Sunday, May 20, 2007
Thursday, May 17, 2007
You've heard these stereotypes about renting, circulated by people and organizations with a financial interest in selling you a mortgage:
- Renting is for poor people.
- Renters don't get involved in their community.
Low- and moderate-income families, as well as minorities, are the groups that homeownership eludes the most.I mention these because a semi-related story in today's Seattle Times caught my attention. In the first three paragraphs it gives a strong counterpoint to these talking points we often hear repeated by those in the home sales business. (emphasis mine)
Homeowners are motivated to stay abreast of local issues to protect their investment.
In turn, involvement in community quality-of-life issues helps prevent crime, improve childhood education and support neighborhood upkeep.
- NAR, Homeownership Talking Points
On the 40th floor of a Seattle skyscraper, in a nondescript hearing room, a young Queen Anne couple sat on one side of a long table. On the other side sat their opponents — lawyers defending a city permit to tear down an old church next door to the couple's rented house.Surely there was a typo. That doesn't sound like renters at all.
On this particular day, the Queen Anne couple, Tyler Crone and Jorge Barón, looked far less like the working parents of a 3-year-old daughter and 15-month-old son and more like who they also happen to be: Yale-educated attorneys, one with a master's in public health, both on a mission. There the couple sat, confident, attired in suits, with briefcases of exhibits — and armed with witnesses who pounded home a single, emotional message: Don't poison our children with a toxic cloud of lead dust.
Bill Merkle, a real-estate broker involved in the deal to develop the church property, watched the spectacle with frustration, having never before seen such formidable neighborhood resistance to a demolition.
Or maybe it's time to rethink the view that renters are somehow inherently unfortunate, lazy, ignorant, and/or stupid.
(Sanjay Bhatt, Seattle Times, 05.17.2007)
Just a quick note to point out that Seattle's riverside neighbor to the south—Portland—has its own housing bubble blog: Portland Housing Blog.
Drop on by and leave Clint a comment or two.
Wednesday, May 16, 2007
First quarter data has been released by the WCRER. There's not much new information about King County that isn't already in the Seattle Bubble spreadsheet, but it's worth noting anyway since their audience is somewhat broader than Seattle Bubble's.
Here are a few quotes from the fluffy, feel-good AP report:
Washington's housing market remains a pricey bright spot, but that means renters are seeing fewer opportunities to become home owners, a study finds.Is anyone else getting tired of the state Realtors' It's A Priority campaign and their endless disingenuous quotes about "quality of life"?
There were 26,720 homes sold statewide during the first three months of 2007, a 9.2 percent drop from the same quarter in 2006, according to statistics released Tuesday by the Washington Center for Real Estate Research at Washington State University in Pullman.
But the median price of $300,800 in Washington was 7.4 percent higher than a year ago. That compares to a 1.8 percent decline in the national median price for a single-family home during the first quarter.
Dennis Rose, 2007 President of Washington Realtors, said Washington's economy is helping keep home prices high.
"Strong job growth, coupled with a commitment to quality of life issues, is helping Washington avoid much of the pain of declining home prices observed in other areas," Rose said.
The Housing Affordability Index uses median home prices, mortgage interest rates and family incomes to measure the ability of a middle-income family to afford mortgage payments on a typical home.
In Washington, the affordability index climbed for the second consecutive quarter, mostly because the mortgage interest rate declined slightly during the first quarter, the WSU center said.
To give you some context on that quote that the Affordability Index "climbed for the second consecutive quarter," check out this graph (found in the Seattle Bubble spreadsheet):
Let's throw a party.
(John K. Wiley, Associated Press, 05.15.2007)
Tuesday, May 15, 2007
April foreclosure stats from RealtyTrac have been released. No surprise: area foreclosures still on the rise.
More Seattle-area homeowners are facing foreclosures this month, but the region remains far below the national rate, according to new statistics released Tuesday.Although the trend is up, it is true that foreclosures are only slightly up. However, even without an economic downturn (local or national) things can change quite quickly.
The Seattle area, defined as King and Snohomish counties, had 760 foreclosure filings in April, up 16.7 percent from March, but down 2.2 percent from April 2006, according to RealtyTrac, an Irvine, Calif., company that tracks foreclosure filings. The April rate of one foreclosure per 1,287 households -- better than the national rate of one for every 783 households -- ranked the region 128th out of 229 U.S. metro areas.
