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Friday, October 20, 2006

"...didn't buy their ticket on the last spaceship flight off a planet that's about to explode."

What a delightfully entertaining gift the Seattle P-I has given us this Friday in the form of guest columnist Sarah McCormic's amusing thoughts about the Seattle housing market:

Several years ago, on a stroll around my Ballard neighborhood, I stopped to gawk at the huge price tag on a For Sale sign in front of a modest 1920s-era bungalow. A young woman joined me, grinning ear to ear. "Isn't it great how all our values are going up?" she said.

"Actually, I rent," I said.

Her smile vanished. The woman cleared her throat and we shuffled awkwardly away from each other.

I walked back to the tiny house my husband and I were renting nearby, and felt a little seed of bitterness taking root in my stomach. I thought about the guilty look on the woman's face. She had been crowing about the same rising prices that might keep me out of the market, and I had caught her red-handed.

I was in my early 30s, newly married, and we had just started talking about buying our first house. Our friends were meeting with real estate agents. Everyone we knew was getting hungry for equity. A lot of people were starting to talk about getting "left behind" and we wondered if we might already be too late to the home-owning game.
...
With friends who have also been lucky enough to land a Columbia City cottage or a Shoreline rambler, there's a sense of shared joy and relief. I remember feeling like this in fifth grade when my best friend and I landed parts in the school play: "Thank God we both got in." We toast our hefty mortgages and spend long evenings discussing hardwood floor finishes, crown moldings and our all-important soaring equity.

But with friends who have not yet "squeezed in" to the housing market, I am reminded of how I felt when I got accepted by my first choice for college and my best friend got nothing but rejections. What do you say to each other? I try to offer soothing assurances: "I hear there are still some great deals up north." "600 square feet is plenty of room!"

But no matter what I say, I know we all feel like they have probably missed their chance, like they didn't buy their ticket on the last spaceship flight off a planet that's about to explode. I fear they're doomed to move back to Missouri in order to afford more than a studio condo on the fringes of the city.
Hah! That is probably my favorite analogy so far of Seattle's housing market—a planet that's about to explode. Only, I have a feeling that Mrs. McCormic may have it backward, about who has missed what chance.

I just don't understand the appeal of spending 2-3 times as much money (or more) for less space and more upkeep. Throw in the very real possibility that all of that "all-important soaring equity" could easily disappear into thin air, and I just don't see how "owning" (aka renting from the bank) is at all more desirable than renting in Seattle right now.

Is it just people's mindset that owning is always better, no matter what? At what point do you step back and say: "wait a minute, renting just makes a lot more sense right now"? If mortgage payments were 5 times comparable rents, would that do it? 10 times? When does the home ownership above all else mindset finally apply the brakes?

Congratulations on your "little house in Ballard," Mrs. McCormic. May you still be so elated about your purchase three years from now.

(Sarah McCormic, Seattle P-I, 10.20.2006)

7 comments:

Eleua said...

Picture this...

In the not too distant future...

Someone looks at the forest of 'For Sale' signs on a Ballard street, and says to someone they assume is a fellow renter, "I wonder which one of these will be the first to the forclosure auction?"

The stunned person says, "I was recently served with a Notice of Default. That's my house over there."

Oops.

Again, I hate to be a broken record, but this was in play back in the Equity Bubble.

During the '99 runup, people would just assume you are buying all the tech stocks. When I would tell them that "I'm short," they would get this "are you under professional care for your stupidity" tone in their voice.

Funny how NOBODY wanted to talk stocks in '01-03. Now, all they want to talk about is housing, fixer-uppers, equity, Home Depot, granite, and just how dumb renters are. The tone in their voice is EXACTLY the same as it was 7 years ago.

That is why forums like SeattleBubble are valuable outlets. Everyone who is here wants to discuss the topic at hand.

plymster said...

This is the same attitude I get occaisionally from some of the weenies I've worked with about being a contractor instead of an employee.

I don't have the heart to tell them I make half-again their salary, have more mobility, and the same job security (actually better because of the way contractors are treated in accounting). Also, I don't have to politically maneuver at my job (though it's always a good idea to stay "plugged in"), and I don't piss my time away on random, useless "training" or "performance evaluations" where you write 10 pages of BS so someone can justify your 2% raise.

People get trapped in their mindsets, and pass over great opportunities (like selling your house at twice the price it should be) all the time. This is why sheeple get sheared and fleeced.

Christina said...

At what point do you step back and say: "wait a minute, renting just makes a lot more sense right now"?

When I'm not very happy with where I live (hostile social/political/economic climate that seems too long-term for my liking).
• When I don't have permanent resident or citizenship status.
• When nothing that suits us is available for 3x our gross income.
• When mortgage rates are above 8%.
• When Rentometer tells me my mortgage is higher than the average rent in my area.
• When I can't come up with at least 15% downpayment.

plymster said...

Nice post, Christina! That Rentometer is an awesome tool. Sort of a Zillow for renters.

Eleua said...

Kaleetan,

Too funny!

I heard that on the radio this morning. I guess that beats our older slogan:

Washington: we are not just serial killers anymore.

Eleua said...

BTW, Seattle paid $200K for that word:

"Metronatural"

I'm in the wrong business.

Shadowed said...

Fantastic post, pacnorwester. I'm considering changing my name to "pagan renter". =)