Seattle Bubble has moved! Redirecting...

You should be automatically redirected. If not, visit update your bookmarks.

Off-topic comment? Interesting link?
Head over to the forums, or click here for open threads.

Saturday, April 22, 2006

Some Kinda Email

Once in a while you read something and you think: "Is this for real?" That's the reaction I had yesterday when I received this email (name changed to protect the... well just as a courtesy):

Hello Timothy,

With interest I read your post regarding the "real estate bubble". Regardless of what happens with the bubble the longer you wait to purchase a home the harder it will become. The only time I would agree that it would be appropriate to wait would be if you feel the bubble will burst and prices/values will fall.

Nothing in anyones crystal ball says anything about values falling in the Northwest, the primary reason being supply and demand. Here in (Mr. F's) County our market is cooling. Even at that if we only have a 10% appreciation this year it is still great news for homeowners. So my recomendation would be to buy now not later. In not buying now you are loosing appreciation and tax writeoffs. As I tell most new buyers, just get on the up escalator! Once there at least what you currently own is appreciating at the same value as most of the homes around you so it will be easier when you are ready to sell and buy the next one.

Good luck, you obviously are putting a lot of thought behind your decisions..............good job!

Mr. F

Web Page: (real estate website owned by Mr. F)
Blog: (real estate blog owned by Mr. F)
Though I'm not sure which particular post he may have been referring to, I have to say that this guy certainly has chutzpah if he thinks that one poorly-spelled email can somehow convince me that there's never been a better time to buy!!! There's some pretty classic quotes in there though. I think my favorites are "Just get on the up escalator!" and "Even...if we only have 10% appreciation..."

Here is the response I sent him:
Mr. F,

I have to say, I'm shocked, shocked I tell you, to learn that someone in the business of selling real estate would recommend that I buy now. Seriously though, we could certainly qualify for some kind of loan that could get us into a home in our area at this time. However, I'm not interested in "exotic" or "creative" financing. And right now that's the only way we even could afford a house.

Believe me, I've run the numbers many different ways, and right now our money is doing just fine in "escalators" that haven't just experienced the largest and fastest run-up in history. Despite your claims, and despite how much I love it here, there is nothing magically special about the Pacific Northwest that makes us immune to market correction, and I feel that one is coming—in the relatively near future. I suppose only time will tell which one of us is right.

Thanks for your comments and good luck in your work.

I wonder what inspired Mr. F to email me in the first place?

In other news: I miss Arrested Development


Anonymous said...

Just about any Realtor could and would have written exactly the same thing.

Predicting the near future based on the recent past doesn't require a whole lot of creative thinking.

He's making an argument that because we can be relatively shure things will stay the same over a short period of time, that it stands to reason that a long term decision based on the previous truth somehow follows.

This is a classic strategy for creating propaganda.

The only thing surprising about his email is that he didn't resort to the usual emotional pleas:

- you'll be priced out forever
- renters are a lower class of individual
- you're at your landlords mercy
- people will respect you more if you own

and on and on and on.

This Mr. F is the guy in Silverdale, no?

Anonymous said...

The only time I would agree that it would be appropriate to wait would be if you feel the bubble will burst and prices/values will fall.

This completely ignores the fact that as people age, they tend to get better credit ratings, more savings, higher pay and better judgement.

"prices rising" after a large run up is probably the least sound prediction when compared with the other factors I mention above.

Anonymous said...

An obvious attempt to quell bad PR and insure the mania is maintained long enough to scrap a few more sales out of the deadbeat barrell... This is all old-hate Realtor(TM) talking points everybody's heard before. For starters...

1) Houses are a commodity, shelter is there with things like food, gas and water. They're not abstract speculative investments

2) Houses are bought and sold, and will always be bought and sold, and inorder to insure that keeps happening people must be capable of purchasing them

3) If they are too expensive and there's an excess in supply, THEY MUST FALL IN PRICE!!!! If you can find your way around this fundement of economics 101, you'll basically win the next Nobel Prize, and unless Mr. F's treatise on Real Estata 'alchemy' has been cleared for journal publication, he's basically parrotting an advertisement.

No better time to buy then now! (if you're an RE agent of course)

Anonymous said...

Bravo Tim.

This is probably the most decisive thing you've ever written about the current state of the Seattle market on this blog.

And you wrote it to a realtor no less!

Good for you and keep up the good work.

christiangustafson said...

Hang in there, Tim. Keep renting, live below your means, save all you can, and brace yourself for the coming crash. It will be brutal.

Cash will be king when the smoke clears. Don't buy a house until 20% down and fixed-rate mortgages are the standard.

Anonymous said...

Am absolutely praying for a return to 20% down and fixed mortgage.

Nothing will do more to fix this tangeled, unsustainable, toxic housing market.

meshugy said...

