The impending Seattle housing market collapse. (foreclose, good credit, buying)

[MissingAll4Seasons]

Originally Posted by seattlenextyear

I drove through Kenmore yesterday and I saw about 20 real estate signs.

Yep, they're cropping up faster than mushrooms! Seems that "For Sale" signs are now the lawn ornament of choice

I shudder to think how many people might be facing foreclosure now that the falling market has left them upside-down on their mortgages and the houses aren't selling at any price. With so many people losing their jobs and taking pay cuts, there are going to be a lot of people who need to relocate for new jobs, etc. The market is only going to get worse for sellers if you get a glut of bank-foreclosed auctions.

[Jennibc]

Originally Posted by MissingAll4Seasons

No, we're out in Kenmore/Bothell.

I know this is anecdotal, but a house two blocks from ours went on the market less than a month ago and is under contract. The list price was 525K, but there is no knowing what the sale price is until it closes. Most of the houses in my old neighborhood priced under 600K that have gone on the market (with the exception of those on arterials) are going under contract within a month's time. But we were in Wedgwood so a very short commute from downtown with good public schools and larger lots. It may be that the realtors are getting better about pricing in our neighborhodd or there are still enough people that feel good about their jobs. Who knows, maybe if that house had gone on the market a year ago they would have list it at over 600. I still beleive that in the more desirable in-city neighborhoods, we are not going to see a 40% drop accross the board because people still want to live there.

[MissingAll4Seasons]

I agree that we still have pockets of desirable houses that are still selling and are selling in the black. I think the problem in our neighborhood is that they recently subdivided a large majority of lots and developers came in and built 50+ new houses. When that first happened our property values went up, but now that those houses haven't sold and the neighborhood is more crowded, none of the older houses are selling either and the market values have gone down.

[Jennibc]

Originally Posted by MissingAll4Seasons

Yep, they're cropping up faster than mushrooms! Seems that "For Sale" signs are now the lawn ornament of choice

I shudder to think how many people might be facing foreclosure now that the falling market has left them upside-down on their mortgages and the houses aren't selling at any price. With so many people losing their jobs and taking pay cuts, there are going to be a lot of people who need to relocate for new jobs, etc. The market is only going to get worse for sellers if you get a glut of bank-foreclosed auctions.

Local News | Nearly 30 percent of all homes sold at a loss at the end of 2008 | Seattle Times Newspaper
I don't know about Kenmore but according to the story attached to the above link, Bothell was the fourth worst area in Snohomish county with 33.5% of houses selling at a loss during the last quarter. So you are right on this one Missingall4. I am very sorry for you and others in those areas.

When we moved back in 2001 we were still dealing with higher prices from the area's growth and the realtor we worked with was a total a-hole. He wanted us to waive an inspection (I refused) and wanted us to offer more than the asking (I refused). Turns out we might as well have waived inspection because the inspector he recommended missed a ton of things that we later had to fix and pay for ourselves.

It is amazing the hysteria the entire industry was promoting "if you don't buy now, you will be priced out forever!" I remember refinancing in 2004 and the guy from WAMU doing everything he could to sell us a seven year ARM. He asked "Really, so you in your dream house now then? Looks like you are really in a starter home." He acted like everybody else was out upgrading and we should be too after a short period of time. Lucky for me I have some sort of inner super BS detecting mechanism that triggers contempt rather than insecurity when faced with a line like this So I told him, no, it was not our dream house, but our dream is not to lose our house so we would pass on the ARM.

I am greatful we purchased in early 2001 because I know we won't lose money and while we are not likely to make a killing, we are firmly above water right now.

[pirate_lafitte]

The one good thing that could come out of this horrible economy is a cheaper housing stock in Seattle. My father left Seattle because the housing market was expensive. Now might be a good time for him to look into Seattle.

[MissingAll4Seasons]

Originally Posted by pirate_lafitte

The one good thing that could come out of this horrible economy is a cheaper housing stock in Seattle. My father left Seattle because the housing market was expensive. Now might be a good time for him to look into Seattle.

He might be able to afford a house now, but it is still pretty expensive to live here (property taxes, utilities, etc). Plus, one of the reasons there is cheap property available is that the job market isn't so great either. Unless he's independently wealthy, I don't think any city is the place to buy right now... job market is trash and you'd be stretching a fixed income pretty hard.

[pirate_lafitte]

Originally Posted by MissingAll4Seasons

He might be able to afford a house now, but it is still pretty expensive to live here (property taxes, utilities, etc). Plus, one of the reasons there is cheap property available is that the job market isn't so great either. Unless he's independently wealthy, I don't think any city is the place to buy right now... job market is trash and you'd be stretching a fixed income pretty hard.

He's not independently wealthy, but he is working.

[Heiwos]

Originally Posted by Jennibc

I remember refinancing in 2004 and the guy from WAMU doing everything he could to sell us a seven year ARM. He asked "Really, so you in your dream house now then? Looks like you are really in a starter home." He acted like everybody else was out upgrading and we should be too after a short period of time. Lucky for me I have some sort of inner super BS detecting mechanism that triggers contempt rather than insecurity when faced with a line like this So I told him, no, it was not our dream house, but our dream is not to lose our house so we would pass on the ARM.

Great story! I too was pitched an ARM while refinancing. Guy said, "I guarantee you that rates won't go up!" I said, "Really, you'll guarantee it?" That shut him up.

[jenlion]

Haha. Yeah, when we bought our first home in Dallas in 2004, everybody treated us like idiots for refusing the 5-year ARM. They were personally offended that we were only buying a house for a quarter of what "we could afford" according to them. Insane. They were SOOOOOO pushy!! Didn't we KNOW how much money we were throwing away on interest (at 5.6%?!) on a 30-year-fixed, when we could get a 5-year and pay so much less, and get such a much nicer home? Man. We'd have been stuck in Dallas still, husband working for Nortel still because we wouldn't be able to afford to leave ... and Nortel just went bankrupt.

Not entirely thrilled with the situation we're in here either, but at least we were eyes wide open. You can't stop the bottom from falling out of EVERYTHING (if we both get laid off, and can't find any work within a year, we're in some trouble), but it's not like we're desperate. SOOOO glad we didn't listen to those morons in 2004. Here, people were much more straight with us -- nobody was jerking us around (once we ditched the first real estate agent idiot, anyway), nobody tried to sell us any crazy lines.

[texastrigirl]

It's interesting to hear the negative chatter on ARMs. I am a CPA and another CPA friend has always used ARMS for the most part and has saved herself money every time so she got me thinking about it. I have typically done fixed 30 year loans but have to say that in all cases, I either moved or refinanced prior to 5 years in every single house I have ever owned (owning #5 right now, have already refied it once). So in theory, I would always have been better off in an ARM in every single case. I have one now and am looking to refi again very soon. Ironically, I will go to a 30 year fixed if I can because I think rates are the lowest they will EVER be in my life time, I don't plan on moving again unless I have no other choice and I can foresee being here at least until my youngest graduates from HS in 12 years. So, ARM's are not bad you see if you use a fiscally conservative approach to them and have a good reason to use them. But when used just so you can eek by and afford a bigger house...maybe not the best choice. Just another perspective.