"Washington has really not followed into what is happening nationwide," said Marc Gaspard, administrative director of the Washington Mortgage Lenders Association. "Certainly if you look at the Puget Sound region, our housing market may have slowed a little bit, but it's still a very strong market."
King County alone had a much worse month, with foreclosures up 37 percent from a month ago and 1.7 percent from April 2006. Its rate, however, still was lower than the national rate, one foreclosure for every 1,347 households. State foreclosures were up 1.15 percent from March and 7.2 percent from a year ago, with one per 1,396 households -- good for 23rd among states.
But don't you worry, we're special. That will never happen here. The real estate agents quoted in the paper told me so.
(Aubrey Cohen, Seattle P-I, 05.15.2007)
Monday, May 14, 2007
Either this report is a fabrication, or the guys in question haven't been clued in to how special Seattle is...
Construction workers from across the country came to the Cedar Rim Apartments in Newcastle for a major remodeling project.Somebody should tell those guys that thanks to Seattle's perma-hot real estate market, there are plenty of construction jobs out there building new homes in a futile attempt to meet our area's insatiable home-buying demand.
They worked for weeks but were only partially paid. Now, some are stranded and taxpayers are footing some of the bill.
Donald Gill and Marc Cox are now stranded thousands of miles from home with no money, no jobs, and no way back.
The men are two of 14 construction workers who answered a Craigslist ad offering good pay and plenty of work to come refurbish apartments.
Somehow the deal went bad and the workers were left to fend for themselves.
Gill says he worked for three weeks but was only paid for one.
Now, a month without money, he and Cox have resorted to food stamps, paid for by Washington taxpayers, to survive.
(Eric Wilkinson, King 5 News, 05.13.2007)
Friday, May 11, 2007
Here's yet another boilerplate national real estate article rah-rah'ing Seattle's apparent resilience:
Amid all the news of plummeting national housing numbers, the premise still holds true that all real estate is local, and nothing supports that premise more than the statistics on local home price appreciation. The ka-ching from a house in Seattle rings just as dramatically as the bell tolling for a home in Detroit.That's a convincing-sounding equation. Too bad that actual research shows it doesn't at all explain Seattle's high home prices. It's more like limited land supply (growth management) plus strong employment equals a plausible, but entirely false explanation for continued (but slowing) home price gains.
Home prices and sales, while certainly susceptible to national macro-economic factors, such as mortgage rates and lending standards, rely largely on the local economy and local supply and demand. This is precisely why home prices in Seattle are up 10% from a year ago, according to the S&P/Case-Shiller Home Price Index, but down nearly 8% in Detroit. It's the booming tech industry versus the slumping auto industry.
Home prices in Seattle have been on a tear, up for four months in a row, to a median price of $465,000 in April, according to the Northwest Multiple Listing Service. Confounding matters even more, the bulk of the homes that sold in Seattle in March went for above asking price.
"We just have a very strong market," says Sara Hasan, financial analyst for Seattle-based McAdams Wright Ragan, a regional brokerage firm. "Two of the major employers are Microsoft and Boeing, and both are doing very well."
Not to mention that Google has moved into the very limited real estate in the area, which makes another point: Seattle has very short land supply, further diminished by a growth management act, which restricts where and how many single family homes can be built. Limited land supply plus strong employment equals pricey homes.
It's not that we don't have somewhat limited land and strong employment. It's just that when you actually take the time to do your research you find little to no correlation between those factors and home price gains.
(Diana Olick, CNBC, 11.05.2007)
Wednesday, May 09, 2007
Check out this delightful piece from today's Wall Street Journal: Where home prices are hot now
The housing news isn't all grim. Even as prices sag nationwide, there are several cities in the country where home values are climbing smartly.Let me stop right there for a moment. The phrase "well into the double digits" didn't strike me as reflective of reality, so I took a look at the actual OFHEO report (pdf). Sure enough, according to the government, homes in Seattle appreciated 14.5% from Q4 '05 to Q4 '06. NWMLS stats and the Case-Shiller index both reported lower figures:
Portland, Ore., Boise, Idaho, Seattle, Salt Lake City, Houston, Austin, and Charlotte and Raleigh, N.C., are among the cities bucking the national trend. Homes' appreciation there between the fourth quarters of 2005 and 2006 far exceeded the national average of 5.9%, according to the Office of Federal Housing Enterprise Oversight.
In some markets, like Boise and Seattle, the appreciation jumped well into the double digits.
