04.14.2007 - Weekend Open Thread
This is your open thread for the weekend of April 14-15, 2007. You may post random links and off-topic discussions here.
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15 comments:
Something to think about for someone who might want to live more “creatively”: I have been a housesitter for months at a time (making up to $400/week or living for free–simply sitting in someone’s mansion!). I currently rent a room in a comfortable home in a great neighborhood for a mere $450/month. I stash tons of cash into investments/ROTH/savings/CDs. The owner of the house pays tons on remodeling because it was a first-time buyer’s “fixer” (read: “teardown” in Seattle). The house is a money pit—constantly having problems only a year into buying it—but I love living in it knowing that it isn’t my responsibility! I know I’m unique—I live a simple life—but I travel like crazy, have time with friends on the weekends, hike all of the time (no house headaches on a nice Saturday afternoon), eat my expensive organic veggies, and have a sense of freedom that I love! There are many ways to live in this world—and to live happily—being a homeowner is definitely not the only way to do it—especially in Seattle!
It seems to me that houses have become “baby replacements” for many people in Seattle—that’s all anyone can talk about these days. “What’d you do over the weekend, Joe?” “Oh, I went down to Lowe’s for the 70th time ‘cuz I’m fixing the plumbing in the bathroom”….
Anyone with a Home Depot card and hammer thinks they’re a Journey level carpenter…..can’t wait to see what all of these $300,000 “fixer-uppers” look like in the future when they’re $500,000. They’ll probably all fall apart because the average schmo is fixing them up
And when will everyone stop checking Zillow likes it’s the stock market???!!!
I couldn't agree more with JoJo. My plan is to live below my means in Seattle and purchase a small plot of land near a lake in Eastern WA, near where my parents currently live. They're not moving again, since they're in their 60's now. As they age, I'll spend more time in that area. I'll build a nice metal-sided shop building first, perhaps with a modest loft studio. I'll store my jet skis, motorcycle and classic sports car there. During the Spring and Summer months I can travel there frequently to spend time on the lake in the 90 degree plus weather. I currently live in a 1 bed duplex that costs me about 23% of my montly gross salary. Since I'll soon not need the garage in Seattle, I will downsize and perhaps live in a studio or share a place with someone. All the while I'll be building my vacation/retirement property, and equity in a more reasonably priced region.
That depends on what stage of life you're in currently isn't it? Some of us do have family and children, a good single family home is still a goal. I just refuse to buy anything at top price. I am cheap.
I've been reading on this site for a while, and it seems like the commentary is progressivly moving toward a justification of renting for lifestyle reasons, instead of financial. If a person choses to rent or buy because that suits a lifestyle at that time, great... But that doesn't support an arguement for others to rent or buy.
Additionally, it seems a big part of homeownership is overlooked in this forum. For most people, buying a house is not a "rational" decision. Owning a home is more than a financial number crunching exersize. There is a large emotional aspect to owning over renting. Security, permenance, pride may all yield value to a homeowner which may not make strict financial sense. And, contrary to most sentiment I've come across, some people actually enjoy weekend house repair projects, myself included.
madrona, I think you're right; if it weren't for the emotional element to our collective conception of homeownership, this blog wouldn't likely exist, and if it did, you certainly wouldn't see the kinds of spirited and occassionally irrational debate we see here. It is precisely this emotional tug of home ownership that I have to guard against: I would love to own my own home; I just don't want to do it at the expense of common sense and my family's future economic stability. Like many who contribute to these bubble blogs, I clearly see that the housing market is completely out of whack. I also recognize both friends and family members have reacted with more emotion than intellect when purchasing a property recently, and I think this will (ironically) have a longterm negative emotional impact due to the continued strain of having to pay absurdly large mortgages. Emotion has certainly played a significant role in the formation of this bubble.
Every bubble has a big emotional component to it ...it's kind of a mass rationalization that eventually falls over.
The tech bubble was at least based on the idea that the proliferation of the internet, PCs and cellular coming together at the same time would increase creativity and efficiency in business (which has actually happened since then).
