 148K the fair price would be 168K).
Given that some places have seen house prices double or triple since 1996 you can see just how INSANE prices became.
Do NOT support insanity. 4% per year is very fair. Pay no more than that.
The above numbers prove that price corrections of up to 70% will be what it takes to get back to "normal" in the more bubbly areas.
Redefining the market area does not help us determine the median price in the Seattle market. So many games are being played.
These are all amateur data collecting sites...I'd take their results with a grain of salt. The best resource is to look at NWMLS data...their current median price for Res/Con in Seattle is $420,000. That's up from $366,500 last year...a whopping 14.6% increase!
Hi Moose,
Do NOT support insanity. 4% per year is very fair. Pay no more than that.
Unfortunately demand has severely outstripped supply...hence the 4% doesn't really apply. My guess is that even in Enumclaw you'd be hard pressed to find a house that only appreciated 4% year since 96.
Anybody have any clue (or can tell me where to find out) how many houses in Seattle are FSBO?
Foreclosure.com lists FSBO among their data. No idea how comprehensive it is. There currently are 63 listings for Seattle.
Google may take tower in Microsoft's backyard
By JOHN COOK
P-I REPORTER
Google continues to expand in Microsoft's backyard.
The Internet search giant, which opened a sales office in Fremont three months ago and a development center in Kirkland in 2004, is now taking a serious look at gobbling up nearly all of a 20-story office building under construction in downtown Bellevue.
I've got to back up dukes on this one. If you follow this dude Meshugy's posts he does nothing but argue with everyone.
I mean, how foolish is it to tell someone that their data is only "amateur" data. This guy is a joke.
meshugy:
How do you picture the future? Two families per home? Endless immigration? Every home turned into a duplex?
Is anyone watching King 5 right now? Robert Mak is doing the whole show on the Seattle condo market. We may be a year behind San Diego but our condo market is booming.
"Our condo market is booming"
Booming in what way? They are slapping together a ton of condos which are being sold to flippers...that is a false boom which turns into a bust.
I wonder if Mak will have any voices on other than real estate shills, now that would be surprising.
RE Robert Mak:
This is a replay of a program that originally aired earlier in the summer, I believe, so given some of the recent trepidation that seems to be taking hold, it's probably a little out of date.
I've seen his show before, and normally I think it's pretty balanced, but this program was fairly lame. The two experts he had on basically only discussed the livability of downtown condos, and didn't talk much about the current market situation.
Also, as an interesting note, I'm pretty sure that one of the guys that was interviewed early on was the guy who runs the "urbnlivn.com" blog. And yet it seemed to be portrayed as random man-on-the-street style interview. A little dubious.
Condos in Seattle are already slashing prices and offering incentives such as "No HOA dues til 2009"!!! Yes that's right, 2009. Last week it was 2008, the week before that, 2007.
Ayone who is seriously in the market for a condo must already know these things- all they've got to do is follow the RE section of the Sunday Seattle Times. Not too much "work" for even the most clueless of buyers.
So don't count on Robert Mak to prop up the market with a 3 month old show.
Interesting that even NOMA in Ballard is still advertising- they've even got little road signs clear up on 110th and Aurora pointing people toward their place.
Three or 4 months ago I went into their showroom and they went on and on about how everything but 4 or 5 were already sold.
Guess selling those last few is a real b*tch.
"Anyone who is seriously in the market for a condo must already know these things- all they've got to do is follow the RE section of the Sunday Seattle Times. Not too much "work" for even the most clueless of buyers."
Interestingly enough, I've noticed that condo prices are substantially higher than I had imagined -- and it appears that prices have risen significantly in the past few months. Earlier this year, I thought about selling my condo, and I was convinced that it would go for $250K (which I consider ridiculous, but there appears to be an ass for every seat). Today I ran a search for condos in my zip code with similar square footage, building age and amenities and there is nothing under $275K that meets the criteria.
A friend of mine listed her unit in my building a few months ago. It sold for $315K, which was $5K under the asking price. I just noticed another unit listed in my building this past week -- a unit with one less bathroom and one less parking space, and the asking price is $370K. I will be very curious to see what happens.
One more note: A woman I work with just listed her house for sale on Friday. It sold 6 hours later. 12 offers, the winning bidder paying $15K over the asking price.
I am not seeing the slow down, even though I believe all the factors are in place to cause a major meltdown.
There are a few links on this very blog that are about downtown condos. The prices are higher than I ever remember and many of the new units are sold quickly. I don't believe most of the buyers are flippers. But the only way to tell is to see how many lights are on at night.
