The impending Seattle housing market collapse. (Bellingham, Lynnwood: bank owned, short sale, lease)

[ElektroDragon]

Originally Posted by Ira500

Oh yeah, mortgage payments are still almost twice the rent in a lot of cases. Not everywhere, but mostly.

That is true in most places in the country, and I have first hand experience with it. But I also have first hand experience that my rent in Kirkland is a few dollars MORE than my new mortgage on a $340K house in Bothell, even after taxes and insurance. Of course, it helps that I was able to put 20% down. Still, that's not right given I can get from the house to the apartment in less than 10 minutes, and my house has way better shopping and freeway access than my apartment does. It will also be a lot easier to get into Seattle from southwest Thrasher's Corner than from Kirkland Juanita, I am thinking. No bridges to deal with, for one thing, just cross over to the I-5 south of Alderwood using the 524.

[Jennibc]

Originally Posted by ElektroDragon

Of course, it helps that I was able to put 20% down.

and that you probably got a 4.5% mortgage. When we bought our first home our mortgage rate was almost 8% and we had excellent credit. When we bought our second house it was slightly lower but when we refinanced a few years later and got the rate down to just over 5, our house payment for a 220 K mortgage was pretty close to our 140K mortgage at 8% (I guess it was actually a higher rate than 8 overall because we did an 80 10 10 so the second was a fifteen year and the rate was slightly higer than the first mortgage) at any rate.

[ElektroDragon]

Originally Posted by Jennibc

and that you probably got a 4.5% mortgage. When we bought our first home our mortgage rate was almost 8% and we had excellent credit. When we bought our second house it was slightly lower but when we refinanced a few years later and got the rate down to just over 5, our house payment for a 220 K mortgage was pretty close to our 140K mortgage at 8% (I guess it was actually a higher rate than 8 overall because we did an 80 10 10 so the second was a fifteen year and the rate was slightly higer than the first mortgage) at any rate.

4.5? No, I wish... 5.0 for a 30 yr fixed (with no points) is more like it! I had the opportunity to get 4.75 but I could not find a house in time. Unfortunately I panicked last week when it seemed rates were shooting and up locked my float at 5.00. Now I see it is 4.89. But what can you do? At least I ended up with a basically "free" closing.

[MissingAll4Seasons]

Originally Posted by ElektroDragon

... the cost of seemingly EVERYTHING has gone up at the exact same "accelerated" pace since 1990. The only way I see house prices reaching $100K again is if everything ELSE also followed suit, which could only happen through massive deflation.

Yup, that's exactly what I'm saying. We're in a recession and the government is desperately trying to keep it running on inflation (maybe even hyperinflation), but that's only going to work for a little while before deflation takes over. Everyone - consumers, businesses, banks and governments - are overextended and the world just can't handle the exponential growth that our current system requires.

Unfortunately, if I am right, everyone who has a $300k mortgage is still going to owe the bank $300k even though their house is only worth $100k and they are making jack-diddly for salary. Sobering thought if the economic, energy and environmental trends actually form the perfect storm (i.e. worse case scenario).

[ElektroDragon]

Originally Posted by MissingAll4Seasons

Unfortunately, if I am right, everyone who has a $300k mortgage is still going to owe the bank $300k even though their house is only worth $100k and they are making jack-diddly for salary.

And that's exactly why I don't want to believe you! Though I think SOMETHING would have to happen at the national level in that scenario, otherwise you would have millions of people in foreclosure and everyone would end up homeless or fighting over apartment rentals for $200 a month. Not a pretty picture.

[seattlenextyear]

Originally Posted by ElektroDragon

That is true in most places in the country, and I have first hand experience with it. But I also have first hand experience that my rent in Kirkland is a few dollars MORE than my new mortgage on a $340K house in Bothell, even after taxes and insurance. Of course, it helps that I was able to put 20% down. Still, that's not right given I can get from the house to the apartment in less than 10 minutes, and my house has way better shopping and freeway access than my apartment does. It will also be a lot easier to get into Seattle from southwest Thrasher's Corner than from Kirkland Juanita, I am thinking. No bridges to deal with, for one thing, just cross over to the I-5 south of Alderwood using the 524.

I thought there was a thread about the virtues of 522 vs. 520 to get into Seattle but I can't seem to find it. My GPS sometimes feels like taking me around the lake, and sometimes on the bridge, to get to the same destination. And it doesn't even get traffic updates!

