Real Estate Talk: It's everywhere and funny!
Seinfeld Live!
Yesterday, I took my son to the dentist. Busy reception room. You get the picture-- kids sprawled on the floor with toys and books and one child playing a video game. A couple parents were sitting next to me. The conversation between them was about housing. Both ladies were discussing buying property to fix up and sell. About five minutes into the conversation another lady started to talk about "horrific "real estate prices etc....I was a classic scene right out of Seinfeld! It was like Jerry's parents arguing with George's parents.
The back and forth about this and that was hysterical. I just buried my head in my National Geographic magazine and listened.
Sound familiar?
At Home Depot
This past Monday I went to Home Depot to get some blocks for a small project at our house. While in the checkout line I listened to two contractors talk about the hot market. I was tempted, but elected to stay out of the conversation.
As I mentioned in earlier threads, there are a lot of people that seem to be "out of the loop" for a lack of a better term regarding tracking the market in a meaningful way. There are cases where I just itch to get in on the conversation. But, sometimes it's more interesting to be the bug on the wall, per se.
Real Estate talk is everywhere: coffee shops, super markets, dentist offices, etc....
What's your story? Been to open houses lately? What's the chatter? I'm sure you all can share some intersting situations. Perhaps some funny ones too.
31 comments:
Same old story - different subject matter.
In the late 90s, I lived in Hawaii. Normally, people don't spend thousands to travel to a tropical paradise, just to sit in a bar and watch CNBC and the stock ticker. Yet, that is exactly what people were doing.
Stocks, stocks, stocks... All stocks, all the time. It was mind numbing.
Last year, I had an annoying practice of logging all the various subject matter of adult conversations I would overhear on the Seattle-Bainbridge ferry. Over half of the conversations I overheard in a six month period were real estate related, and all but two of those were of the Meshugy/bullish type.
We know how the stock chatter ended ended. This will end the same way - only worse.
Stocks, Pokemon, Beanie Babies, real estate...
Americans love a speculative bubble.
My girlfriend works for a grocery store and everyday she comes home shaking her head in disbelief at all the nonsensical real estate chatter from the people in her checkout line. Here are a couple of her favorites:
The seminar guys who are over eager to share the 7 easy home buying tips to megawealth. They will usually hold up the line drawing golden pyramids on the backs of their receipts.
The soccer moms that never make eye contact with her, yacking on their RAZRs about how so-and-so completely f'd up the marble countertops. Then they always complain about the high prices of food in the store. Maybe try not buying produce so out of season it has to be flown half way around the planet?
Etc etc!
Here's a conversation that I cut from a members-only investment forum that I follow:
"My issue is that I purchased a home last November and financed $250k. I used a 1 year ARM (4.74%), anticipating I would pay off the mortgage with the proceeds from the sale of my old house (currently in VG MM) and exercising Hershey Foods stock options. When I did initial calculations, Hershey was at $63 per share and it is now in the mid 50's. My mortgage reprices in 4 months."
I'm finding more and more people are getting "in the loop" as far as RE goes.
Yesterday I was talking to my doctor about getting more excersize. I said I used to walk a lot til I moved from my "walking" neighborhood.
She said, "What's yor plan to start walking more again?"
I said, "You're going to think I'm crazy but I'm waiting for the RE market to crash so I can move closer in again."
I thought she'd say "Come on now, get real, get a realistic plan!"
Instead she said: "I don't think you're crazy, RE prices are dropping already and they'll be dropping more!"
Unbelievable.
I feel like in the past month, more and people are starting to get a clue and beginning to ignore local realtors hype in favor of the truth.
While at dinner with my mother, I brought up that I thought RE prices are at a peak, and would be coming down over the next year or so.
My mom, (age 62 and still likes to read books about the Kennedy family and Princess Dianna), actually said, "And you know, with all those crazy adjustable rate mortgages resetting, people are going to have a hard time paying their mortgage since rates are going up".
I almost fell of my chair.
