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Wednesday, September 16, 1981

Weekend Open Thread

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

25 comments:

meshugy said...

Here's a few quotes from the recent Atlantic article “Where the Brains Are":

From: The brainy ones driving up house prices?

In the past 30 years, the nation has seen a steady pooling of college graduates in distinct parts of the country – San Jose, Seattle, Boston, Atlanta. To make more money and enjoy life more, the best and the brightest gravitate toward each other.

In other words, it's not the gross demand that's driving the prices up; it's the wealth of those who demand.

“What matters today isn't where most people settle,” Florida asserts, “but where the greatest number of the most-skilled people do. Because the return on collocation among the ablest is so high, and because high-end incomes are rising so fast, it makes sense for these workers to continue to bid up real estate and accept other costs that traditional middle-class workers and families cannot afford.”

“As traditional middle-class households are displaced by smaller, high-income households,” Florida goes on, “population can decline even as economic growth continues. America's most successful cities may increasingly be inhabited by a core of wealthy workers leading highly privileged lives, catered to by an underclass of service workers living in far-off suburbs.”

meshugy said...

DataQuick had the 2Q #s up for Seattle...interesting to check it out because it has $/sq ft for every zip.

Seattle Area Home Sale Activity

My zip: 98117

1Q:

Median: $435,000 17.6% up YOY
$/SqFt: $317
Sales Volume: 137 up 3.0% YOY

2Q:

Median: $442,500 10.6% up YOY
$/SqFt: $324
Sales Volume: 231 up 9.0% YOY

The increase in the $/SqFt shows that high end homes aren't skewing the median...simply that houses got more expensive.

Anonymous said...

Can anyone comment on this rediculous article on MSN home page.

http://realestate.msn.com/Buying/Article2.aspx?cp-documentid=883089>1=8588

I hope this works?

Anonymous said...

Sorry try this, these people must be wearing blinders.

http://realestate.msn.com/Buying/Article2.aspx?cp-documentid=883089>1=8588

Anonymous said...

It still didn't work anyways it's on the MSN homepage entitled "second home: should you choose coast or mountains"

Anonymous said...

nice job, anon 10:20, you fooled me. Not sure this blog is the best target market for selling homes though...

Anonymous said...

Try the Tim Dunn, Realtor, blogsite Anon.

I believe it's called "Seattle Bubble?"

He still thinks housing is a great investment no matter WHEN you buy, including right before a crash.

Anonymous said...

The increase in the $/SqFt shows that high end homes aren't skewing the median...simply that houses got more expensive.

No it doesn't -- it shows that big homes, may not be skewing the median. Maybe.

In order to say that high-end homes aren't skewing the median sales price, you have to consider neighborhood. For example, in June 2006, the mean Ballard price/ft^2 was around $400. In Madison park, it was closer to $500.

If all of the sales data for this DataQuick analysis came from Madison Park, it would seem like the mean price per square foot had gone up a great deal, when in fact, only homes from a tony neighborhood were selling.

Anonymous said...

Sigh...I didn't see that you had selected data for your zip code alone.

Aside from the fact that I can't get the 1Q numbers from that site, I still have no way of knowing that a $7 increase in median price/ft^2 is sufficient to explain the change in median price.

I also can't tell if the sales of high-end homes within the zip code are biasing the price/ft^2. If you plot price/ft^2 versus the size of homes sold in a particular time period, you often see significant correlations -- in other words, even if you control for home size, you don't control for home quality....

richard said...

The increase in the $/SqFt shows that high end homes aren't skewing the median...simply that houses got more expensive.


Or flippers had an additional 3 months to install granite and cherry wood.

richard said...

I've been checking inventory levels a few times a week and the last 2 weeks have shown the fastest climb this year.

Currently, Ziprealty lists 2816 properties for sale in Seattle with 729 price reductions. Just before Labor Day we were below 2500 with around 550 price reductions.

Seattle Renter said...

