The impending Seattle housing market collapse. (Burien: foreclosure, condo, mortgage)

[StealthRabbit]

Originally Posted by 70Ford

From what I've been reading on the Realtor's side, ... but soon - probably by mid year - Seattle will be back on track and everyone will be making mad cash again....Then, you've got this guy. [/url]

Spooky.

yes.... interesting market, but I venture to say we have not seen much of the pain, yet. I've found that 'desirable places' (view, good location, park...) will sustain reasonable value and may spend more time on market, but not likely torpedo. so... since SEA in general is desirable, it will not go to Detroit levels, but... I wouldn't be surprised to see a 10-20% decline in values, for fairly priced stuff. The crazy priced stuff will stay on market until someone crazy comes along to buy it, or the crazy person decides to keep it, or give it to the bank. I don't know if SEA prices will ever get back to 'cash-flow' range. I.e., can you rent it for the payment, taxes, insurance?... doubt it. Stuff is just too high. I wouldn't want to be sitting on tract houses, or McMansions. Gonna be a tough sell with aging demographics and skyrocketing WA property taxes.

[70Ford]

Here's a list of Countrywide owned properties for sale in Washington. As you can see, they are dropping the prices somewhat.

If you consider $188,000 dollars, "somewhat".

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[70Ford]

Wow. Just...Wow.

__________________

So far it looks like sellers have a 50% chance of selling vs. last year. I’ll keep tabs on that as we go. You were twice as likely to sell your house last year as this year, if you put it on market.

For those of you who think it’s a new year and if it didn’t sell last year it’s time to raise the price…I’d rethink that. Hopefully low interest rates will improve the stats moving forward. But I wouldn’t count on the improvement being more than a 66.6% chance of selling.

We’re not talking about selling at the price you want. We’re talking about selling at all.

Not a good time to be stubborn or overly optimistic. You have until 4/1/08 to get real with your pricing, or possibly be back on market in 2009. Stop pricing off what other people are asking. Stick close to the comps this year. No more than 5% over the comps is a good rule of thumb.

And don’t skimp on condition. Condition will be the MOST important factor in 2008, second to not pricing more than 5% over the comps.

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[Condorll]

Contrary to 70Ford, I believe Seattle home prices have been reduced sufficiently now to attract buyers. The phones are ringing a lot more than in the Fall, buyers appear to be coming back into the market.

The 3/4 point Fed Rate cut this past week and another possible Rate cut next week and you are looking at a turnaround in this quiet market, possibly buyers scrambling to make offers.

With Interest rates this low and reduced prices this might be a great time to buy!

[John Shaft]

Home prices can't appreciate at 10-15% every year while wages only appreciate at 2-3% or are stagnant.

Same thing happened in the tech crash in the late 1990s. Tech stocks couldn't appreciate 30% with no earnings/profit.

Economics 101.

[Fallingwaters]

Originally Posted by 70Ford

Here's a list of Countrywide owned properties for sale in Washington. As you can see, they are dropping the prices somewhat.

If you consider $188,000 dollars, "somewhat".

Countrywide Foreclosures / REO Property Listings - Washington

Whoa, wait. You're talking about a foreclosure property in Camas, WA, where the median home price in 2005, before this started, was around $270k, and this house was bought for around $600k, right? I'm guessing, there's probably not a huge market for a house like that in Camas in the first place and, since it's a foreclosure, the lender's trying to cut their losses and move on. This doesn't mean houses all over Washington are going to drop something like $188k based on this one instance.

I know, I know, the "bubble" was a pain and sellers were smug and buyers treated like they didn't matter for a long time -- and, yes, those who waited can feel like "smart people" even though they should've probably bought in 2002 if and when they had the chance. But to gloat in return and then try to over-hype the situation doesn't make sense, either.

[70Ford]

Some of the fastest increases in home listings have occurred in relatively strong markets. The inventory in the Seattle metro area counties of King, Snohomish and Pierce leapt 50% last year. At the end of December, when listings are lower than usual because of the holidays, the inventory there was enough to last 4.9 months, denoting a fairly balanced market -- but up from a very lean 2.7 months at the end of 2006. In King County, the median price in December was down 2.6% from a year ago.

RealEstateJournal | Housing Slump Starts To Hit Stronger Cities

The market is starting to cool.

[irrational exuberance]

Originally Posted by 70Ford

Seattle homes are seeminglly overpriced by 25 - 30 percent.

Regular folks making regular pay can't afford a 3 bedroom, 2 bath home, in a good neighborhood, with good schools. They MIGHT be able to afford an apartment, or condo - maybe - or can perhaps take on room mates. Just you, your wife, 2 kids, and a room mate. Mmmmm, good times.

You know, it's sad to see people lose homes they can't afford. It's sad to see a kid lose his ice cream cone because he wasn't careful, as well. But dollops of ice cream fall - and homes are foreclosed on.

