Seattle Bubble Poll Time
Given the variety of opinions expressed in the discussions on this blog, I am curious about the general statistical status of the readership, with respect to the issues that we focus on. To satisfy my curiousity, I have created the following series of polls. Vote in as many or as few as you like. The poll is completely anonymous—I have no way of even associating an IP address with poll selections. Please vote only once for each question, and please be honest. Feel free to use the comments to discuss the results or suggest additional/future poll questions.
FYI, "own" is in quotes because as long as you are still carrying a mortgage, it's really the bank that owns your home.
19 comments:
The poll is interesting, but I think the questions about when someone would buy, or what level prices will drop to, are missing some key options. As we've discussed on this blog before, many people don't think in terms of "percentage" declines for when they will decide to buy, but are looking at other factors instead. I think most people in our discussions favoured waiting till the rent/ownership ration was more in ballance. Others said they would wait till there were signs of revulsion for real-estate, in general. On this basis the "percentage" of the decline is not really the deciding factor as to when many of us bubble-sitters would wade back into the market.
On a completely seperate subject, I was up visiting friends in Snoqualmie ridge this week and was just flabergasted at the amount of development going on. The new housing tracts just go on and on...
And it is the most gaudy lot of cookie cutter McMansions you can imagine with tiny lawns, and small spaces between the homes. And the construction continues at an incredible pace. There were scads of homes in various stages of construction.
So much for the idea there's no building going on in the Seattle area.
Interesting that alot of people of $100K incomes but little in savings...
So much for the idea there's no building going on in the Seattle area.
FYI, Snoqualmie is NOT Seattle or the Eastside. It's the boonies...that I-90 commute is brutal.
It's similar to what happened in Chula Vista in San Diego. A ton of building and master-planned development in a formerly bad/undeveloped area, but everyone now finds themselves with 1-2 hr commutes and are starting to bail to homes closer to the city.
Good point, Mikhail. Perhaps I should add the following question:
If you do not currently own, what is the main factor that would cause you to consider purchasing a home?
- Drop in absolute purchase price
- Improved rent vs. own monthly cost ratio
- Negative public sentiment toward real estate
Are there other options I should add?
Interesting that alot of people of $100K incomes but little in savings...
Not really surprising. I suspected most of the "bubble-sitters" aren't prudent investors sitting on a ton of cash, just waiting to pounce after the bubble bursts. But rather it's people who spend far too much of their income on "stuff", don't save enough, and now find that they have nowhere near enough of a down payment to afford a decent place without "creative" financing.
Just wait 'till the lending standards start tightening, then ven with a big price decline you will need AMAZING credit and LOTS of cash to be able to buy, so the situation might not be much better.
that I-90 commute is brutal...1-2 hr commutes
Sounds like you are assuming that everyone is commuting downtown. There's lots of jobs on the Eastside, including Microsoft of course. That makes commuting from "the boonies" along I-90 quite possible, in much less than 1-2 hours.
it's people who spend far too much of their income on "stuff", don't save enough, and now find that they have nowhere near enough of a down payment to afford a decent place without "creative" financing.
I can't speak for others, but this bubblesitter is doing just fine financially. I could afford the houses I've been looking at with 30/fixed, but I don't think the houses are worth their price, and I think prices will indeed be coming down in the next few years. Doesn't make sense to buy, so I don't. I have very good credit and a growing supply of cash. It's just a matter of waiting for a house that's worth the price.
Re: Lake Hills Renter:
Right on! This "bubble sitter" is also doing just fine - I figured that until I know that I'm staying put for several years, the financial incentives to rent are quite strong. Whether one believes that housing market values will decline or not -- even the value of these overpriced King County houses as shelter are out of line.
Living debt free, six figures+ in secure, interest-generating investments, while maxing out my 401k and IRAs, and still saving more every month for a "rainy year" or an eventual down payment when prices correct.
Either my spouse or I might decide to leave our job in the next 12 months, to work on another degree while the other works fulltime. No way could we entertain this thought, if we were scrambling to send interest payments to the bank. At some point, a white picket fence and "granite countertops" become FAR less important than actual _Freedom_. Based on what I've seen some of our friends go through, it seems like these days, chasing the ghost of the "American dream" equates to giving up any real freedom.