What additional value does the housing bubble rest on though? A house is a house is a house ...if the same exact house cost $250k, $500k or $1m it generates the exact same value or utility to society.
Either houses have been undervalued for over 100 years (based on Dr. Shiller's modeling) and have been moving toward their true value since 2000 ...or they are currently way over valued based on the historical norm (by ~70-85%).
The latter argument is the only one that make any sense since there is no additional utility being created.
I think the only question worth debating at this point is will we have a soft or hard landing as we move back toward "normal" housing prices?
A soft landing means housing prices stagnate (or slowly drop) for decades as inflation eats away at them. A hard landing is a quick drop in value over a year or two.
A soft landing would mean simply leaving houses alone for a long time. A hard landing would prompt me to short housing stocks and then buy property at the bottom of the cycle in a couple years.
Any thoughts?
Lord, I hope for a nice hard landing, really bring the economy into the stink.
Really, housing prices have increased in the last 7 years with double digit increments. What have salaries/wages done? Barely kept up with inflation, so a 3-5% rise a year. With that in mind, you have to figure we have quite a long time of stagnation until wages creep up to housing levels.
Or, the housing market could crash like a big wonderful lead balloon.
Funny chickasaw Kathleen Madigan telling it like it is.
I think madrona is correct that housing is an emotionally charged speculation. In a normal environment, there are very few good financial reasons to buy a house. If you bought all cash down, you would get an 'investment' that costs money every year and grows at the rate of inflation. The primary profit of real-estate is that it can be highly leveraged, but then so can stocks.
So in almost every market, the best reason to buy a house is because you want to live in a house you own.
I recently heard on the radio some advertisements that the average mortgage in America lasts only 3 years (between refis). The ad used this as proof that if you haven't refinanced lately, that you need to do so today. I found that funny, and the frequency of refis disturbing.
Zillow gets legally nipped in Arizona
Arizona regulators have ordered a Seattle-based online home price estimator to stop doing business in the state.
As foreclosures pile up around the country and people start pointing you can bet Zillow's going to take its turn at the whipping post... along with its future stock performance...
Good riddance anyway, zillow's about as useful as a stock-ticker was to the tech-stock day traders.
It looks as if the spring selling season just kicked in this past week in east Bellevue. The extremely low inventory for 98008 on ZipRealty has popped from 45 to 67 in just one week. It's as if someone just turned a switch on.
This is verified by the sight of numerous new for-sale signs on my regular Saturday bike-ride around lake Sammamish, many of which were sporting fancy "new listing" bubbles.
Of course, this doesn't imply that the market is declining yet. We will have to wait and see what happens to all these new listings.
Funny, the part of 98008 I live in has had the same houses on the market for literally months.
Lake Hills Renter said: "Funny, the part of 98008 I live in has had the same houses on the market for literally months."
There may well be homes on the market who's listings are months old. However, I can personally vouch for the fact that there are far more for-sale signs up around lake Sammamish today than there were last Saturday.
By the way, I didn't notice any "price reduced" notices, and there were quite a few "sold" postings, so nothing to indicate a real downturn just yet. Although, with the kind of construction I see going on around the lake, it's hard to believe that a happy ending is around the corner. Just down by I-90 there were six signs for new developments, all on the same bend, as I rode towards Issaquah. And there are just scads of new homes being put up, in ones and twos, in neighbourhoods all around. I wonder if these new constructions even show up in the MLS listings?
Interesting article on Zillow ...I think the RE Agents just want to keep people in the dark though. The more info they know and the less you know, the more they can control the situation.
Anyway, even though Zillow is wrong half the time it's a good triangulation point. Or as good as anything in a bubble at least... who is to say what anything is truly worth right now?
Finally, I don't see how it's illegal to provide free estimates. Isn't Bluebook on MSN Autos the same thing??
regarding zillow...whatever computer program they are using certainly isn't working in my neck of the woods...but at least they are so laughably wrong here that it wouldn't even come close to being considered a tool, resource or anything of that nature. Here they have about as much credibility as a carnival "love-meter" machine IMO.
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