Its hilarious to me to see a home that was purchased in 1993 for 120 thousand, on sale now for 370,000. There's one I saw recently - 4 bedroom, 2 bath, bought for 600 thousand now on sale for 800,000 - 19 months later. Feller was complaining that it's been on the market for 3 MONTHS and hasn't sold. Think about it. 19 months...200,000 dollars. That's a pretty good rate of return.

Yet, returns don't always pan out. Stocks historically return about 9 percent, bonds slightly less. Seems housing was the way to go, at least in Seattle. The rate of return ran to ~20 percent or so. Little less, little more.

I wonder if it can be blamed on people moving in. Being one of those people, who moved to Seattle as of last year, I dunno. I do know that you gotta be able to make a ****load (Ha! got you, <--it's boatload) of cash. Or something.

We're all forced to make decisions. Do I want a decent house? A decent neighborhood? Decent schools? Do I want to take the chance of some gang banger accosting my wife, because I chose to save a few dollars? Or my kids to grow up next to dope dealers and drug fiends? I mean, you do what you can to protect your kids - but if you sleep in the jungle, you learn to sleep in the trees.

I wonder if these housing prices are a scam.

For some reason, it feels like a pyramid scheme. A pyramid scheme, which is finally beginning to unravel.

Guess we'll see in a year or three, eh?

The Mortgage Lender Implode-O-Meter - tracking the housing finance breakdown, related to Alt-A and subprime mortgages, lending fraud, predatory lending, housing bubble, mortgage banking, foreclosures, debt, consolidation, lawyers, class-action lawsui

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Interesting point made in that last blog -

First up is the incessant refrain that anyone predicting a decline in house prices is forecasting “doom and gloom” and/or a “housing apocalypse.” How do lower prices translate to “doom and gloom”? Isn’t it a good thing that people will actually be able to afford to buy a house without entering into a self-destructive financial death trap? Are falling gas prices “doom and gloom”? What about falling flat-screen TV prices?

When the cost of something falls, it is a good thing that leads to greater affordability and frees up money for people to spend on other things. Apparently I’ve got it backward. To me, a rapid escalation of prices leading people to make extremely risky financial decisions and putting them in a situation where all they can afford to do is pay the mortgage (if that) is “doom and gloom.”

I guess it depends on one's perspective.

Then again, if you happen to lose your job, because of a bad economy, because of someone else's bad decision - or someone's greed - then, you won't be able to buy that newly depreciated home. Flip it some more, though, and when you do find a decent job (if you find a decent job) then you might be able to afford that lower priced bit of shelter.

It's fun to speculate. Speculation is what got us here.

I think I found someone with the exact same logic as me. If you look at my previous post I have compared the housing market to the stock market historically. I even made my forum name after the phenomem that is happening right now. Its a disaster when you get people who rely on optimism over conventional economics and markets in general to think they are investing genius and wonder how they cant flip their house for 200k in less than 2 years. Like you said the stock market has been giving about a 9-11 percent rate of return since 1800s (adjusted for inflation) but yet people seem to think continous returns of 30% is realistic. Only difference with the real estate market and the stock market is liquidity. If my stock are plummeting I can play into the behavior finance and get scared and sell low when I bought high but with a house I am stuck with it until someone else takes it off my hands.......Irrational Exuberance.....one of the wisest things Allan Greenspan has ever said

[irrational exuberance]

Originally Posted by Condorll

Contrary to 70Ford, I believe Seattle home prices have been reduced sufficiently now to attract buyers. The phones are ringing a lot more than in the Fall, buyers appear to be coming back into the market.

The 3/4 point Fed Rate cut this past week and another possible Rate cut next week and you are looking at a turnaround in this quiet market, possibly buyers scrambling to make offers.

With Interest rates this low and reduced prices this might be a great time to buy!

Agreed, I got preapproved from a small credit union in the south that i have been banking with for over 10 years. THere lowest rate so far was 5.00% If it goes down to 4.875 after Jan 30 when the fed meet again I think I cant pass buying up. With inflation at a 17 year high interest rates are going to be down for too long. I think I would pay potentially 20K more for a house at a 4.875 interest rate than 20k less for a 6% interest rate....these are just hypothetical numbers but I will buy if 30 year rates at my bank go under 5%

[Condorll]

Originally Posted by irrational exuberance

Agreed, I got preapproved from a small credit union in the south that i have been banking with for over 10 years. THere lowest rate so far was 5.00% If it goes down to 4.875 after Jan 30 when the fed meet again I think I cant pass buying up. With inflation at a 17 year high interest rates are going to be down for too long. I think I would pay potentially 20K more for a house at a 4.875 interest rate than 20k less for a 6% interest rate....these are just hypothetical numbers but I will buy if 30 year rates at my bank go under 5%

Good for you! But tell me, is the difference between 5% and 4.875% gonna make it or break it for you? If so, maybe reconsider that purchase.

Also remember that just because the FED cuts, doesn't mean the Banks cut Mortgage rates! The FED is looking for short term stimulus to the economy (and saving a few banks butts in the process), while the Lenders are looking out 30 years on those interest rates. There have been times where Banks actually increase rates due to their own economic projections, even though the Fed cuts .