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Friday, August 07, 1981

Monday Open Thread

This is your open thread for today. Please post random links and off-topic discussions here.


matt said...

This one may be different , no maps for these territories, there be dragons...

Economists, however, have few clues on which to base their predictions. Today’s housing boom differs radically from its predecessors. For one, it has been bigger and longer-lived. House prices are still more than twice the level of 1991, when the boom began.”

“Much of the recent increase has been driven by an unprecedented flood of cash into U.S. capital markets.

Even if 'Seattle's Different' the blast radius may be such that even Ballard might not escape...

matt said...

link fixed... sorry 'bout that...

Anonymous said...

I'd like to see a thread where people on this blog would state what they would purchase if they *had* to buy right now.

And what variables have significant correlation to downside risk: Older house or newer house? Condo or starter home or McMansion? In-city or suburban or rural? High land-to-house value ratio or low? Good schools or okay schools or any schools? Crime? This question is really about what house buyers will want during a recession -- who will still be buying and what will they want.

Peckhammer said...

Seattle Weekly interviewed Sergio Salinas, "Seattle's Best Union Organizer," according to the local rag. Quoting from the article:

The biggest change Salinas has noticed in Seattle during his two decades here has been the increasing expense of living in the city. "Seattle has grown so much. It's vibrant, but there isn't enough space for people of all sort of income levels. It's heaven for developers. In our Union, most of the members used to live in the city -- now they live in White Center, Kent, Tukwilla, Federal Way.

Maybe it's an old-fashioned ideal, but some people have the expectation that should be able to live in the city they work without having to sell blood for food and healthcare so they can afford to own a modest home. But in another thread on this blog, I noticed the following comment challenging that notion:

"My, oh my. The world is lining up to accomodate your expectation, dear."

So is this the new Seattle, where the top percentile of income earners get to live in exclusivity while the rest of the working population is relegated to Ferrell Way and other marginal areas? Are we reverting to the socio-economic structure of the 19th century?

The Tim said...

So is this the new Seattle, where the top percentile of income earners get to live in exclusivity while the rest of the working population is relegated to Ferrell Way and other marginal areas? Are we reverting to the socio-economic structure of the 19th century?

No, we're just finally "growing up" and becoming a "world class city." Apparently ridiculously expensive housing is all it takes. Go figure.

matt said...

So is this the new Seattle, where the top percentile of income earners get to live in exclusivity while the rest of the working population is relegated to Ferrell Way

Not at all, its all cyclical. The same dynamic happened in Japan , now its all changing...

"Now, after years of tumbling land prices have made Tokyo more affordable again, few people are shopping for homes in the distant suburbs. That has led to severe declines in property values in these outlying areas, leaving many people with homes that are worth less than the balance on their mortgages from a decade or more ago."

jcricket said...

rest of the working population is relegated to Ferrell Way and other marginal areas?

Is Ferrel Way where Ricky Bobby lives?

Peckhammer said...

Is Ferrel Way where Ricky Bobby lives?

LOL! I need a freakin' editor.

Feral Way, as in feral animals, not the former SNL comedian.

jcricket said...

I think you actually mean Federal Way, right? Or were you making some sort of intentional slip?

Back off-topic - Here's an article on Condo reversions (some call it "re-partments").

Yet one more reason I would never buy a conversion and generally get nervous about condos (even outside the current bubble)

Eleua said...

Anon 952,

I'll bite.

If I was forced to commit financial suicide, and buy a home anywhere in the PNW, it would probably be in Jefferson County. Granted, that would suck for getting my three kiddies to a school that would challenge them and develop their character. Prices would still drop, just not as much as the King/Snoh/Pierce/Kitsap markets. I could live there and keep away from the metro riff-raff, yet get to the city if I needed to.

I figure that if the economy tanks hard enough, the Dems will rerun the New Deal playbook and build a bridge from King County to Kitsap. After the 20K Bainbridge Islanders commit suicide, or move out my way, land values would probably make me whole again.

