Friday Open Thread
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20 comments:
We know that housing prices, inflation, interest rates, average earnings, repossession levels, mortgage levels, affordability, and rental yields are all part of the bubblicious equasion. Those indicators may also point to there being a broader, international bubble. In The Daily Reckoning, from the UK, I read some intersting commentary by Bill Bonner that validates a lot of what is being churned up in this blog, and also points to the bubble going well beyond our own borders. Here are a few snippets from the article:
23 percent of all American houses bought last year were for investment and in Miami, one speculation hot spot, 70% of condo buyers are investors/speculators.
Last year, 42 percent of America's first-time buyers – and 25 percent of all buyers – put no money down.
In California, 60 percent of all new mortgages this year are interest-only or negative-amortization.
House prices in relation to rent have hit all-time highs in the US, Britain, Australia, New Zealand, France, Spain, the Netherlands, Ireland and Belgium. In the US, the ratio is 35 percent above its 1975-2000 average. The price to rent ratio is a cardinal indicator of over valuation.
s crow said: "71% of all purchase transactions our office closed in 05' were 100% nothing down."
Has this trend kept up for 2006, or are people starting to get more conservative? Also, I wonder how different the recent trends for nothing down are compared to the 1990s?
Hi - I used to live in Seattle, and now I live in Boston. I just finished an article compaing the housing markets of the two, based on my experiences here and a conversation with a good friend of mine who is an agent in Seattle. Here is a link to the article:
Good News for People Who Love Bad News
I know a lot of people on this board are pessimistic about Seattle, but let me tell you. Seattle beats the pants off of Boston. It is newer, cleaner, nicer, prettier and cheaper! How I miss home. If you saw what I pay - $1400 to rent a small one bedroom apartment - you get an idea of how "undervalued" Seattle is. As I said in my article, Seattleites can't believe the prices, but outsiders see them as bargains. I know, because I was the same way. $500,000 for a house in Ballard? At least you get a whole huge house! Something that close to the city in Boston would get you a small, half of a duplex!!!
So take that Forbes chart seriously!
Take care
Michael Nystrom
bullnotbull.com
Looks like the pace of new inventory is accelerating. The Seattle area added 1900 new listing since 8/15, but 1200 of those were added in the last week. Seems like post-labor day, everyone has clued in to the fact that they'd better sell now...
Q13's morning news has a guy from the Puget Sound Business Journal on every Friday. Today's lead story he talked about was, get this, "We might be in a housing bubble after all."
He talked about the potential for increased foreclosures in the coming years. He cited the fact that "50%" of local housing purchases are financed with interest-only loans, up from "2 or 3% five years ago." He also explained the whole concept of initial low payments that then adjust in a few years when the borrower has to start paying back principal.
I couldn't believe my ears. It's about time, but I am always surprised by what is considered "news" to the general public. If so many people have bought homes in recent years, and if half of them used IO loans, shouldn't people already know this?
*forehead smack*
Seems like post-labor day, everyone has clued in to the fact that they'd better sell now...
An increase in September is actually quite normal in King County. In 2005 inventory peaked in Sep/Oct. But fell after that....we'll have to wait an see what happens in the winter months. If inventory keeps climbing then appreciation will take a big hit.
Spammer alert..."michael nystrom" has posted under two different user IDs, iirc...looks like he's just pimping his blog.
manystrom might be pimping his blog, but it's interesting to consider a comparison between Boston and Seattle.
Their population is a smidge higher than ours and their median income is a bit higher (less than a 5% difference). Their major industries are a smidge different (tech, medicine, education, finance vs. software, planes/warplanes, mortgages), and their employment sector is more diversified (we have two companies employing the lion's share of people locally, while they have multiple smaller employers like Harvard, Fidelity, hospitals, etc).
Similarly, they're the hub of New England, while Seattle is the hub of the Pacific Northwest.
It's interesting to note that our median price is nearly what theirs was before the bottom fell out of their housing market. It's also interesting to note that their economy recovered about a year before ours did after the last recession.