Dec. '05 - Dec. '06I think the difference lies in the following (emphasis mine):
OFHEO HPI: +14.5%
S&P/Case-Shiller HPI: +12.1%
NWMLS Median (Res, King Co.): +12.0%
OFHEO calculates appreciation based on repeat sales or refinancings of the same single-family properties.Including refinancings may have worked in the past, but for whatever reason, it is now apparently skewing the numbers a bit higher than they are in reality. With that in mind, let's take a look at some of the other claims made in the article...
There's no single secret of these cities' apparent success, but many of them missed the housing boom of the past five years. From 2001 to 2005, annual appreciation in these cities was between 2% and 5%, far slower than the 7% to 12% national average, according to the Office of Federal Housing Enterprise Oversight.Between 2% and 5% from '01 to '05? Really? No, not really:
Quarter: OFHEO, Case-Shiller, NWMLSLooks like we got a late start, with only slight price increases in '01 and '02 but from '03 on, it was off to the races.
Q4 '05: +17.2%, +18.5%, +17.3%
Q4 '04: +10.1%, +11.4%, +9.9%
Q4 '03: +5.3%, +7.1%, +11.3%
Q4 '02: +4.5%, +4.1%, +3.3%
Q4 '01: +5.6%, +4.5%, +5.6%
Now, their economies are strong...Good thing our local economy is completely immune to any potential slowdown in the national economy, right?
...and housing prices are still perceived as affordable, luring buyers into the market.Now it's just getting ludicrous. No one but an ex-Californian perceives homes in Seattle to be "affordable."
The growth of Portland, Salt Lake City, Boise and Seattle can be attributed in part to an influx of former Californians and people opting out of slumping Las Vegas or Phoenix.Ah, well there you go.
While some worry that a new group of cities could face a boom-and-bust cycle, local real-estate agents and economists predict stable growth for the near future.In other news, local burger franchise owners and beef producers predict stable growth for the near future in their own industry, as well.
Lest you still come away from the article with a puffed-up opinion of Seattle's superiority, take a look at the seventeen cities with higher appreciation than Seattle (according to the OFHEO):
- Bend, OR
- Wenatchee, WA
- Provo-Orem, UT
- Salt Lake City, UT
- Boise City-Nampa, ID
- El Paso, TX
- Flagstaff, AZ
- Corvallis, OR
- Mount Vernon-Anacortes, WA
- Longview, WA
- Myrtle Beach-Conway-North Myrtle Beach, SC
- Wilmington, NC
- Miami-Miami Beach-Kendall, FL
- Ogden-Clearfield, UT
- Salem, OR
- Tacoma, WA
- Mobile, AL
(Dean Treftz, Wall Street Journal, 05.09.2007)
Tuesday, May 08, 2007
Here's a compilation of what your local press (aka real estate advertisers) had to say about last month's home sales data from the NWMLS. It's depressing to think that these sources are where most people get their news of the market from...
Elizabeth Rhodes, Seattle Times:
King County home prices keep rising, bucking national trend
Buying a home here: You'll pay even more
"Overall, people have been getting worn out paying what in their opinion is an inflated price," Martin said.Mrs. Rhodes' article is riddled with inaccurate assertions such as a claim that decreasing sales are "explained" by increasing inventory (huh?), and a quote that sales activity is "improving" and "at a faster pace than last year." She also says "Whether April will be the strongest month remains to be seen," when in fact it is already known that March experienced both more sales and larger price increases than April. Take home lesson: When reality isn't as rosey as you'd prefer, just pretend that it is!
Plus there are significantly more properties to choose from compared with a year ago.
Aubrey Cohen, Seattle P-I:
Home sales in city shoot up 14% in April
Anshul and Christine Pandhi were in their second week of seeing what they could get for $500,000 to $700,000 if they moved from Tacoma to Seattle.Aubrey's article was much more even-handed than we've come to expect. I was floored by the quotes he managed to get out of recent home buyers.
"It's expensive," Anshul Pandhi said. "In our price range, the pickings are pretty slim."
John and Sahrah Marcantonio sold their Woodinville house in November and have been renting in Seattle while looking for a house in the city.
Sahrah Marcantonio was pessimistic about the market, but didn't care.
"I think it's a bubble, we're at the peak of the bubble, and yet, I want a house now," she said. "It's for the long term."
