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Thursday, September 28, 2006

More Homes Than They Could Afford

Seattle was mentioned today in this piece from CNNMoney.

NEW YORK (CNNMoney.com) — Home price increases have slowed nationwide and even reversed in many markets. Inventories are up and new home builders are cutting back. More and more sellers are having difficulty selling their properties.
...
For some sellers selling their old home quickly is critical: They've already made other plans.

Tom Shipp, Seattle: "My partner and I purchased a new home in Seattle, before we listed our current home on the Eastside. Our agents were confident that our current home would sell in 2 weeks and advised that we not make a contingent offer on the new house. . . . [the bid] was quickly accepted.

Ninety plus days, a second mortgage, and a bridge loan later we are still trying to sell our Eastside property! We just made our first double mortgage payment and are feeling desperate and depressed. We are supposedly still in a "hot" market and our property has what the agent's say are the three mandatory factors for a quick sale; price, location, and condition."
(Les Christie, CNNMoney.com, 09.28.2006)

13 comments:

Christina said...

I don't get why they took out more money when they refinanced. Were they adopting a child from China? Two single men have oodles of disposable income.

Their 2003 deed of trust had the worst rates I've ever seen, and that includes a person with a foreclosure history, and a person who went bankrupt.

synthetik said...

This home is 16009 271st PL NE 98019 purchased Jan 2003 using 2 Year ARM @ 7.75%, loan value $339K currently Zillowing $586K

Ref'd property in April 2005 using fixed rate adding $20K to principal. Then a HELOC in April 2006 for $32K. The bridge loan I presume?

The new house purchased 07/06 in the 98119 - aw, yeah! 1908 11th Ave W using 4-YR ARM @ 7.25%, loan value $571,900! Yikes!

"my interest rate will never be greater than 13.250%"

Jimmeny! I hope they can sell their first home and then get the heck out of that ARM!

The duvall house does not show up on Ziprealty, but there is an identical one nearby [kerchunk!]

synthetik said...
This comment has been removed by a blog administrator.
synthetik said...

Looks like they were nearly 100% financed too @ sale price of $368,800.

How bad does your credit have to be to get an 8% 2yr ARM?

I still can't find their first home listed anywhere. What gives?

synthetik said...

Weird thing about that neighborhood, about 25 homes for sale within 1000 yds of each other, one down the street on the market 265 days, many others 60-90 days.

I'm assuming the burbs' will be the first to start feeling the pinch so this kind of makes sense.

Crashcadia said...

Synthetik,

I think you may be correct about the burbs’ feeling the pinch first.
In particular I think the new subdivisions in the burbs have been infiltrated with specuvestors. I have been running the loans in the new subdivisions in my area and a large percentage were purchased as investments and rented out. I bet there are a large percentage of those in which the owner claims occupancy for tax and loan purposes.

I just watched KOMO news do an interview with the REIC about how the Seattle area is not in a bubble and that we will not see the downturn that the rest of the country is seeing.
They were talking about the Forbes article that predicts 60% gains over the next 10 years. The Forbes article can be seen on the Tacoma market website.
http://tacomamarket.blogspot.com/

I left them a little note about how I felt about the article.

Richard said...

It's worth noting that the Eastside saw considerably more price weakness in the 91-93 slowdown than the city proper did.

Considering how built out many of the eastside communities have become since then, it will be interesting if the pattern repeats - or just moves further out.

SeattleMoose said...

"Considering how built out many of the eastside communities have become"

I think Bellevue east of 405, parts of Kirkland, and the older Sammamish area are all gonna take a big hit.

Been to crossroads lately?....feels like you are in a foreign country.

After spending the summer checking out rentals we have driven just about everywhere in King county. What gets me about the geo areas I listed above are the number of 1960/1970 era homes that are: boring square boxes, in need of repair/overhaul, and are situated in neighborhoods that feel "worn out". Who really wants an old ugly "project" in neighborhoods where English appears to becoming a second language?

My wife discovered that many home built between 1945 and 1975 also have the popular "popcorn ceiling" which actually contains asbestos!!!

When we brought this up the RE agent showing the rental in Kirkland said "oh don't worry, just don't touch or disturb the ceiling and you will be fine"...

