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News and discussion about real estate & the housing bubble, specifically as it pertains to the Seattle area.
Just to clarify, I want local companies to succeed, and don't take pleasure in bad news like the linked stories. I just think it's a bit naïve to think that because these two companies have been doing well the last few years, they're guaranteed to continue growing at the same rate, and thus propping up our housing market. It's an argument I get really tired of hearing.
I may be able to speak to this topic with some level of expertise. I work in the Microsoft relocation center. I primarily deal with recent college grads, but occasionaly an industry hire (experienced) transferees. I'm open for questions!
This article is indicative of a general trend in the software industry towards shifting dominance. Google unveils Web-based office softwareAlthough Google's product base is tiny compared to Microsoft, they generally accomplish what they set out to do - whereas lately Microsoft spends a ton of money only to back off and switch direction. It seems while Microsoft has the cash to move, the lack of vision and leadership is having them play catchup to the most innovative palyer in the market.
MsRelo, good to have you. I work at Uncle Bill's Family Fun Factory as well. Can you speak to the size of this "hiring binge" we're supposedly on, and what portion of it is college grads vs. transferees?Ironically, the younger guys I talk to are more inclined to believe the "buy now or be priced out forever" line, while the older ones who've just moved here are more inclined to say "that's ridiculous, I'm not paying that for a house" even though (or perhaps because) they can better afford it.
MSRELO - is google moving up here to compete with microsoft?
Good luck with Google office. No company in their right minf will let their internal docs sit on a remote server.You can download openoffice.org for free and it's pretty frickin' awesome. I use it for most everything (and LOVE the PDF output button - so easy for reports!)
I just typed a whole response and it disappeared into thin air...I think this year there will less relocations to the area. We moved almost 4000 people last year with majority them coming to Redmond. But who knows, we haven't had our meeting about the summer volume yet. There are also around 1000 interns that come for the summer putting an incredible strain on the Eastside rental market. It is my opinion that the the bellevue Redmond area is near it's breaking point. The infrastructure is simply not here to support the numbers of people coming in.From what I see it is the MBA grads who are bent on purchasing. They often already have condos or houses. I see a lot of sticker shock!!! In response to the comment on google. I would say the reason they are here is to simply poach talent from Microsoft. Seems like a simple numbers game in that regard.
Good luck with Google office. No company in their right minf will let their internal docs sit on a remote server.You're making 2 assumptions - the first is that google isn't intending to make these apps available for install on a local network (seems unlikely since running thousands of apps that ALL require net access isn't practical due to bandwidth issues)The second is that storing this data on a 3rd party server is any more insecure than other places it might end up - like on a stolen laptop.Google already has a few products aimed at non internet use like "Google Mini"(essentially a standalone server) - just because it's called Google doesn't mean it has to run on the web.
Boeing Puget Sound #Jobs YOY1998: 103,4201999: 96,5102000: 79,9002001: 78,2002002: 75,4002003: 61,4002004: 53,5332005: 55,4342006: 62,8422007: 68,570Again, the jobs Boeing creates in the Puget Sound's median income have probably gone down as well, because after Corporate left town, high paying executive jobs fled to Chicago with them...The significant percentage of the 787, people must remember, is manufactured/engineered OUTSIDE of the Puget Sound. (Has anyone seen the monstrosity 'Dreamlifter' flying over the 'Sound yet?). Parts are flown in then slapped together here...This should put the nail in the coffin of "Boeing will save the Seattel Housing Market" nonesense
It is naive to think that these 2 companies will prop up the housing market.There are many other companies and industries emerging in the area.Here is an example.."Harvard's loss is UW's gainThe University of Washington is poised to cement its place as a leader in global-health research.Top public-health officials say the move could catapult Seattle to the forefront of global-health research. "I wonder if this global health research thing will take off...hmmm....
Also, I wonder if the 2010 Olympics in Vancouver will have any effect on the local economy here over the next several years? The Pacific Northwest should see some economic benefits from this Global Event. It couldn't be bad.Throw in the increase in Trade/Port Activity, Starbucks, Costco, Increasing Cruise Ship tourist $$ .. By 2010 we might still be waiting around for "the right time to buy."
Regarding Boeing - it's worth noting that the last 2 major jet launches (767 and 777) coincided with stagnation in the local housing market. Whether we'll see any similar effect this time around is debatable since so much of the 787 part fabrication isn't being done here - either by Boeing or other local aerospace contractors.