Devona Wells, Tacoma News Tribune:
Housing market still shows signs of slowing
The jump in the number of Pierce County houses and condos for sale puts the county at a six-month supply, generally considered the point a market moves from one favoring sellers to one favoring buyers, said Dick Beeson, a Windermere real estate broker and MLS director.Apparently the market just south of us is a bit harder to spin in a positive light. Of course, that doesn't mean they aren't trying...
"The news is, pay attention, sellers, you’re not going to have the spring and summer you usually have," he said.
...though sales have slowed, [John L. Scott agent David Gala] said Tacoma homes under $400,000 remain hot. Two of his listings priced at $250,000 and $210,000 sold in the last week after multiple offers, Gala said.Mike Benbow, Everett Herald:
But agents say three to six months tends to be the time it takes to sell a home today. As recently as two years ago, homes often sold in a few days.
Buyers drive up condo sales
While Snohomish County houses are less expensive than in King County, they're still out of reach for many people in the market, especially with the tightening of loan qualifications that has followed the recent increase in home foreclosures.Those buyers had better get into any type of home they can possibly afford, because as everyone knows, if they don't buy now, they'll be (you guessed it) priced out FOREVER!
That has attracted more people to condos and their much lower price range.
Rolf Boone, The Olympian:
Condos sustain housing market
The pace of new South Sound loan applications has so far been strong this year, said Jeff Devlin, a Wells Fargo Home Mortgage consultant. Devlin said he doesn't sense the "doom and gloom" today that hung over the real estate market a year ago.Hmm. Year over year pending (res + condo) sales down 15%, listings up 50%. SFH median up 9% vs 23% (April '05-'06). But the market is in better shape today than a year ago. Yeah.
Just for kicks, here are a couple of stories from a little further out in Western Washington than we usually focus on.
Dave Gallagher, Bellingham Herald:
Home sales slowing as supply rises
Evan Caldwell, Longview Daily News:
Region's home sales bucking U.S. trend
(Elizabeth Rhodes, Seattle Times, 05.08.2007)
(Aubrey Cohen, Seattle P-I, 05.08.2007)
(Devona Wells, Tacoma News Tribune, 05.08.2007)
(Mike Benbow, Everett Herald, 05.08.2007)
(Rolf Boone, The Olympian, 05.08.2007)
Monday, May 07, 2007
It's time for April statistics from the NWMLS. King County SFH summary:
Active Listings: up 38% YOY
Pending Sales: down 10% YOY
Median Closed Price: $465,000, up 11% YOY
Sales continued their descent, making April the 17th of the last 18 months to register a YOY decrease in pending sales. Likewise, inventory continues to balloon, registering the highest YOY increase to date.
Despite the downward pressure of increasing supply coupled with decreasing demand, median prices still rose $10,000, for a 10.85% YOY increase. Apparently the increasingly small number of people that are still buying are all too happy to continue paying higher prices. Perhaps they're frightened of being priced out forever.
Months of supply bumped back up to 3.00.
As is the custom, I have uploaded an updated copy of the Seattle Bubble Spreadsheet that contains the relevant data. Here is the recap NWMLS pdf.
Here's the supply/demand YOY graph:
Tick, tock, tick, tock...
Living most of my life in Florida, cockroaches were a fact of life. In general, if you spotted one cockroach, that meant there were at least 1,000 others somewhere, waiting in the wings.
In the past few months homeowner subprime sob stories have been coming at us from all over the country, ad nauseam. With Washington state in the top five for toxic loans, you'd figure we'd see more local stories.
Here's one from the Seattle Times this morning: Borrower, beware: Debt disaster looms as rates rise on easy-money mortgages
It was a sweet little house, with affordable day care nearby for their 6-year-old son. Patrick Fultz and Laurel Swartz were hooked.Editors note: Always watch your back when a commissioned salesperson beings a sentence with "I help"
But when the couple — with no savings and about $20,000 in credit-card debt — shopped for a mortgage to buy their 1,200-square-foot house in Tukwila last year, they heard the same thing from lenders and in a home-buying class they attended: Forget it.
"You basically had to be Scot free, no massive credit debt, which we had, and to have money in the bank, which we didn't," said Swartz, 31. "How do people buy houses in America anymore?"
Fultz thought he had found just what he was looking for when he came across Gold Mortgage Lending in Renton on the Internet. "No income verification mortgage, zero down," read the firm's Web site. "We fund mortgages the others can't."