Here's a recent sale a block away from me:

7522 20TH AV NW 98117

You can see from the record someone bought it last Oct. for 395K, then just sold it on April 12th for 475K! They were actually asking 489K which was ridiculous for that it was sold below asking, but is obviously well above what the house is really worth.

As far as I can tell there has been no improvements done. This house is very similar to mine, built in the same year (1946) and actually less sq. ft. It's obviously in far worse shape....the previous owners of my house remolded everything (roof, kitchen, basement, heating system, landscaping, etc.). I paid 431K for my house in April 2005. Based on this recent sale, I could easily justifying selling my place for over 500K. 70K appreciation in a year....hard to believe. Who knows if I'd actually get that, but when I see sales data like this I start to wonder.


Anonymous said...


whoever bought that place are fools. How could they not look up the county records? get on zilliw? for crying out loud? I'm wondering if I showed up on their doorstep with a bridge to sell 'em if they'd just hand me the 100K willy-nilly...

I guess I underestimate the foolishness of the general populous, exhibit A: G.W. Bush

Anonymous said...

We are currently scraping the bottom of the barrel for last available fools willing to shell out hard earned money (or rather, YEARS of interest payments) on over- inflated and soon to be depreciating properties.

It IS amazing that people don't check the county tax records for prior sales history of a home they are interested in buying.

Years ago, that kind of research didn't matter. Now, only a dolt doesn't bother to find out what the house sold for a year or 2 ago. Or a month or 2 ago.

Here's hoping they've got the money to keep the house once they've signed the papers.

meshugy said...

I just took my son for a walk and checked it out. It actually has had some remodeling done since I last saw it. Looks like there wasn't any additional space added. But it looks pretty neat from the outside, and some nice landscaping. So that would explain at least some of the increase.

But I have to admit, I wouldn't pay that much...the buyers are either nuts or the market is still so competitive that people are desperate. I guess we'll find out in a few months.


Anonymous said...

You can see from the record someone bought it last Oct. for 395K, then just sold it on April 12th for 475K!

Wow, that's alot of money for a 1200 sq ft house on a 3800 sq ft lot in Ballard.

Any indication yet if the people that bought it are actually going to live there?

Unless that was a top notch remodel job, they clearly overpaid. The median price for tha zip code is only $430K and that's a small house on not much land.

Anonymous said...

Meshugy - do you ever get tired of bragging about your "purchase?"

Everyone else is certainly tired of reading about it...

Anonymous said...

I'm am a renter as well. All I hear from my coworkers is the advice to live above my means or I am a fool because "you gotta live somewhere" and "renting is throwing money away".

From my perspective, closing costs, insurance, fix ups, property taxes and possible depreciation are also throwing money away.

This madness cannot be sustained. If the prices don't drop substantially, in the end milk will be eight dollars a gallon and the manager of the local McDonalds will be making 175,000 dollars a year.

Anonymous said...

Anon 2:54

Well said. thankyou.

Anonymous said...

Compared to Silicon Valley, the Seattle Bubble is more of a ... uh... froth?

Check out

Anonymous said...

This realtor must be needing to scrape THROUGH the bottom of the barrel to find buyers if he's writing to a bubble blog.


meshugy said...

Hi Folks,

I wasn't intending to brag at all about my's in fact very modest and not worthy of boasting whatsoever. I've just been using it as a benchmark when comparing other similar houses. I think most owners do's a natural thing to do. If this offends people, I'd be glad to use a similar property when making comparison in the future.


I went to some open houses in Ballard today. There was a lot of's sort of starting to look like the craziness of last year.

This open house was nuts:

3403 NW 71st St

I asked the realtor for a flyer and she said she had printed 100 and they were gone. She also said they already had multiple offers and that several people had already done pre-inspections. The owner are reviewing offers on Tuesday.

This is the same sort of thing that was going on last year when I bought. The sellers setting all the terms...everyone is obviously waiving inspection and overbidding. There's no doubt this will sell in a week.

Albeit, it's an awesome house way out of my price range. But it's interesting to see how competitive the 1 mil and over market is. I guess with all the exotic loans now, even a janitor could buy this house!

I wonder if houses in the 4K range are experiencing this type of fierce competition. If anyone is out their bidding on houses, I'd like to know your experience.


Anonymous said...

Oh come on Meshugana. I didn't realize it at first, but you've just been baiting us all along . . . sad that you get your kicks this way.

Anonymous said...

Yes, Meshugy is getting very tiresome....

Meshugy, we don't care about you little neighborhood.

Go play somewhere else...please...

Anonymous said...

Originally, I thought that meshugy is a rational person who is only trying to share his opinion. It increasingly looks like he's a troll. All of his writings are just bragging about his house and his neighborhood… Kind of disappointing… I hope that he is someone who can provide some sensible explanation about the bubble… instead, he just provides some stories of greater fools and seems to take gratification in this because they provide him some sense of imaginary paper wealth… what’s a pity....

meshugy said...