[ElektroDragon]

Originally Posted by seattlenextyear

I thought there was a thread about the virtues of 522 vs. 520 to get into Seattle but I can't seem to find it. My GPS sometimes feels like taking me around the lake, and sometimes on the bridge, to get to the same destination. And it doesn't even get traffic updates!

Well, in my case I'll have the option of taking 524 to get to the I-5 south of Alderwood, but I think an even more direct option will be take 228th to 236th, crossing Brier and getting on the I5 just east of Lake Ballinger. Any chunk of freeway avoided in rush hour is probably a good thing.

I just don't see how taking the 522 to get into Seattle is a good idea. It's stop and go stoplight traffic even during NON rush hours! Certainly it's a better option than the 520 bridge, I'm thinking, at least until they replace the thing. Fortunately I work from home now and have NO idea if I am going to be working in Seattle or the Eastside in the future. So you can see why I picked Bothell given my paltry budget. My only other real option was Renton.

[jenlion]

I think the rents are so high here because we have so many immigrant workers here on temporary visas. Sure, SOME of them buy (like my friends from London that did, and are selling at a huge loss), but many of them seem not to, just for that reason. The other friends I've made here from other countries have either bought modest condos, or they rented. When you can get sent out of the country on a whim, why would you want to be tied to property there? So, Microsoft and, to a probably lesser extent, the other big companies out here inflated both property values for families moving in AND on rentals.

Shoot, even a lot of the citizen-families I know here are renting, sometimes nice homes, but usually a bit raggedy. They took one look at the housing prices here and said no-thanks. Shoot, I would have rented, but there were no decent single-family-homes available for rent while I was looking that were less than a mortgage or not on top of a freeway or out in the boonies. I DID look.

The house next door to me is a rental. A quiet Japanese family had lived there for years before we moved in. Last summer he was summoned back to Japan, and the house was re-rented within a month for $2000/mo. 1700 sq feet, 3 beds, backyard, but the house is not being maintained properly. (We've tried calling the owners when something happens, like the high winds pulling the gutters off the house, or part of the chimney is falling in, but they do NOT CARE, so we gave up on that. I worried about that with a rental next door, but at the time it looked fine, reasonably maintained. Now, the new neighbors just had their 4th kid, and they don't care either. Ayyyayay). Anyway, Japanese family was renting just because even though they'd been in the US for five years, they knew that could end on short notice -- and it did.

So, I think rents will remain quite high Eastside, unless MS sends all the visa-folks home, and stops relocating families that don't want to buy.

[MotleyCrew]

Originally Posted by blondandfun

^--
what really angers me is this will never happen unless people take losses. Realize, most people with these expensive homes are just normal people who are nothing special... all they did was move from california to Seattle and they are no more educated than middle class, just in the right time at the right place.

I hope Obama enacts some type of program that encourages development in cities and wipes these stupid wastefull single family homes off the market... the only people that benefit off these homes are stupid fixer uppers, investors, and lucky Californians.

Looks like the "rich" in CA won't be so rich now. Your homes are safe.

[eskercurve]

I was thinking the other day about this, and I'm wondering what you all thought of this ...

Given that Microsoft is laying off people, and Boeing is laying off people (and will lay off many more, trust me), and there doesn't seem to be very many places actually hiring, we're only beginning to see the housing bubble burst here. Yes, housing prices have fallen about 30% off their highs and now they are approaching being affordable to the mean household income in King County (~75k / year), but if there aren't jobs being added to the area, we'll have oversupply of houses. That will put even more downward pressure on home prices.

Now, if the government keeps printing money to cover expenses inflation will dramatically increase and home prices will eventually settle due to inflation ... but that isn't any way to "stabilize" the market.

The fact that there's a fair number of people who refuse to lower their asking price is laughable to me. Yesterday I was cruising around West Seattle and there was this little bungalow that has two bedrooms and 1.5 bathrooms and they were asking $465k for it. I felt like inserting a flyer in the flyer handout box with a note saying "You're insane". It wasn't on the water, it wasn't near California ave., it was not beautifully kept up, and it looks like it was one of those ramblers built in the 1960s. I thought I'd seen the last of such insanity but I guess I was wrong!

Anyway ... no jobs being added to the area. I don't see that happening for another year at least either. So I'll just sit tight in my nice new apt. which I am renting for ~$250 / mo less than my previous place.