Kaleetan, Read the latest addition of the PSBJ stating that port activity will see no growth and has actually declined. So that's out.Increasing Cruise ship tourist contributing to housng costs? as a person in the hospitality industry, I can tell you that yes, they are good for local merchants and hotels. It certainly doesn't raise the standard of living for any one. My pay won't increase dramtically if at all due to that and I am directly affected by them.Not a lot of job growth locally at Starbucks, nor Costco....as stores open up in china etc..Olympics may contribute some tourist money way down the road. Probably the biggest contribution will be from people who can't get into Canada due to a DUI 20 years ago and are stuck in Seattle. It will problably be equivalent to a couple fo Superbowls, which certainly haven't stopped any of those hosting cities from housing crumbling. So I really don't see where you are going with that. Are you really trying to say that all of these put together will keep inflated housing up despite mortgate collapses, foreclosures etc...? I guess I don't see the logic there.
As Bill Gates turns his full attention to his foundation, and as Buffet's money (and whatever other money comes in) starts needing to be spent, there's an opportunity for the health sciences industry to really explode here. Once the Gates foundation HQ is completed (adjacent to Seattle Center), things may kick into high gear.This would help diversify the area's job base further.
"Are you really trying to say that all of these put together will keep inflated housing up despite mortgate collapses, foreclosures etc...?"Yes, I do think that this area will still have inflated housing prices despite mortgage collapses, foreclosures...Its not right, its not fair to the rational homebuyers but yes, I see all these factors combining to keep the local economy strong...Specifically the Biotech.We might have a dip in 2008 if the 6-12 month california lag theory holds up but by 2010 we will see median prices near 500k getting closer to Forbes predictions of 650K
Kaleetan,Even if median income were to rise 10K a year in Seattle, it would not be enough to support current prices.You should really read an unbiased economic publication like The Economist and not some drivel like Forbes...Steve Forbes also claimed in 2005 that there was no National housing bubble and that National housing prices would not decline... OOPS, DOH!There are plenty of markets out there with thriving economies, with even lower unemployment than Seattle, that are currently getting hammered in their housing markets. We'll get there, like The Tim posted before we have just been a little slower getting to the big dance.
"I primarily deal with recent college grads, but occasionaly an industry hire (experienced) transferees."How interesting. This one sentence says volumes about Microsoft and its hiring practices.I have long known that Microsoft tends to hire naive young kids right out of college and burns them out by their 30s. I wonder how many of these walking zygotes can afford a $500,000 house on the starting Microserf salary?
"We might have a dip in 2008 if the 6-12 month california lag theory holds up but by 2010 we will see median prices near 500k getting closer to Forbes predictions of 650K "This is a version of the ever-popular "and then a miracle happens" style of analysis favored by CNBC and government economists.How? I really mean it. HOW can you so accurately predict a boom on the other side of some small downturn? Honestly, how can you or anyone do that? You have a minimum of two inflection points that you have to get right, not to mention the scope of both intervening periods of time. These inflection points (especially the first one) are not even acknowledged by the 'experts' in the REIC.
Just wanna say: I love that illustration Tim posted with this topic!So typifies the group-think mentality of people who think Boeing and MS are the saviors of the NW.Btw, what's in that envelope that guys holding?a. fat paycheckb. unemployment checkc. equity check from house saled. threat letter from loan provider
Kaleetan:I work in biotech. You're wrong. As wrong as a person can be. Dead wrong. Wrong.There are actually very few high-paying biotech jobs in Seattle. Traditionally, there have always been far more technician and "research associate" jobs than "research scientist" positions in Seattle, but those don't pay what you think they pay. Certainly not enough to buy the current median Seattle home on a 30-year fixed mortgage. In many cases, we're talking about salaries that barely cover the bloated local rents.Furthermore, with the closure of Icos, there are actually fewer biotech jobs than there were 6 months ago. Couple this with the ongoing research budget crisis at the UW (NIH funding levels are down by nearly 30%, in case you hadn't heard), and things are looking bleak for biotech in Seattle.Don't even get me started on the number of people with PhDs at the UW who are being rushed out the door. I've known several people with post-doctoral experience who have already moved out of the area, for want of a relevant job.No, despite what you read in the local newsvertisements, biotechnology is not a strong industry for Seattle. Oh well....maybe Boeing will save you.
