I would like to highlight a post from over on the forum that I think should be read by more people. It was written by my friend Catherine (a.k.a. "Dove"), and posted to the thread How did you first learn of the National Housing Bubble? (Although it really speaks well to the Seattle market specifically.)
It was a long awakening, for me. I put "2004" in the poll, but depending on how you call it, it could've been a year earlier or later.I think Catherine hits the nail on the head. If the Bull Cadre gets their wish and home prices in Seattle continue to defy all logic and reason... at least I'll already have some local friends when I move to Denver.
The first sign of trouble came when we'd been married a couple years, living as poor grad students in an apartment, and I started dreaming about getting a house. Nothing fancy, really - like maybe one of those cute little cottages with a tiny yard that Need Lots Of Love. Surely an itsy bitsy house couldn't be that much, right? Cue realtor.com telling me what a funny little girl I was. That sent my spidey sense tingling a bit - if tiny crappy houses are that much, who the heck can afford a house to raise a family in? Strike 1. That was 2003 or 2004 I think.
Strike 2 came when I first got a job as an engineer - and a good one - and my husband and I started making plans about where to live. My family had recently moved, and now both our families were in the midwest. We wanted to live close, so we eyeballed houses in Denver, just for planning purposes. And promptly realized that they were extremely affordable. That tiny crappy fix-er-up I'd wanted? Less than my annual salary. Big New House For Big Family? We could totally swing it. Heck, save aggressively for a couple years and we could almost buy it outright.
I quickly flipped the page back to Seattle to see if the same was true here, but no dice. Apparently a mansion in Denver is worth about the same as a mud hut in Seattle. We still couldn't afford *anything*. We promptly resolved to rent, save aggressively for a couple years, and then move to Denver, which is where we'd rather live anyway. This was 2005.
I'd heard that big cities were supposed to be expensive, but this was rediculous. I mean, it's not like Denver is that much different from Seattle in terms of size and opportunities. Saving and moving seemed obvious. In fact, why wasn't everyone doing that? I suspected again that something was wrong. Strike 2.
Throughout that year I began actually watching the housing market - planning to buy in the eventual future, I figured I should get a better feel for how it worked. And as I thought about things, I began to put a lot of stuff together very quickly. (1) We can afford a pretty nice apartment, with tons of money to spare. Seems like we ought to be able to afford a crappy house. But we can't. That seems . . . odd. There ought to be some sort of in between transitional product, right? They should be pretty comparable, right? (2) Actually, come to think of it, we're pretty well off - I make more than a lot of friends and neighbors and relatives all of whom are homeowners, and I can't afford a house. What gives? (2) And actually, come to think of it, who the heck is buying all of the houses? Where do all the normal people live???
More complaints confirm it isn't me. My brother in law has trouble with his house and then more trouble with his house and then a little more trouble. My co-worker is crying about how she can't afford the low-end condos. My *boss* is considering buying a townhome full of 70's shag. And she's not your run-of-the-mill manager, either--she's gotta make twice what I do.
As soon as I saw a suggestion somewhere that there was a housing bubble, it all clicked. The market that had smelled so funny for years now made sense. That was maybe a year ago. If not immediately convinced, I definitely acknowledged that it was a strong possibility. Any desire I had to buy a house evaporated overnight.
The final straw actually came recently when someone on that blog pointed out that rent prices were out of whack with housing prices. For some reason, I'd never thought to check that - I'd just always assumed those markets would pace each other. A quick run by Craigslist confirmed it.
That cute little crappy house I'd wanted? Rents for about the same as my apartment. Perhaps a bit more, $200 or $300 more. Psshaw. Shopping around a bit more, I saw nice houses go by at decent rents. And it suddenly dawned on me that if I wanted to, I could live anywhere in Seattle. Fancy condos downtown? Check. I could make rent. 5 bedroom houses? No sweat. Fancy Vacation Homes On The Water With Stunning Views? Ahhh... I might not want to pay for it, but the mechanics says I could afford to live there full time. (Not that I'm going to - still sticking to plan A, but still . . .)
Quick check on the real estate market and . . . yup, I still can't afford the mud huts.
That's it, I decided. That market's hosed.