So if we bought this place we would have to pay to have the stuff removed and house decontaminated from asbestos fibers!!! They also used asbestos in siding from this era although this is less common.

Many areas of Seattle (White Center, Lakeridge/Skyway, Columbia City, Seward Park, Beacon HIll, etc.) as well as much of Renton, Kent, and Fed Way also have the "run down" and "3rd world" feel to them.

When prices have fallen and there is a ton of inventory, these "tired" areas are going to be the least desireable places to live with the result that these areas will be where prices drop the most.

Now throw in a recession and cities will be hard put to maintain their services. Crime will be on the rise due to the generally poor economy but police forces will be cut, not expanded.

All of a sudden these "tired" and "multi-cultural" areas will be the least desireable places to buy which will push down prices even more with the end result that these areas become the "bad" parts of town.

I realize I have touched on subjects that are not "politically correct" but neither am I.

It is what it is......

Eric D. said...

Another interesting point to consider might be crime rate. The crime rate is going up nationally and locally (at least in Pierce County). We are at a point now where we have a large teenage population who are going to spend the next 10 years doing bad things. This means areas with lots of young people are probably going to suffer from higher crime and subsequently lower property values. East Tacoma is a good example in my neck of the woods. It used to be considered a great "up-and-coming" area. Now with increased gang activity most buyers are avoiding it like the plaque.

NotMyRealName said...


I realize I have touched on subjects that are not "politically correct" but neither am I.


Politically correct? No. Racist? Yes.

You should realize that a lot of these "diverse" communities, particularly in the bellevue/redmond/issaquah area, are populated by immigrants with very high levels of education and very high salaries. And you expect this to become a "bad" part of town?

Get a clue!

dalas said...

Their house is stand to profit about $200k. 3 years = 200k and they're whining about their house not selling? More like, oh no I can't sell my house at 50% profit since I bought it 3 years ago!

This is ridiculous...more like greed than reflection of housing bubble.

Jackson Wallace said...

I agree that people who think Tacoma is up and coming are high.
It may have been since the downtown has improved - great. Hilltop
is worlds better than it was, but its still sketchy in a sort of way.
Yes, its partially minority populations, but there seems to be a degree of
integration. but there's also a lot of people just wandering around with no
money. The vibe is ok during the day, and I dont trust the place at night.

The topography of Tacoma makes it a large area with a grid that is
not really pedestrian friendly, like a lot of Seattle is. The most appealing areas of Tacoma are to the north. There
are no real landmarks by night. Granted, some people got deals, buying dumpy houses with great views of Mt Rainier, but the town's economy
still seems fragile. I dont know the future eonomically, but I'm not crazy about the segregation in Tacoma either. Its quite have and have not there, and less high-tech and flashy like Seattle, etc. Of course, some people like it that way. Its great for an adventure, but to live, eh. It seems like a lot of gangbangers as well as methheads and stoners populate the place. Its not real vibrant in terms of productive activity. Its a place to hide and zone out. I dont know, it just doesnt feel right to me, and I'm way more forgiving than a family.

Jackson Wallace said...

I judge people more by the way they live and keep their house than by their skin color. There are plenty of white cul-de-sacs full of truck-driving morons playing Kenny Chesney at full blast while they spend weekend after weekend working on their project muscle car. I'd rather live next to two gay black graphic designers than local yokels with scremaing kids and barking pitbulls anyday.
Then there are the Dr Dre wannabes once again blasting crap music at full blast, staring their neighbors down, and making you sorry you ever got near their neighborhoods. Racism is a two-way street.

I love mide-century house floorplans and the details on the nicer-built ones, however,
there are A LOT of 'tired' suburbs in this area, and I've gone into houses that needed so much help they were basically teardowns. In this kind of environment, buying a condo in town and another vacation home seems like an idea, except all the hassles that entails. Meanwhile, the condo craze has raised the price of these smog-deck shoeboxes to stupid
levels as well. Telecommuting from the San Juans still looks pretty good if you can do it.

People are gonna realize that RE is a lot less appealing when you dont have the guaranteed year-on-year price increases. Imagine improving a property thats losing value. People are gonna dump those like hot potatoes. It will be fascinating to see this all play out.