Witzend, I also really like the picture. It came from a Puget Sound Business Journal story back in January where they were attempting to summarize the state's economic outlook for 2007. I posted the pic when I linked to that story, but I couldn't resist using it again. :^)
I have long known that Microsoft tends to hire naive young kids right out of college and burns them out by their 30s. I wonder how many of these walking zygotes can afford a $500,000 house on the starting Microserf salary? MR Bubble,I should clarify that I do work on a team of roughly 20 people. There are 4 other people on the campus team but the rest handle industry hires.The one thing you have to keep in mind is that my exposure is limited only to people who are offered relocation packages. I am sure there a tons more people who get jobs at MS but are not offered the benefit of relocation.To the next topic... On more than one occasion I have relocated new college grads where the husband and wife are both getting hired (both undergrad and Masters). They can more than easily afford a $500k house. Definitely an exception to the rule.
Oh, and if you enlarge the picture, you can see that the text on the envelope says "DIRECT DEPOSIT." Perhaps if the local economy does turn south with the loss of construction and RE jobs, it would be appropriate to Photoshop the image a bit...
"The one thing you have to keep in mind is that my exposure is limited only to people who are offered relocation packages. I am sure there a tons more people who get jobs at MS but are not offered the benefit of relocation."If you work exclusively with recent college grads, that's one thing. But there's no reason that relocation packages should be disproportionately associated with young employees. In fact, it should be the other way around -- when I was 22, the only "relocation package" I needed was a cardboard box (these days, I need at least a hatchback)."On more than one occasion I have relocated new college grads where the husband and wife are both getting hired (both undergrad and Masters). They can more than easily afford a $500k house. Definitely an exception to the rule."Yeah, that's quite an exception. It also assumes that both husband and wife will continue to work, not have children, etc. In other words: not terribly realistic.I realize that some people don't want to have kids (I'm one of 'em), but I still don't think it's safe to assume that a dual-income couple can afford twice the home because they're both Microserfs.
Mr Bubble,I wish I could be more candid with the some of the information I have. But I cant...These kids get handed everything from Microsoft. Either they are the cream of the crop or management is dilusional. They think their sh** doesnt stink. And from what I can see, their incomes are extremely high for being in their early to mid 20s.
"These kids get handed everything from Microsoft. Either they are the cream of the crop or management is dilusional. They think their sh** doesnt stink. And from what I can see, their incomes are extremely high for being in their early to mid 20s."I understand, msrelo. Believe me...I know the people you're talking about.The kids are usually very good, and certainly very arrogant, but they're still young and inexperienced. Very few people make it as a technical employee at Microsoft for more than a decade (and Microsoft counts on this behavior).The funny thing about those high starting salaries, is that they never seem to get much higher. And Microsoft isn't exactly well-known in the industry for hiring "experienced" employees....
Mister Bubble -I don't work in biotech but my second-hand experiences support what you say. A few years ago I knew a woman that worked as a scientist at Zymogenetics. She didn't live in a $500K house. She lived in a studio MIL unit.Another fellow I knew worked at FHCRC. He rented a bedroom in a rundown house in Greenwood.Neither of these people made a large salary in the medical sciences. The only person I do know that pulls in six figures in biotech moved to (ready?) San Diego shortly after finishing up her PhD at the U. She did buy a house. It appreciated quite a bit and now is worth...about what she paid for it. I'm hoping that she can get out and break even.These are just anecdotes, of course, but that's what I've seen.
Probably the biggest contribution will be from people who can't get into Canada due to a DUI 20 years ago and are stuck in Seattle.LOL. That's about it. Vancouver's winter Olympics will be held for two weeks in Whistler, 10+ hrs from Seattle (Highway 99 and downtown Van will be gridlocked during the Olympics) Don't expect much spill-over.
My little sister works in BioTech in San Fran (Genentech). She wants to move to Seattle, but told me that the job climate here is very limited in terms of paying her what she is making there. Luckily for her, her husband is a doctor and she doesn't really need to work if she doesn't want to.
KBitoech hasn't saved San Deigo, the fastest growing Biotech area in the US. I dealt a lot with Biotech down there and know a lot of people involved in that industry, even some of the CEO's Presidents etc...DO NOT count on that industry keeping house prices high.I think both Eleau and Misterbubble have incredibly valid points and though I appreciate your opinion, must strongly disagree with your conclusions.The ONLY thing keeping this floating is international cash flow. When the cash cow dries up...and IT WILL...MS, Boeing, Biotech, UW, tourism, Biotech..don't care, you name it....won't keep the air in the balloon.