It's also interesting to note that those Forbes graphs from Moody's indicates that Boston's prices are supposed to flatten at this point (just before a national, housing-led recession) instead of continuing to drop like a stone. The simple laugh-till-milk-squirts-out-of-my-nose factor of this makes me discount the usefulness of those graphs.
This one has been on the market for the entire summer. The owners had to drop it $100K to get it to move.
The new owner will be $100K underwater by this time next year.
This one has been on the market since the Spring - ZERO ACTION.
This one has been on the market for as long as I can remember - early Spring +/-, and is now for rent.
More and more developments are coming in, increasing supply at a rate not seen in this area in its history - yet, no new jobs. Median household income - $38.8K.
There is another 300 unit development coming to the southeast intersection of SR-3/SR-305. I'll try to get the name, but it is even more supply, and the commute to Seattle is 35 minutes to the BI ferry + 40 minutes ON the BI ferry + your drive on the Eastside (King Co).
With all these new houses going in the N. Kitsap area, and the prospective buyers needing income that requires a Seattle job, the Bainbridge Island FBs are going to hate sharing "their" ferry even more. That can't be good for BI prices.
I read that article and find that many of the points are true. My family lives in boston and I went to school in NC. I currently live on the eastside near north bend and have been very happy here.
My brother is an engineer at a huge company and does not own a home or condo because of the prices. Were he to live in seattle, he could buy at least a condo.
Also, the weather sucks and there have been a lot of people leaving the state. Taxes are horrible too..Taxachussets.
One thing about WA is that compared to other states the number of 4 year colleges is low, but yet we have the most educated population. That leads me to believe that educated people are moving here from other states specificly the east coast. Just go to a red sox game at safeco to witness the red sox nation that have relocated.
Anybody know why Zillow is stuck on 9/1/06 data?
This is the longest stretch (2 weeks) waiting for them to update since I have been using their data (5/06).
Big jump in inventory this week in KingCo. Will post ongoing trend data later this weekend.
[Boston's] population is a smidge higher than ours and their median income is a bit higher (less than a 5% difference).
Boston's population density is also nearly double that of Seattle -- 12,166 people/mi^2 versus 6,717 people/mi^2 -- because they cram that population into half the land area (48 mi^2 versus 84 mi^2).
(source: 2000 census)
It's interesting to note that our median price is nearly what theirs was before the bottom fell out of their housing market.
Indeed. On a supply/demand basis, our prices are comically, absurdly, ridiculously beyond those of boston.
I won't even bother with the usual, "Seattle is NOT Boston, LA, NYC, Chicago, etc...." rant. The comparison is absurd based on geography and demographics alone.
The auther of the article certainly has a soft-spot for Queen Anne.
I like Queen Anne, but I'm not sure I would call it "special". It's ceratinly a great NW neighborhood.
But just about every city has nice historic neighborhoods close to downtown:
Chicago - Gold Coast
Dallas - Turtle Creek
Austin - Tarrytown
Atlanta - Buckhead
New Orleans - Garden District
Miami - Coconut Grove
and on and on...
Common characteristics are: older homes, mature trees, close proximity to downtown, expensive.
Hey Anon -
I don't think Nystrom is just "pimping his blog." It is a good article.
At least he left his name, which is more that I can say for you.
Uhm. Ok.
I apologize if this has been discussed on this forum before. I wonder if anyone knows the current building cost ($/sqft), excluding land value, in Seattle. Let's assume just average quality (if you have data for different qualities, that'll be even better). If you get the data (not just average/median statistics) straight from a builder (small or big) in this area, please do share. Thanks.
That question is absurd. The size of the building, the insurance costs, materials used, labor costs, margins, time, (the list of variables is very extensive), all affect construction costs. It is definitly not a simple equation, which most consumers don't realize.
I have a friend who just decided not to build even after buying a lot. My impression is that it is around $150-200/sq ft.
Times cartoon today
Nice find, jpsfranks! Posting...
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