If I was forced to live in the 4 county area, I would buy a ramshackle house on Bainbridge or Poulsbo, and do a teardown/rebuild. It would still be a money pit, but at least it would be what I want. As long as I could stay ahead of the bank (I'd probably pay cash, assuming part of your scenario is you can't do the "jingle mail" option), I could live debt/stress free.

I would absolutely stay away from the over priced, X-Cal roach motels, and all the condos, and I certainly wouldn't buy in anything that has been, or is projected to be, "vibrant" with +/- 25 years.

I see people posting on "why I buy" with thier projections of home fluxuations between -8% on the downside, and +40% on the upside. I wish them well, and I hope the remainder of their financial house is in order.

matt said...

Anon 952, I'll throw in as well, if I was to buy right now? Hmmm... How 'bout a Winnebago? That'd rule. I could park it in the 164th Wal*Mart for free, and when I needed to tap a little equity for pizza/beer money I'd drive it to Ballard and cash out with a shady re-appraiser... drive back to SnoCo. and repeat...

I'm sure a Winney's got about double the avg. sq footage of anything in the NoMa Ballard anyhow...

Eleua said...


Your idea rocks.

I have a buddy that went through MD80 training with me and he actually does live in a Winnie at one of the airport parking lots/local campgrounds. No kidding. He makes $75K/yr and lives in an RV. His commute is nothing, and he is never home to begin with, so it works for him.

Now, I don't know about the cash-out refi angle, so I'll ask him if I ever see him again.

I think there will be many former Ballard homeowners that might be in the market for an RV with "good bones" in a "vibrant" part of town.

One nice thing about an RV: location, location, location. You have total control of location.


richard said...

I tried posting this yesterday, but apparently it didn't take.

I was checking on a few current listings when I found what appears to be a flip gone bad.

MLS# 26097918
51 days on the market, reduced from $599 to $585, purchased 10/24/2005 for $582K.

The interesting part is the loans that were used.

The primary is 40 year option arm for $466K. Initial rate at 1%, minimum payment $1170/month (capped at 110%). Rate adjusted in December to LIBOR+3.75% (currently that would be over 9%) Second in the form of a HELOC at $65K - so they likely put around $50K down.

(this data taken from the KC records)

At this point after paying 9+% interest for 10 months + sales fees, they'll be lucky to get any of their down payment back.

There are a few other things about this deal lead me to believe this house may not be a flip. But who in their right mind would use financing like this on a place they planned to live in long term?

The Tim said...

Here's a random link of my own. Not really enough to make a full post about.

Condo Conversions Turn Into Reversions

Now that demand for condos has cooled, conversions are slowing and in some instances, condos revert back to rentals.
Condo conversions nationwide peaked in September 2005 and by June of this year levels had fallen back to those last seen in early 2004, before the bulk of the conversions happened. Nearly 28,000 units costing more than $4 billion were converted in September, while only 3,354 units were converted in June at a total cost of $449.4 million, according to a report from Real Capital Analytics, a research and consulting firm.
Nadji sees further softening in the second half of 2006 and in 2007, the market will be absorbing the bulk of the excess condo units. He estimates the market correction should have run its course within 18 to 24 months.

"We have a ways to go before we bottom out," he said.
In certain markets, though, condos have not succumbed to the reversion trend and solid sales are expected, Nadji of Marcus & Millichap said. He expects Seattle, Philadelphia, Tucson and Portland to continue to see healthy demand, while New York and Chicago will also be fairly stable.

That seems more like a list of where condos are still currently considered "hot." What are they basing the "expectation" of "healthy demand" on? Could it just be that we're just behind the cycle? Nah...

Peter Taylor said...

Here's what $250k will buy you in Snohomish.

I especially like the "Total Chef" oven sitting on the kitchen countertop in place of a real oven. I wonder if it's included in the purchase price?

The Dave said...

Re What I would buy right now...