Found this link on housebubble.com:

http://www.europac.net/media/Schiff-Bloomberg-9-8-06_lg.wmv

great interview that sums up quite succinctly the housing bubble's effect on our economy in the future, and where we go from here.

meshugy said...

Here's some Microsfot news:

Where'd The Whiz Kids Go?

The sometimes-bumpy boom has created more than 300,000 high-tech jobs statewide, and the big money flowing from those jobs employs hundreds of thousands more in traditional industries. The state estimates there will be nearly 30,000 openings for computer specialists in the next decade, and the technology they create is needed in every industry from fishing to aircraft manufacture.


Meanwhile, Microsoft continues to add workers locally at the rate of 4,000 a year.

The Tim said...

Meanwhile, Microsoft continues to add workers locally at the rate of 4,000 a year.

Incorrect. Try more like 1,350 per year. We've gone over this before.

meshugy said...

I didn't realize the luxury condo market was so hot:

Popularity of luxury condos grows in downtown Seattle

"There have been select condominiums in the city that have sold for more than a million in some of the Belltown high-rises," said Roger Nyhus of Nyhus Communications, which represents the Four Seasons project. "But this is a new phenomenon in downtown Seattle."

But the all-luxury concept seems to be paying off. More than 70 percent of Fifteen Twenty One's condos have sold for an average of about $1.8 million, and at the Four Seasons, where prices for each of the 36 homes start at $2.5 million and reach above $10 million, half have sold.

The Tim said...

I didn't realize the luxury condo market was so hot:

Oh yeah, it's totally smoking. In fact, take a look at the graph in the original P-I version of the story and you can see that luxury sales skyrocketed from 0.75% of the total Seattle condo sales in 2004 to a whopping 1.6% so far this year. That's an extra 30 condos!

</sarcasm>

seattlebubble said...

Those of us who immigrated to this country from Hong Kong have a sense of deja vu. For those of you who don't know, Hong Kong people used to be the most aggressive real estate speculators in the world. This was because Hong Kong real estate grew at incredible rates over the course of 20 years, in conjunction with the huge economic boom in Hong Kong over that time period (as reflected by the 600 Rolls Royces in the city). Case in point: My mother bought a 1800 square foot townhouse for the equivalent of $100000 US in 1982 and sold it 15 years later for $1.5 million US. That's a 15-fold rise over 15 years, folks. Unfortunately, a lot of HK people didn't take into account the fact that "past returns do not guarantee future returns." The general feeling prior to 1998 was that HK real estate was a sure-fire way to riches. The argument was that HK is a tiny place and the population of 7 million was constantly increasing because of all the people moving in from China. As they say, "they're not making any more land" and "people have to live somewhere." HK people were saying exactly the same things (in Cantonese) that a lot of American real estate enthusiasts are saying now. Long before Americans had heard about the term "flipping", HK people were doing it day in and day out. Well, guess what? The HK economy stalled in 1998 and local housing dropped by 60%. Nowadays, it is still 30% below it's peak in 1998 and about 30-40% of HK homeowners are "upside down" on their mortgages. It is truly miserable. The point I am trying to make is that it is possible to have red-hot real estate price increases when the underlying economy is booming, but when economic growth is slow then rampant housing price increases are probably a sign of speculation. I am worried about the Seattle housing market here because: (1) being a mature, developed country, the U.S. economic growth rate is relatively sedate; (2) a lot of people are now buying with exotic loans, which implies low affordability and a speculative frame of mind that will end badly when the whole housing Ponzi scheme collapses; and (3) rents are very low compared with housing prices, which again implies a speculative atmosphere. If Seattle people were truly so wealthy that they can justify such high housing prices, then we wouldn't have all these exotic mortgages all over the place.

synthetik said...

Looks like Meshugy is getting desperate.

Anonymous said...

He's repeating his old, disproven lines.

meshugy said...

Hi Tim...here's some more info on Microsoft:

Where Did Microsoft Put 10,000 New Employees?