You gotta admit, the winter Olympics 10 hours away, in a totally different country, is a new one! Have fun getting through the border during those two weeks!Of course Kaleetan usually does this... He comes around every so often, spews forth some regurgitated MSM nonsense and then disappears!
msrelo: i will be one of those relocating to redmond this october. how is the rental market like in redmond? what can i expect?
I'm sure the '90 Goodwill games were a real booming influence on local housing. Vancouver and Portland probably had their values double overnight.Perhaps we can have a really big salmon derby to jack up prices.
Don't forget the Tacoma Marathon in May. That ought to boost prices in Redmond by 2% all by itself.
My wife was raised in a communist country and she said it reminded her of the propoganda pictures she was bombarded with in her communist school....Engineering always ramps up in the development cycle, then falls off. MS hired like mad the past few years because of Vista, Zune, etc. The major design thrust is over. Hence...fewer people in the future. Also, I lived in Kirkland in "high end" apartments from 10/05 thru 3/06. Across from us was a suite apartment obviously rented by MS and full of folks from India who slept on the floor. There were 6 full time occupants in a 2 bedroom apartment. They were all crammed in this apartment and had computers (beta testing) running 24/7. How do I know?...I asked one of them. They were all due to go back to India in early 2007 after the release of Vista. They wanted to rent a house. Really nice likeable people....Now on to Boeing. Boeing is laying off contractors on almost all its defense programs. They are always the first to get cut and are the "barometer" of the job cycle. After the contractors come the employees. Boeing (like MS) hires like mad during development then hiring freezes (already happened in late 2006), then falls off. How do I know?...talking to headhunters. They say the root cause is defense spending is being siphoned off to Iraq and the DOD's favorite programs are coming under "pressure" due to lack of funding. Commercial airplane company is also "over the hump" engineering wise and now only the manufacturing jobs are a projected as being "level" as the backfill of orders is worked off. Even then one only has to remember that if there is a global recession, airlines ALWAYS end up cancelling some or all of their orders for airlines as they scale back, go bankrupt, etc.If these 2 companies are the foundation of the "it can't happen here" argument, then all I can say is the emperor has no clothes...
Very few people make it as a technical employee at Microsoft for more than a decade...Funny, I work with quite a few. I can't speak for all parts of the company, but in my product group the idea of working the employees until they drop is long gone. The company really pushes home'life balance from my experience. They seem to recognize it's in their best interest to keep employees long term rather than burn them out and let them go. But that kinda kills the Microserf stereotype. YMMV.
As far as the olympics go,for (Washington), it is the best possible situation. All of the economic risk is being borne by the Canadians, yet we will get a lot of the economic bump.Estimates on the possible economic benefits vary from tens of millions to hundreds of millions of dollars in contracts and tax revenues. The Idaho tourism board claims the state made millions in taxes alone from the 2002 Salt Lake City Olympics.As far as Biotech - i do believe the Gates Foundation Headquarters along with UW-Global research center will play important roles as far as diversifying the local economy away from MS and Boeing
I find the idea, that Microsoft, or Boeing, or any company, or combination thereof, will prop up the ridiculous housing prices in Seattle, hysterical. Short of some miraculous, across the board and instantaneous hyperinflation of local wages, NOTHING can. This confused rhetoric is quite obviously another desperate and futile attempt on the part of the REIC and it's believers, to justify and support the runup in values, which was completely and totally independant of income to begin with. Furthermore, I would argue that the only effect, if any, these companies could have on local prices would be negative due to massive job cuts. After all, most of the jobs created do not support current prices, but jobs lost support them even less.
LHR:"I can't speak for all parts of the company, but in my product group the idea of working the employees until they drop is long gone. The company really pushes home-life balance from my experience."It depends heavily on your product group, I guess. Personally, I know of a half-dozen people who have washed out of development at Microsoft in under 10 years. I know a few more who are getting there fast. Many were working on the OS. All were incredibly bright, talented people who just got sick of the insane work ethic and the culture.Now, Kaleetan:"As far as Biotech - i do believe the Gates Foundation Headquarters along with UW-Global research center will play important roles as far as diversifying the local economy away from MS and Boeing."You're talking out of your butt.1) The Gates foundation is a philanthropy, not a biotech company. They give money to a few local researchers, but the vast majority of their investments are scattered around the globe.2) There is no such thing as the "UW Global Research Center." The article that you neglected to link is nothing but an example of MSM, back-patting, gee-aren't-we-smart, bullshit PR. If you actually read the article, you find that "UW's gain" is much more speculative than real.3) As I told you before, the UW is experiencing a funding crisis at the moment. Researchers are being laid off in significant numbers. Furthermore, the UW has been a biotech research leader for much of the last 20 years, and that fact has yet to translate to substantial numbers of jobs in the region.The "biotech will save us" argument is nothing but fantasy. Microsoft and Boeing will come to the rescue long before biotech employment reaches the levels necessary to sustain current home prices.