Now that the media is all over the condo mania, maybe we are reaching the top.
"The best way to determine what the price of any house should be is to go back to 1996 (precisely how far back Zillow goes) and assume 4% increase up to now. THAT is what the house should sell for. And 4% is "generous"."
Why are 1996 housing prices somehow assumed to be fair and accurate? That rule seems as arbitrary as if I said after prices decreased that the right way to determine a fair price would be to go back to 2006 and add 4% a year.
Condos in Seattle are already slashing prices and offering incentives
High Pricedrop....then how do you explain that condos appreciated 20% YOY in July? They're actually appreciating faster then houses which appreciated 14% YOY. At some point all the condo development currently going on may flood the market...but right now it seems they can't build them fast enough.
Here is the raw data for Redmond and Seattle as a whole since 5/5. You can draw your own conclusions:
Date Redmond Seattle %
5/5/06 144 22023 0.0%
5/8/06 149 22171 0.7%
5/9/06 149 22203 0.8%
5/10/06 140 22307 1.3%
5/11/06 143 22398 1.7%
5/15/06 151 22587 2.6%
5/16/06 152 22715 3.1%
5/17/06 150 22784 3.5%
5/18/06 148 22975 4.3%
5/19/06 157 23178 5.2%
5/22/06 155 23382 6.2%
5/24/06 149 23419 6.3%
5/25/06 155 23469 6.6%
5/26/06 157 23585 7.1%
5/30/06 149 23747 7.8%
5/31/06 156 23753 7.9%
6/1/06 155 23719 7.7%
6/5/06 168 24196 9.9%
6/6/06 165 24264 10.2%
6/7/06 162 24417 10.9%
6/9/06 157 24684 12.1%
6/12/06 161 24985 13.4%
6/13/06 162 25168 14.3%
6/14/06 163 25303 14.9%
6/19/06 180 25635 16.4%
6/20/06 181 25715 16.8%
6/21/06 173 25914 17.7%
6/23/06 185 26106 18.5%
6/26/06 199 26349 19.6%
6/27/06 194 26440 20.1%
6/29/06 189 26564 20.6%
7/5/06 182 26586 20.7%
7/10/06 193 27380 24.3%
7/11/06 191 27367 24.3%
7/12/06 192 27537 25.0%
7/14/06 196 27849 26.5%
7/19/06 195 28170 27.9%
7/20/06 194 28207 28.1%
7/21/06 193 28340 28.7%
7/25/06 199 28638 30.0%
7/26/06 197 28713 30.4%
7/28/06 192 28835 30.9%
7/31/06 199 28900 31.2%
8/1/06 196 28781 30.7%
8/3/06 203 28984 31.6%
8/7/06 206 29434 33.7%
8/9/06 206 29537 34.1%
8/14/06 208 29964 36.1%
8/15/06 200 30051 36.5%
8/16/06 201 30057 36.5%
8/17/06 199 30149 36.9%
8/21/06 201 30368 37.9%
8/22/06 203 30379 37.9%
8/23/06 207 30389 38.0%
8/24/06 206 30491 38.5%
8/25/06 210 30611 39.0%
8/28/06 211 30743 39.6%
You may wish to view his loans.
This will give you a better idea of how solvent he is. To do this in King County go to this website
http://146.129.54.93:8193/search.asp?cabinet=opr
If in Pierce County, go to this website.
http://hartweb.co.pierce.wa.us/localization/menu.asp
If in another county then do an internet search for your county's public records website.
From these websites you will be able to see the loans that this person has taken on properties in the county. If a loan is a fixed loan then the terms will not be displayed. If however the loan is an ARM or if there are HELOC's taken, then the terms will be displayed. Given that he probably used a HELOC in order to extract equity for his speculative new purchase, you should be able to find this. Keep in mind that it may take months for these records to be placed on the public records websites.
This will help you decide if he is a good candidate to rent from.
What I am finding is new subdivisions are filled with ARMs and HELOCs, while order subdivisions are filled with less ARMs but with many HELOCs.
It is good to see that you are renting instead of buying in this market. It is also good to see that you are educating yourself by asking questions of those outside the mortgage/realestate industry.
Crashcadia.
ZZYZX:
The reason to choose 1996 is because that is the year Seattle RE began on it's upward trajectory.
Prices rose slowly, in line with inflation. In '96, in many neighborhoods they began a catapult, ie.100K in one year vs. 10K.
So to wipe the slate clean of nonsense, you'd have to go back to the year it started and 2006 for sure wouldn't cut it!
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