Pop Quiz Time: Fundamentals or Speculation?
Here's a pop quiz for you. Take a look at the following two tables and try to determine which one more closely resembles a market based on fundamentals, and which one represents a market based on speculation.
| Year | Med. Income | % Chg | Avg. Rent | % Chg |
| 2000 | $53,200 | +3.9% | $784 | +3.9% |
| 2001 | $55,900 | +5.1% | $826 | +5.3% |
| 2002 | $58,000 | +3.8% | $838 | +1.5% |
| 2003 | $59,200 | +2.1% | $821 | -2.0% |
| 2004 | $60,400 | +2.0% | $803 | -2.3% |
| 2005 | $60,700 | +0.5% | $810 | +0.9% |
| Total 2000-2005 | +14.1% | +3.3% | ||
| Average Yearly | +2.67% | +0.65% | ||
| Year | Med. Income | % Chg | Med. Home | % Chg |
| 2000 | $53,200 | 3.9% | $225,000 | 4.9% |
| 2001 | $55,900 | 5.1% | $235,000 | 4.4% |
| 2002 | $58,000 | 3.8% | $249,000 | 6.0% |
| 2003 | $59,200 | 2.1% | $265,000 | 6.4% |
| 2004 | $60,400 | 2.0% | $289,950 | 9.4% |
| 2005 | $60,700 | 0.5% | $332,000 | 14.5% |
| Total 2000-2005 | +14.1% | +47.6% | ||
| Average Yearly | +2.67% | +8.09% | ||
These figures come from the most recent King County Benchmarks Report, released yesterday. Both the Times and the P-I have their usual un-insightful blabs about it, if you're into that sort of thing.
If the implication of these numbers is not obvious to you, you are either:
- willfully ignorant of basic economics
- incapable of comprehending basic math
- in the real estate business
- all of the above
(King County Budget Office, Affordable Housing 2006, 01.2007)
(Sharon Pian Chan, Seattle Times, 02.01.2007)
(Aubrey Cohen, Seattle P-I, 02.01.2007)