The toxic mortgage news is making people do a double take on this market.
More and more people are beginning to understand.
The sad part is, that news has been out there for at least a year now and had it been more publicly kown, could have saved a lot of people from buying in at the top this year.
Every person I've met who's said the market's going down in the past month, they all say they think that because of the toxic mortgage news.
Turns out Americans are not as rich as we all thought! They really CAN"T afford 400K and up houses!
Turns out Americans are not as rich as we all thought! They really CAN'T afford 400K and up houses!
What? People (who are not me) can afford $150/month of gasoline, and $50/month cell phones, and digital cable, Internet DSL, and $24000 vehicles, and full contributions to their child's college funds, 401(k)s and Roth IRAs and their tax sheltered investments -- they can afford $400K houses.
People bought houses, however toxic the market was, in the late 1970s and early 1980s, and yes, even when mortgage rates were above 7%. And they'll continue to do so. However, the sellers need to flick the illusory bigmoneynowhammy scales off their eyes, and the buyers need to know they are at least equal to half of the transaction equation.
As it was Night Out last night, we homeowners could not help but talk about real estate. Was the house on the corner owned by a flipper? When was the house down the street going to have a new occupant? I think we were the youngest couple (as usual) at the Night Out: many folk either have paid off their houses decades ago or will do so within the next ten years.
But mostly, the chatter I hear around me is about high fructose corn syrup. Not everyone has her panties in a wad about real estate prices, homeowner or renter. But all the homeowners I've spoken with remember a housing bust at some point in their history.
I read alot of of automotive forums.
Frequently people post questions like "I have $XXXX to spend on my car, should I upgrade the suspension or save up for a turbo?"
Last year, without fail, EVERY time this question came up, someone would reply "buy real estate!!!" Haven't seen this phenomenon in months.
Christina-
Yes, we can afford the gas, cell phone, cable, car, fully-funded 401ks and the 400K+ house too. We also avoid that evil high fructose corn syrup. We're not alone.
we can afford the gas, cell phone, cable, car, fully-funded 401ks and the 400K+ house too. We're not alone.
Not alone, but you are not representative of the majority of Americans. Half the country makes less than $20K a year.
You guys have got to be kidding if you think that most Americans can comfortably afford a 400K house! Without a toxic loan.
Remember, just a few years ago 400K was pretty close to top of the market in Seattle, now it's the bottom.
I know the median household income for Seattle is in the mid-$50Ks, but that number (as I understand it) includes all wage earners over 15/16/18/whatever in a home. This can include a couple of early 20s roommates working at Starbucks.
Let's face it: not everyone is a candidate for homeownership (nor should they be, but that is another post). What I'm curious about is: what is the average income of a college-educated 2 wage earner household in Seattle? Any guesses? That has typically been the demographic of the average homebuyer in this country (you can dispute the college part, and yes, more single people are buying now...)
I'm asking because a college-educated couple each making $50K could come close to qualifying (according to the CNN "how much home can you qualify for" calculator) for a $400K loan. That is assuming that they aren't 1st time home buyers and have minimal (<$10K) down.
Those numbers don't seem so unreasonable to me. Am I really that out of touch?
This can include a couple of early 20s roommates working at Starbucks.
Really? Is that how they figure household income -- anyone living at the same address?
Am I really that out of touch?
I don't think it's fair for me to answer that question. I will say that my annual income puts me in the top 10% of earners in US -- yet I do not think I could afford gas, cell phone, cable, car, fully-funded 401ks and the 400K+ house without a lot of credit. In particular, I think that a fully funded 401k is inadequate as a retirement plan. I save(1) 50% of my gross income every month, which for me, feels about right.
(1) Includes 401K, IRA, MM Funds, and other mutual fund investments.
You guys have got to be kidding if you think that most Americans can comfortably afford a 400K house! Without a toxic loan.