Microsoft hired 10,000 new employees in fiscal 2006, which ended on June 30 -- the most ever in a single year in the company's more than 31-year history.

The majority (7,000) were added to two groups: product research and development, and sales and marketing. Microsoft's development groups added 4,000 new hires, expanding product development headcount by 17 percent.


For local #s see:

Microsoft posts record job growth

In the Seattle area, Microsoft boosted its employee ranks by 3,938 -- a net addition reminiscent of the regional growth the company experienced at the height of the tech boom in the late 1990s.

With the net addition of 10,081 employees, Microsoft says its work force totaled 71,553 people worldwide as of June 30, the end of its 2006 fiscal year, up 16 percent from the same point the previous year. In the Seattle region, employment is 33,333, an increase of 13 percent.

In February, the company said it would accelerate the expansion of its Redmond campus -- spending $1 billion to add 3.1 million square feet, with room for 12,000 people. Parking has become so tough in some areas that the company has started offering workers free valet service.

Anonymous said...

thankyou Seattlebubble,for your succinct description of a housing mania gone bad.

umsue said...

Please allow me to introduce myself (insert appropriate soundtrack and voiceover here). I'm just a lurker with a sense of ethics that says after so much lurking you have to identify.

So here's my identity:

Profoundly typecast: PhD and a career in a hard science, resident of Seattle since 1981, homeowner in a zip code that is frequently discussed here (15 yr fixed at the bottom, 90% equity right now, paid off at retirement, but .... ), lived through stagflation on a fixed income, lived as a renter through 2 booms and one bust. Got laughed at when I was young and said that housing could only get as expensive as people could afford. Only within the last few years have I figured out that the word "contrarian" might apply to me. As a total fool when it comes to real estate, I have been guessing 10-50% reduction in Seattle residential value for the next few years. Until energy prices moved down-- now I'm guessing, for the next two years, that local residential real estate values will be somewhere between 3% and minus 20%. I reserve the right to change my mind on a daily basis.

Really I'm just listening and learning and evaluating and analyzing what others have to say.

But...

1. Been tulip shopping lately in the greater Ballard area and here is the report:

Inventory stocked by all the major retail sources is way down this year. Ordered inventory at all retailers is down 50% and limited to mid to low price point (bulk) tulips. Historically high end retailers have increased prices 10-20% to reflect direct costs, and eliminated most specialty items. Discount retailers have cut inventory with no price increase. Both markets seem to know their customers fairly well.

2. Is it just me or does anyone else think that a comparison of the data on how brainy seattle is (Yay) and the data on how few Seattle School students can pass a standardized test in math and science (Boo) represents another situation where the fundamentals are flawed.

synthetik said...

>fundamentals are flawed

I don't know. I don't have any hard evidence but some things in life just work out that way.

The preachers daughter was always the biggest whore in school, if your parents are religious then you are often agnostic/atheist... the point is, whatever your parents are shoving down your throat, you resolve to do the exact opposite.

Maybe that's why being a slacker is so popular here. Overachieving parents have a direct result on the increased use of THC, Nag Champa and Pochouili oil.

sarah said...

Umsue-

Really enjoyed your post and please contribute more often.

It seems you are somebody who has the ability to "observe" and "make note of" and we can definitely use that!

Personally, I'm still rooting for -50% no matter what oil does.

What is your reasoning for tying RE values so closely to oil?

I'd be interested in hearing the logic.

For me, the toxic lending machine is enough to push them down to at least *close* to fundamentals!

Anonymous said...

Median asking price in Seattle falling rapidly now according to benengebreth.

No *wonder* some are beside themselves, reposting old (and previously discredited) articles.

People who bought under influences of fear or greed in the recent past will now start to panic.

Please people, if you need to stretch at all to buy right now, do not buy! Wait!

If you buy against all logic and math, do not expect anyone else to save you from your financial mistakes.

Those of us who are not making mistakes will feel compassion for your situation, but not to the extent where we will agree to "bail you out".

You are on your own now.