tag:blogger.com,1999:blog-15223784.post116258263356587455..comments2023-10-08T06:24:07.089-07:00Comments on Seattle Bubble: A Question Of AffordabilityThe Timhttp://www.blogger.com/profile/14832570891451659976noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-15223784.post-1162783368320454512006-11-05T19:22:00.000-08:002006-11-05T19:22:00.000-08:00Austin is an awesome place to live. My condo there...Austin is an awesome place to live. My condo there depreciated about 2% over five years. I think it has something to do with the 2-3% property tax in Texas keeping out speculation.Alanhttps://www.blogger.com/profile/05660201775008638301noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-1162678555485286852006-11-04T14:15:00.000-08:002006-11-04T14:15:00.000-08:00After some digging, I found that eleua examined th...After some digging, I found that eleua examined <A HREF="http://clearcutbainbridge.blogspot.com/2006/01/do-math-why-real-estate-will-get-cut.html" REL="nofollow">the fundamental affordability question</A> before in crystal clarity.PugetHousehttps://www.blogger.com/profile/06212635665958191321noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-1162632972716855542006-11-04T01:36:00.000-08:002006-11-04T01:36:00.000-08:00SLinky is onto something here.Yes, as a former hom...SLinky is onto something here.<BR/><BR/>Yes, as a former homeowner in the Dallas area, I can testify to all the lending laws that are different in Texas.<BR/><BR/>When you have a million people lose their homes in a short period of time, it kinda sticks with you. That phenomenon is probably coming to the US as a whole in a few years.<BR/><BR/>Austin is the most expensive part of the state, but I don't see where any part of the D/FW area can be considered "bubbly."<BR/><BR/>Price a home in a city with the equivalent income of a city in the Dallas area.<BR/><BR/>Mercer Isl., WA - Flower Mound, TX.<BR/>Both are comparable in income, education, crime, etc.<BR/><BR/>Flower Mound is under $200K, but MI is almost a million.<BR/><BR/>You can run down the list, and find the same thing.<BR/><BR/>2-3x income is the norm in the Dallas area. If the PNW was 2-3x income, we would lose 3 congressmen in the next census, just due to suicides.<BR/><BR/>Picture Mercer Island at $200K<BR/>Picture Bainbridge at $170K<BR/>Picture Medina at $400K<BR/>Picture Poulsbo at $100K<BR/><BR/>You get the picture.Eleuahttps://www.blogger.com/profile/08248482892459370601noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-1162620533199850092006-11-03T22:08:00.000-08:002006-11-03T22:08:00.000-08:00everyone,Those are great posts. I'm learning lots...everyone,<BR/>Those are great posts. I'm learning lots.<BR/><BR/>amazedrenter,<BR/><BR/>I don't really follow the relevance of the OER. Taking OER into account would lead to some range of alternative inflation numbers. However, the affordability index leaves inflation entirely out. What were you trying to say?<BR/><BR/>Slinky,<BR/>astute observations. The fact that the affordability index assumes traditional loans begs a reality check. Pity that it is, the preeminence of highly-leveraged loans may be permanent, at least until a catastrophy induces government intervention.<BR/><BR/>Tim,<BR/>My answer to your query is that inflation, due to the accessibility of bigger loans, gives the appearance of vastly heightened desireability. I agree that the current economic/financial environment is unstable. The only sensible way I see to diffuse this bomb is to follow the regulatory example of Texas by phasing in some restrictions on loan qualifications.PugetHousehttps://www.blogger.com/profile/06212635665958191321noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-1162591389639506082006-11-03T14:03:00.000-08:002006-11-03T14:03:00.000-08:00This is picking nits, but the City of St. Louis, M...This is picking nits, but the City of St. Louis, Missouri is not part of St. Louis County, Missouri. <BR/><BR/>If you wanted to compare the affordability of houses in Saint Louis, Missouri, where the Arch is, where Morgan Quitno has deemed the most dangerous city in America is, use <A HREF="http://www.city-data.com/housing/houses-St.-Louis-Missouri.html" REL="nofollow">this data</A> instead of using County data. If you look at the County page closely, you will see that Saint Louis is not one of the cities within that county, whereas Florissant, Clayton, Ladue and Kirkwood among others are.Christinahttps://www.blogger.com/profile/08343258421596733177noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-1162588890431273172006-11-03T13:21:00.000-08:002006-11-03T13:21:00.000-08:00slinky...Thanks for that insight.<I>slinky</I>...<BR/><BR/>Thanks for that insight.whetherforecasthttps://www.blogger.com/profile/12061419022463486648noreply@blogger.comtag:blogger.com,1999:blog-15223784.post-1162584778797612902006-11-03T12:12:00.000-08:002006-11-03T12:12:00.000-08:00Your point is spot on, and I have an explanation t...Your point is spot on, and I have an explanation that will use the one gross outlier in your little dataset to support your conclusion. This is one of those cases where the realtorspeak postulate that "all real estate is local" does actually hold true, but not in the way I think you intended. But first I'm going to launch into a little story that goes along with my point.<BR/><BR/>In January, I had a back-to-back business trip that took me from Virginia to Houston to Seattle and back home. Going from freezing VA to TX in January felt like being let out of jail. I was wearing short sleeves, going barefoot, and putting the windows down. Going from Houston to Seattle felt like being put back into jail (long sleeves, etc). In Seattle, I went to supper with a couple of friends of mine, one of who has been trying to get me to move to Seattle for years. She told me about the nightlife, the restaurants, the cultural stuff, etc. I said, "Well, you know, if I want xxxx, I can live in Houston." "But what about yyy?" "I can find that in Houston, too, and be closer to my family." She was stunned quiet--obviously had never occurred to her that a city she found horrid might be acceptable to someone else. Back to my point:<BR/><BR/>Houston is the obvious, glaring standout to that set of cities in terms of affordability to purchase. Toss Phoenix, Sioux Falls, and St. Louis from the mix, and you have a set of large (pop. >2mil) coastal urban areas with a mixture of home-grown industries AND significant port and commercial facilities. Then the list becomes as follows:<BR/><BR/>Houston 204<BR/>Miami 121<BR/>Seattle 94<BR/>Boston 88<BR/>San Diego 87<BR/>San Fran 58<BR/>New York 20<BR/><BR/>What makes Houston so different from this group are the local laws. In Texas, ARM, stated-income, and I/O loans are severely restricted. If you are a Texas resident or are purchasing property in Texas, you have to meet stricter lending standards. This is a direct result of the mid-80's oil bust that was followed by a mid-80s savings and loan bust that was followed by a massive recession in most of Texas. It might even be fair to say that Houston underwent a depression from which it did not recover until about 1997-98. The Texas legislature enacted much, much stricter lending laws than the rest of the country, and that is why housing in Texas, outside of Dallas and Austin, has largely avoided the speculative runups seen elsewhere. It really is different there. We've been there, done that, lived with the excruciating pain, and done something about it.<BR/><BR/>The Houston outlier, then, reinforces the idea that speculation and exotic loan products fueled the massive runup in prices. My little anecdote about supper with my friend could just have easily have had Houston and Seattle replaced by Phoenix and San Diego, or Boston and Vancouver and sounded exactly the same. The local laws and lending standards in Seattle, Phoenix, Boston, San Diego, and Vancouver are all similar in that they're much looser than in Texas, thus permitting the unusual and unprecedented appreciation in home valuation.Slinkyhttps://www.blogger.com/profile/00219326179865124676noreply@blogger.com