Hi Folks,

I'm not trying to bait anyone....not sure what I said that gave the impression. I'm just interested in sharing people's observations of the housing bubble in Seattle. I think Tim is doing a great job with this blog. There have also been a lot of good input from readers. Price Drop has been especially kind in sharing his research on the Sandpoint area.

I've been posting about Ballard because that's were I live and it's what I follow the closest. I don't think it's any better then any other neighborhood. There are actually a lot of neighborhoods in Seattle that I'd be happy living in.

I've been posting on this blog for about 6 months...not sure why I'm being ostracized all of a sudden. Obviously, housing is a very charged topic these days. There's a lot of emotion surround any discussion of real estate. I agree with general premise of this blog and most of it's readers: that there is a housing bubble and prices will eventually correct. So we're all on the same side.

Anyway, no hard feelings.


Anonymous said...

When anonymous bloggers berate another blogger, it doesn't bring anything of substance to the blog. At least Meshugy brings something to the Blog.

Moving along....I lived in Sunset Hill near the house Meshugy discusses. This was at NW 62nd, back around 15 yrs ago in Spring of 1990. I ended up selling my "fixer" at a $40K loss. This was due to the market shifting in a huge way and being financially unprepared (code for ignorant, and market dumb. I coulnd't afford my mortgage and therefore sold at a loss. Back then $40K was quite a bit of money to lose. It took several years to recover.

I'll never forget the Realtor lady who came to my place one day. She held out a folder and pulled the 'new listings' paperwork out. She held it shoulder high and it unravelled 'accordian style' until it hit the floor. She said, look how many homes came on the market. This is when all the listings were printed on dot matrix printers and all the pages were connected. When she left the house I was shell-shocked. I knew that a large inventory increase would spell disaster for me. I sold and learned a valuable lesson. Markets do turn and do have cycles. You also want to be in real estate long term.

I enjoy reading Bill Fleckensteins articles at CNBC. He's a local Issaquah based hedge fund manager. His CNBC piece (slated for Monday's) is already online this evening: The Housing Bubble has burst

Anonymous said...


I am going to give you the benefit of a doubt.

Here's how it goes: You might be a genuine, nice, simple, person who is simply watching your neighborhood and noting that the RE situation there has not declined yet.

What you may be missing is that when an RE cycle turns, certain areas fall before others.

Eventually, they all fall. That is just the basic pattern. It's not a conspiracy theory, it's just the way it is.

The more desirable areas will lose value after the less desirable areas.

It would be shocking, for instance, if Lake City held it's value longer than downtown Ballard. That would be a first.

However, if Lake City , then Maple City, then Sand Point, then Roosevelt, etc. etc. loses value we can be pretty certain that Ballard is not far behind in line.

Ballard center is a great little neighborhood. A lot of people recognize it as a pretty idyllic spot. It will not be the first to fall in a downturn and, if an upturn happens, it would probably be one of the first to rise.

However, when all properties everywhere have appreciated at the rate that has happened, we can logically expect that all will eventually fall, including Ballard, Madison Park, 2 blocks off of Green Lake, everywhere.

That is why, when you notice a downturn in one section of town, if you are smart, you better prepare for a downturn in ALL sections of town.

I fully expect that Ballard properties will fall with the rest of the Seattle and the US in general. It would be positively absurd if they held their value while everything around them deteriorates.

Some places just go down later than other places, that's all.

So just be happy that you bought in an area that, when the worst happens, has a chance of re-couping value.

biliruben said...

Mesh -

Don't sweat anon-tweedle, anon-dee, and anon-dumb. They're probably the same twit who just can't stand to have their preconcieved notions of some imminent crash countered.

I appreciate your insight and your realistic view that things are still doing quite for the RE market here.

I understand this and though I feel like things will have to eventually correct, and we are beginning to see signs of weakening, we will be lagging the hottest markets by 6-12 months.

Don't let the anons get to you. I generally just skip over them, assuming anyone with something useful or interesting to say will say it with a name behind it.

Dukes said...

My .02, I think Meshugy is a bit of a troll. Or at least he likes to brag about himself to feel smart. Or, maybe he is nervous about what is coming and he keeps telling himself that all is well, all is well, all is well...

He may, and probably is a nice person - but I bet the schadenfreude part of him likes to tell everyone how he "bought last year," once or twice wouldn't be bad, but constantly telling everyone about his self proclaimed spectacular (in his eyes) purchase gets old.

Anonymous said...

Let that realtor check out this Center for Economic Policy and Research's calculator:

Seattle homes are 34% above where they would be with just the influence of supply and demand. It is realtor's who scare people, as well as speculators (idiots at this point) who keep the prices rising. My guess is that over the next two years the prices will drop in "real" dollars by that 34%.