Erin Rearden, a mortgage counselor at Solid Ground, a nonprofit social-service agency in Seattle, said the deal Fultz and Swartz struck is typical, especially as the cost of housing skyrockets out of reach for so many.
"They wanted a home. And a lot of this comes from operating under the assumption that owning a home is an inherent American right. So when someone offers a way to do it, you want to go for it," she said.
Fultz makes $12.75 a hour driving a fish-food delivery truck. He recently paid off half of the 12 credit cards he used in buying a motorcycle, a couch and a television, going out to eat, "just buying stuff," Swartz was working at an insurance office, where she made $11.75 an hour.
The couple signed two mortgages to buy their $246,800 house in July. The first loan, a so-called pick-a-payment loan for 80 percent of the deal, had a variable interest rate. The second mortgage, at 12.5 percent interest, covered the rest.
Not long after they signed the loan, Swartz decided to dump her sedentary office job to become a personal fitness trainer. The new job paid less, $7.89 an hour, but she had the opportunity to earn commissions as she brought in clients.
The commissions, however, didn't materialize. At the same time, the interest rate on the first mortgage went up, from 7.06 to 8.15 percent — and it can go up every month until topping out at 11.5 percent.
Suddenly the couple were $300 a month short of paying their bills.
"I feel sorry for anyone who can't get into a house," Mills said. "We beg the banks to give us their turn downs. I help people; that's the bottom line."
But today, people like Fultz and Swartz aren't the only ones having money problems. Mills, and brokers like her, have troubles of their own.Wait a minute... I'm confused. I thought your customers were people that already didn't have any money? Or were you talking about the money to pay your broker fees?
A meltdown in the subprime lending market is drying up the money pipeline.
Across the country, where home values are stalled or plummeting, lenders are watching loans turn upside down, with mortgages grown larger than property values. People behind in payments are losing their homes. Entire neighborhoods in parts of the Midwest and California are shuttered by bad debt.
The situation is nothing like that in Seattle, where increasing home values can still grease the mechanics of subprime deals.
But even here, lenders have stopped serving subprime clients or are imposing tighter requirements to qualify, from higher credit scores to a couple of months' worth of payments in the bank and at least some money down.
"For my clients, that is a deal killer," Mills said. "My clients don't have any money."
The pullback has cratered the business model for brokers like Mills. She used to write 10 to 15 loans a month. In March, she wrote two. In February? None.While the map of misery shows a percentage of toxic loans of roughly 15%, I wonder how many of these loans were written in just the last year or so?
"I didn't make my own mortgage payment this month," Mills said in April. "But nobody feels sorry for me."
Where will future "buyers" get the money for even a 5% down payment. If there are less buyers, what will that do for Seattle home values?
Now that we've seen one homedebtor facing foreclosure story here in Seattle, I wonder how many other stories are out there?
(Lynda V. Mapes, Seattle Times, 05-07-2007)
Friday, May 04, 2007
Problem: Housing in the Seattle area is too expensive.
Government solution: Artificially inflate the buyer pool by throwing millions in government loans at the problem.
Seattle will soon stake low-income housing developers in the cutthroat bidding wars for building sites.How does "spend more money" make sense as a solution for the problem of something being too expensive? I'm no economist, but I'm pretty sure that projects like these only serve to further drive up prices.
The idea, which the City Council's Housing, Human Services and Health Committee approved as a two-year pilot project earlier this week, is to lend developers money fast and early — up to five years before they're ready to build.
The program will help non-profit developers secure sites before Seattle land costs get even more out of hand and better compete against their for-profit counterparts, who often can move more quickly, said Kollin Min, regional program director in Seattle for Enterprise Community Partners, an organization that helps fund low-income housing.
The program will get $2 million a year through 2009 from the city housing levy's operating and maintenance fund.
That's just a start, Min said.
"It's a very good first step," he said. "We need to have a larger pot to really make a dent in the problem."
The Legislature authorized a separate $1 million earlier this year for a similar program statewide.
Forty percent of the program money would go to home-ownership programs for residents earning 80 percent to 120 percent of the median income. Other money could go to rental housing for people making no more than 80 percent of the median income.
Should local and state governments bother trying to get involved at all, or should they just let the market work itself out?
(Aubrey Cohen, Seattle P-I, 05.03.2007)
Wednesday, May 02, 2007
Thanks to the cessation of daily open thread posts during and after my recent vacation, participation in the forums has really taken off. However, when I announced on Monday that I would cease posting open threads for the foreseeable future, a number of you protested.