In the poll, why was there not an option for "Own, paid off mortgage"?
We'll buy when we find a house that fits our criteria, right price, lot, commute, etc. I'm not real eager to jump on a nice house that was purchased 2 years ago for 200-300K less though. However, I see lots of folks have no problem buying these houses. The search goes on for me and my wife. I could rent for quite awhilel, but my wife is more emotional and will pounce as soon as the right property shows up. Oh well, she makes all the money. Our search is primarily in the southend, where houses tend to site on the market longer, especially when they are overpriced.
Are there other options I should add?
Yeah, make sure there is an "all of the above" option.
Waiting out the coming storm in my bungalow, paying less than 20% of household income on my mortgage, stuffing retirement accounts and saving up for a bigger house in a better neighborhood a few years down the road.
This is our plan too -- we'll probably be renting out our current house. We know there are cycles, and I've actually lived through a housing bust. Yes, prices are coming down, but in the localities that suffered a bust fifteen years ago, the prices went back up. People post as if bottoms were permanent -- tops aren't, obviously, so why should bottoms be?
Investors/speculators, and not actual homeowners (except for those that perhaps bought units priced at 5x-6x their household income during the past 36 months), might have wider emotional swings.
My family moved to the area recently for my husband's Microsoft job. We were brought directly to Snoqualmie Ridge by the Microsoftie realtors and it was touted as "the place to buy"... however, we are moving closer in as the commute to MSFT is close to an hour many days and we are spending a fortune in gas. Plus, the Ridge feels claustrophobic to us. We are also committed renters who gave up the nice "relo package" involved in buying a home because we were pretty certain the market was going to level out and even drop. It was the right call, as most of the homes in S Ridge have lowered prices big time, including rents. Many homes here have been on the market for months & months -- there are too many new ones being built & prices continue to drop.
i live in north bend and have commuted to west seattle...i aways get home in less than an hour at night...45 minutes usually - 35 minutes in the morning...thats to west seattle ..bellevue is only 25 minutes. I can speak from experience that I-90 is the best road in seattle to commute on. I have coworkers that drive north towards shoreline and it takes them well over an hour. Where else can you go 70 miles per hour ? - the only slowdown is through mercer island. The quality of life is also outstanding - plus the leafy half acre doesnt hurt - Oh, and in the winter i can be on the chairlift to black diamonds in 25 minutes from my garage...
Hey, no category for actually owning free and clear, which I do.
Now even if its free and clear, you do not really "own" it since the government will take it away from you if you do not pay your yearly protection (er taxes) money.
I picked "other" in the What Would Influence You Most... question.
It would have to be a combination of things: drop in absolute price, better ratio of buy vs. rent, and most of all it would have to include some sort of quality judgement.
I was looking at buying a house until about May of this year. Like everywhere else, prices here in eastern Virginia have doubled in the last 3 years. My budget is modest, and all I am interested in is at most a 3-1, 1000sf home. I'm single and living by myself, don't need a lot of room.
Oh, the parade of utter crap! Like Judge Judy says, don't pee on my leg and tell me it's raining. I can't tell you the number of run-down/cracked-foundation water damage major mould problem/ daylight through the roof/gunshot holes in the siding/graffiti in the walls/marijuana grown on the property POS's I saw, and was told what a "fantastic deal" they were. Or that they were perfect for a first-time homebuyer. I eventually went under contract on one, which mercifully failed the inspection.
I wanted to add that yes, I'm a bitter renter, and not because I'm "stuck" renting, but because I was constantly shown horrible properties and told how great they were. I'm not stupid, and I'm not going to spend a quarter of a million dollars (over a 30-year mortgage) of somebody else's money without being darn sure I was getting a good property.
Housing IS an investment, not in the stock-market sense, but like buying a new piece of expensive equipment is to a manufacturing company. There is far, far more to value in a home than the purchase price. The houses I was shown were consistently of marginal to poor value.
I'd be interested in seeing what the avg. monthly rental was for renters.
In speaking to a condo conversion(I hate those things) developer he said that over 875 units have left the rental market in the last year. Which to me shows that not only is there a rental shortgage, but someone is buying these things to try and rent it to me. That is one of my biggest reasons to consider a condo, as I need a place to live and the tax write-oof against my tax bracket are looking to make sense
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