I hope to live one more year.Why?I can not wait to hear what economic snake-oil the REIC will be pimping to justify their predictions of permanently high house prices. It gets better every year. The '10 Olympics was the best so far. Perhaps in Pt. Roberts, but Seattle? Get real.How many people in King County know ANYTHING about British Columbia? I bet at least half don't even know they use the metric system.You have to know that the primary reference that Americans use to gain a knowledge of Canadian culture is SOUTH PARK: BIGGER, LONGER, and UNCUT.The more developed the RE bust becomes, the better the excuses...
I can not wait to hear what economic snake-oil the REIC will be pimping to justify their predictions of permanently high house prices.Robots! Robots will save the housing prices.You know, Microsoft is getting into robotics...
Tim,The cancelled Russia order is a drop in the bucket of 787 orders. What's more, it was a cancellation on political grounds, not economic or technical reasons. It alone will have no effect on Boeing staffing let alone the local housing market. So what are you suggesting here?
So what are you suggesting here? I'm sorry, I thought in the first comment above I made it pretty clear what I was suggesting: I just think it's a bit naïve to think that because these two companies have been doing well the last few years, they're guaranteed to continue growing at the same rate, and thus propping up our housing market.
one of my friends pointed this out to me...she's been with boeing for 20+ years and made 25$+ per hour until 2004 when boeing started to downsize and her entire department was contracted out...they were all offered their old jobs back - with the new subcontractor for half the salary... most of them took the paycut rather than risk being unemployed... bottom line, actual boeing jobs don't reflect the entire aircraft market (lots of subcontractors in puget sound) however boeing's not paying like they used to...
Seattlemoose, The guys from India you are speaking to are quite common. We will rent them an apartment for x days, then they are on their. However if they have friends that are starting at the same we can piggy back their benefits. They are basically working the system to the max. We are all aware that it is done but you can't tell them how to live.Van,The rental market is always tough on the east side. I am pretty sure there is somewhere around 3 or 4% vacancy. October is a much better time than over the summer. The temporary influx of 1000 interns in apartments really makes it diffucult. My advice is to use your rental assistance benefit along with pounding the pavement on your own. If you find something you like and can afford jump on it. Chances are it won't last long.
Pretty small bad news story . . . 22 airplanes isn't all that many for Boeing.
"husband and wife are both getting hired (both undergrad and Masters). They can more than easily afford a $500k house. Definitely an exception to the rule."I dont know about exception. I also work at MS, and there are TONS of married couples who both work at MS. Its almost amusing actually. Hewlett Packard San Diego was not like that, nor was Lockheed Martin Orlando... I guess Redmond is so pathetically boring that the only girls you meet are at work? Sad.. Anyway, If you both work at MS, its easy. As long as you don't mind paying 1/2 mill for a moss covered, 35 yr old split entry house that seem to be ubiquitous up here. As for me? After looking for 4 months, I gave up. My wife refuses to move to Seattle anyway, so Im renting with 3 other guys and paying less than 450/month and banking the rest. I'll be moving away 2 years anyway.
Im renting with 3 other guys and paying less than 450/month and banking the rest. I'll be moving away 2 years anyway.We're the same. We've a dream to live in Denver with family, and given the different housing economies, it seems like a fairly obvious thing to do. Work in Seattle for a few years, just because it's where I happen to be. Save. Then move to a city with similar opportunities and much cheaper houses. I wonder how widespread that sentiment is. Most people don't want to move away from their jobs and communities, but on the other hand, nice houses in other cities can look awfully cheap.
dove, i am in a similar situation. my original plan was to move my family to this area after liquidating my house in Florida,however,it appears that i have to sacrifice a LOT and move back to renting some 50-year old wooden house that loses power in a snowstorm, i am giving my plan a serious second thought.
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