Well, judging from what I see on the West Coast, and in my neighbourhood, people think they can comfortably afford a 400K house. With $10500-$13200/year daycare for the tot if the scamp is under the age of five, and $4000/year Coverdell Savings Accounts, $18000/year 401(k) contributions, $8000/year Roth IRA contributions, cable, cellular phone plans, Internet, gas insurance maintenance and license tabs for two late model cars (paid in full), or rather one car and the supposedly required minivan or SUV, to boot. This is supposedly what the American middle class thinks it can afford, or is at least entitled to. It's my quest to find out how people manage these with incomes under $100,000 and no stock options nor five-figure annual bonuses and no help from mumsy and dadsy.
People managing this without children not yet schoolage do not impress me much.
Where I live, the average household income is $61303. The average household net worth is $128,182 (I do not know if that counts home equity). Meanwhile the average net worth per capita in the US is $155,100.
Average home sale price: $363,412. Median total debts: $28327 (does this include mortgage? I know not).
Average total household expenditure: $49831. I suppose I live in a low-income part of Seattle.
Meanwhile the average net worth per capita in the US is $155,100.
This stat is misleading, and does not paint an accurate picture of the average American. Median might be a better stat to use.
Average does not account for our skewed income distribution where the richest few percent have a majority of the net worth.
Here are some figures, reported by age group:
Among Americans under 35, median family net worth was $14,200 in 2004. For ages 35 to 44, median family net worth was $69,400.
For ages 45 to 54, median family net worth was $144,700 in 2004. For Ages 55 to 64, when net worth peaks -- because people start drawing on their retirement savings -- median family net worth was $248,700.
Source: "Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances." See http://www.federalreserve.gov/pubs/bulletin/2006/financesurvey.pdf
http://www.federalreserve.gov/pubs/
bulletin/2006/financesurvey.pdf
>>> What I'm curious about is: what is the average income of a college-educated 2 wage earner household in Seattle? Any guesses?
-- I am a manager at a large local company, and college educated professionals in their 20's who work for me make about $100k plus 15% bonus, plus stock. They are typically married to the same, and usually work for the same company (different managers though). So we are talking a $200k base, plus $30k bonus, + stock for the 401k.
The ones I know are buying $600k-$800k houses.
More experienced people get up around $150k + bonus, + stock, but I find more of the wives at home for a while since they have kids. But usually expect to get the second income again when the kids are (pre) school age. These people usually have already bought, and may have an $800k house, they bought for $400k, so are in a better situation for single income.
The younger ones having kids are hurt more since since they have the $800k mortgage that required both incomes, but now want to spend some time with their kids, or must put up for day care.
>>> Average total household expenditure: $49831. I suppose I live in a low-income part of Seattle.
-- In my little eastside microzone the average household income is $300k, and net worth a couple mill. Scary how close the averages are to reality...
I am a manager at a large local company, and college educated professionals in their 20's who work for me make about $100k plus 15% bonus, plus stock.
Dang anon. Can I come work for you?
More experienced people get up around $150k + bonus, + stock
That is no joke, please anon, can you post some applications online here? Where is this 'land of milk n' honey'?
There's just no money in airplanes...
-- In my little eastside microzone the average household income is $300k, and net worth a couple mill. Scary how close the averages are to reality...
LOL! Nice troll.
How close would the averages be if you moved to Medina, or to Ranier Valley?
Does anyone else have info like anon's they care to offer? I just have a feeling that more college-educated couples in this area can afford the $400K homes than we think.
"I am a manager at a large local company, and college educated professionals in their 20's who work for me make about $100k plus 15% bonus, plus stock. They are typically married to the same, and usually work for the same company (different managers though). So we are talking a $200k base, plus $30k bonus, + stock for the 401k.
Incomes at that level represent the top 10% of wage earners in the entire country!
According to data from the 2000 census for the city of Seattle, as reported in Wikipedia:
"The median income for a household in the city was $45,736, and the median income for a family was $62,195. Males had a median income of $40,929 versus $35,134 for females. The per capita income for the city was $30,306. 11.8% of the population and 6.9% of families were below the poverty line as were 13.8% were under the age of 18 and 10.2% are 65 or older."