While I am certainly glad to see the forums well-utilized, I also don't want to alienate those of you who have contributed some of the most interesting discussion to this site. When I post daily open threads, forum usage declines, but without open threads, some people don't really participate as much. So I'm looking for some kind of middle ground.
Does anyone have suggestions for a way that we can facilitate open thread discussion without decreasing forum usage? I was thinking of reducing the open thread frequency, or placing it one click away from the front page (like the forums already are).
What do you think of either of those ideas, and what are some other things we might try?
Tuesday, May 01, 2007
Finally some semi-useful information out of Dupre + Scott. Mr. Cohen reports on the "1-19 Unit Report" just released by Dupre + Scott in this terrifying tale of skyrocketing rents and plummeting vacancies:
Rental houses get scarce, expensiveIt should be noted that even this report excludes homes or condos rented out by individuals. According to the Dupre + Scott website, the 1-19 Unit Report is derived from a survey of "apartment owners, professional property managers, and on-site property managers." Given the logistical complexity of such a task, you can't really blame them for not surveying individual owners, but it's important to keep in mind what this data is and is not telling us.
The good news for people who cannot afford to buy a house in Seattle is that it may make economic sense to rent for the moment.
The bad news? Rental houses are a lot harder to find and pricier than they were a year ago.
The typical Seattle rental house now costs $1,604 a month, up 4.6 percent from a year ago, according to data that Dupre + Scott Apartment Advisors released Monday. House rents for all of King and Snohomish counties were up 6.5 percent from a year ago.
Dupre + Scott did not release vacancy rates just for houses, but among all King County rental buildings with one to 19 units, including houses, the rate declined from 3.7 percent a year ago to 3.1 percent now. The house trend is similar to that for apartments in general, according to Dupre + Scott.
Dupre + Scott's April apartment report asserts that people would make more money renting, and investing the money they save elsewhere, than paying current prices to buy a home.That makes about as much sense as the following: "There are a lot of reasons to visit a casino. From a purely financial perspective I'd say no, it doesn't make sense. But if you make 10 to 15 percent profit on your next visit, I'll have to eat those words."
"There are a lot of reasons to own a home," Dupre + Scott co-owner Mike Scott said. "From a purely financial perspective I'd say no, it doesn't make sense. But if home prices go up 10 or 15 percent in the next year, I'll have to eat those words."
No words will in fact need to be eaten, because even if home prices go up another 10 to 15 percent next year, it still doesn't make financial sense to buy a home right now. To put it another way... Just because a reckless decision paid off in the short term doesn't mean that it wasn't reckless, it just means that you were lucky.
Bob Melvey, assistant manager of Windermere Real Estate's Ballard office, said renting and investing the savings might pay off "if someone is very, very disciplined and they truly do put that difference in the stock market and they do a good job of managing their stock portfolio."A "forced savings plan" where 80% of the money you "deposit" in the first five years simply vanishes (the interest portion of the payment), and from which you can only withdraw money by paying a 6-9% fee (not on the amount you have "saved" mind you, but on the total sale price) and relocating. Wait, that doesn't sound anything like a savings plan.
But most people would end up spending the savings on other things, Melvey said. "Owning your own home is, to a degree, a forced savings plan."
To give these figures a bit of perspective, let's say that the average single-family home at $1,583 (King/Sno) is comparable to the median home, which sold for $454,950 last month (King), resulting in an approximate PITI payment of $3,400. We will assume the homebuyer had 20% (almost $100,000) to put down, and we will ignore maintenance, HOA, utilities, and tax deductions in order to keep this simple. Right off the bat, the renter's monthly payment just 46.6% of the buyer.
It would take 13 years of 6.5% rent hikes before the renter's payment exceeded the homeowner's. Of course, during that time, the renter's $90,000 in liquid investments will likely have doubled or tripled, and that doesn't even consider that they're adding the monthly savings to the investment. If they bank the difference, their $90,000 could quite easily become $500-$600k. Also, if you think that rents will increase steadily at 6.5% per year for the next 13 years, I don't think you have a very good grasp of history.
Suffice it to say that despite the scary language in the headline of Mr. Cohen's latest volley, renting still beats buying in the Seattle area hands down (financially speaking).
(Aubrey Cohen, Seattle P-I, 04.30.2007)