If I keep my house in Kitsap I may buy a boat and keep it on lake union or at Shilshole instead of commuting everyday. My current house and a pretty nice boat are still cheaper than a crappy house in Balllard. (And since I have a house I am not technically a liveaboard which makes moorage easier to find).

I lived aboard on Lake Union for about 9 years. It was great except I missed out on the housing boom years of appreciation in Seattle. But looking at a cooling market makes living aboard seem like fun again.

At least with a boat your are fully aware you are pouring money down the toilet.

jcricket said...

Here's a random link of my own. Not really enough to make a full post about

Of your own! You're cribbing my link from like 4 posts back (scroll up a little). Cheater! Stealer. I demand my money back for my contributions to this open thread.

The Tim said...

Of your own! You're cribbing my link from like 4 posts back (scroll up a little). Cheater! Stealer. I demand my money back for my contributions to this open thread.

Zoips! Caught in the act! :^) I guess that's what I get for just skimming the comments and not clicking on every link. The MSN version showed up in my news alerts inbox and I just went with it.

But you do qualify for a full refund. ;^)

jcricket said...

But you do qualify for a full refund. ;^)

That's good, because I'm broke after my IO arm on my $2m Vulcan loft just adjusted. :-)

Peckhammer said...

It's as if "The Tim" writes for the Seattle Times... or maybe the paper reads his blog:

King County home prices barely budge in July; sales down
By Bibeka Shrestha
Seattle Times business reporter
Monday, August 7, 2006 - Page updated at 02:17 PM

Home prices are still rising in King County, but not by much. The median sales price of a single-family home in King County in July was $435,000, up only $50 from June.

seattle price drop said...


I think that may be from the same article I just read from PNW Newsource?

The most interesting thing about that article, is that at long last there are quotes from Seattle realtors saying that the market here is cooling.

They are admitting we're not different!!

That's the biggest news to date, IMO.

seattle price drop said...

Here's the latest from David Lereah, chief economist of the NAR: (referring to sellers reluctance to lower prices)

"The house party had to end eventually, even if sellers refuse to believe it. Many remain defiant to the point of delusion".

Little rough, eh?

Last week he said house prices could go down 10, 20, or (gulp!) 30%.

And now he's taking a bat to sellers.
Watch the NAR lead this thing down now that they've spent 10 years pumping it up to popping point.

matt said...

Hahahaha... a howler of a King 5 news piece just on!

Cooling Housing?...

Of course it was your usual gambit of Realtor's shilling like never before, raving about the 'economy', etcetera, your usual used-car salesmen tricks.. but the last quote by Gene Enerson was the howler...

"Realtor's said last July's unusually hot weather may have been a reason sales were not as strong as last year"

Which is it? Apparently this winter it was the Superbowl, this spring was the rain, now this summer its the summer?

Anonymous said...

Aiya, what'll be the excuse in the Fall? Halloween's so popular now , everybody's busy making costumes?

emcityjill said...

Here's a Miss Rhodes blast from the (not so distant) past...a Seattle Times article entitled "Seattle market: Distorted prices — or room to grow?" Published June 2005, here's a little snippet:

Don Henry, a Prudential Northwest Realty agent, remembers that time well. After languishing through much of the 1980s, prices took off in 1988. In 1990, they peaked in a frenzy of multiple offers and price run-ups much like Seattle is experiencing these days.

Then, seemingly without warning, the market stalled the next year. In half of King County, prices rolled back.

Mercer Island was one of the more dramatic examples. In 1990, the median price per square foot reached $140, according to a Seattle Times analysis. The next year it dropped to $126.

That meant a 2,000-square-foot Mercer Island house that was worth $280,600 one year commanded $251,520 — or $29,080 less — the next.

The scenario was repeated in area after area. Some owners who had to sell took a loss, Henry said.

"They were extremely disappointed, but there was nothing they could do," he said.

I was just told by a Bank of America manager last week that "housing prices in Seattle have never gone done." I thought it would be rude to laugh. Wish I had.

Pollyanna said...

Fun newsweek articles on consumer debt:

Pollyanna said...

And housingbubbleblog Ben!