I'm an HR rep at a local company, and I can tell you that everyone under 30 that we've hired in the last 3 years is making $140K/year plus 50K shares of options sign-on (worth about 50-150K), full medical, dental, matching 401K to 10%, plus a $30K annual bonus.
Incedentally, I just made up anon 9:07s post. See how easy that is?
Most of the people I work with are in the $60-100K range. These are folks working at Fortune 100s with at least 5 years experience in IT. 2nd tier managers that I've met (with 10+ years of experience) make around $100-140K.
That's reality, not anonymously posted fantasy.
Hmm, I make just around $100k and my wife around $70k. Neither of us have 20 years of experience or anything. We're both in our mid 30s. In fact my wife's fairly new to her current career (switched out of tech for quality-of-life reasons and makes $20-30k less/year than she did). Neither of us work for tech companies or have stock options (although we have in the past) or family money. A couple years ago I turned down a job that paid about 15% more (including bonus opportunities) because of quality-of-life issues (my current job is closer to home, more sane work schedule, more personally rewarding, etc.). My point being that with the same experience I have now I could be earning $110-120k/year.
I'd guess the average salary in my IT department is probably around $80k, with the managers averaging around $120k or so. The average raise here is somewhere around 3%/year. There have been something like 4 layoffs (out of more than 100 people) in more than 10 years, and the company has been in business and growing for 35+ years.
No super crazy google-esque riches, but no one's in the poor-house either. Also, the core of the company are non-IT people, most of whom earn between $70k and $120k, from the job and salary grades that I can see on our HR web site.
Again, I'm not trying to be cavalier, but there are more people making $100k per person than you think. I know my group of friends and family are not the median, but we're also not figments of my imagination.
And it's not fantasy to think that with $150k family income you can easily afford a $450k house if you saved up and put 10 or 20% down. If that's what you choose to spend your money on. With $200k, $600-700k in housing isn't out of the question.
Plenty of these same people had temporary large bumps in their income due to stock options in the last 10 years. That money may not be coming in now, but plenty of them were smart and built up $100k, $250k, $500k or even $1m nest eggs. Most of them were smarter than me in terms of cashing in their options. Live and learn.
None of this discounts the fact that housing is very expensive, and there is a widening gap between the haves (me included) and the have nots. I don't know what the long-term economic conseqeuences are of that.
In my little eastside microzone the average household income is $300k, and net worth a couple mill.
We hear the exact same numbers dropped for the SF area--to suggest why home prices can remain sky-high. And here, an average 3br (fixer) home will run you $800K+. We're supposedly the wealthiest county in the state, yet local salaries are analogous to well-paid professionals in Seattle.
Just thought I'd share that for perspective. The same disconnect and rationalizations are here too.
So about these well-paid professionals making 150K combined who can easily afford that 450K POS under I-5 in Seattle:
Is that the house they're shooting for?
Or do you think they'll try to squeeze themselves into the 6-800K place?
Thereby adding to the pool of FB's?
Or do you think they'll try to squeeze themselves into the 6-800K place?
I no longer live in Seattle, but I can provide my perspective around here, so perhaps that suggests something...
I know many 2-paycheck households here earning perhaps $200-250K that shoehorned their finances into a $1M+ residence. They could've used a fixed mort in a cheaper town, but they had to get into a status area. Most often that meant an interest-only loan.
"I'm an HR rep at a local company, and I can tell you that everyone under 30 that we've hired in the last 3 years is making $140K/year plus 50K shares of options sign-on (worth about 50-150K), full medical, dental, matching 401K to 10%, plus a $30K annual bonus."
I would also like to see a link to these job openings. As a 30 year old with a degree in BS in Business, I'd like to know where these jobs are. Maybe my company is cheep. After 4 years I am raking in the big bucks at around 48k with my bonuses. In my peer group this rates in at or above the average.
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