The impending Seattle housing market collapse. (sale, real estate, apartment)

[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

[url]no blogs Mod cut]

[no blogs/URL]


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.

[gnab gib]

Great post. The "doom and gloom" spin is coming from a few fronts. First, you have people thinking that the collapse in housing prices is indicative of a coming economic slowdown, if not even a recession. Second, there are a lot of lending institutions hurting from the subprime-lending mess. (I know -- they made their own bed, and now they have to lie in it. I'm just sayin'.) And third, of course, you have the people who bought the houses at inflated prices in the first place. Some of them can no longer afford their homes when the interest rates on their ARMs go up (for which I don't have a lot of sympathy ... you have to plan ahead), and others are sore that they can't flip houses any more for an enormous profit (for which I have no sympathy whatsoever).

My wife works for a homebuilding company whose financials were terrible this past quarter. Lots of homebuilders are teetering on bankruptcy. Her company has been laying people off and cutting lots of corners. But again, it was their greed that got them there in the first place. It's hard to feel much sympathy.

Heck, I hope home prices DO start falling out there. My wife and I will be moving to PNW in a little more than a year (or sooner, if she gets laid off), and we want to be able to afford a house when we get there. We haven't been able to afford one here in the DC area, where prices are still astronomical, even though houses aren't selling the way they used to, even in this region.

[41Willys]

House prices will never come down. They will just level off.

[Pugetsoundman]

Originally Posted by 41Willys

House prices will never come down. They will just level off.

Home prices go up and down all the time. Only one thing is certain and that is that home prices never stay level for long.

[pshinspections]

I own a home inspection/appraisal firm in Seattle, and have bought and sold real estate for decades. Regarding an inpending crash... it is all part of a cycle. If one makes a chart from the last 50 years with housing prices, they will see the cycle. High demand accompanies rising times, low demand accompanies falling times. Supply and demand. Of course prices will fall in Seattle, as they already have elsewhere. It is only a surprise to those who rely on news or gossip for their facts.

My only caveat to the above paragraph would be regarding wars. Not military actions, but wars. Iraq is not a war. Real wars affect the economy and shift the cycle. Military actions simply function in the flow of the existing cycle, as Iraq has.

Real Estate is a poor investment if held less than ten years, IMO. Yes, you can buy it on the way up and sell at the peak, but most people cannot do that, and wind up getting their heads chopped off trying to sell after the peak, and paying two mortgages waiting for the house to sell. Just like mutual funds. If you are going to hold onto them for a long time, great. But if not, look out, the cycle can rip you to shreds. Most Realtors will not tell you this. I know thousands of Realtors, most of them are liars. They will likely tell you what you want to hear, or that prices will always go up. Well, it just ain't so. They are in sales... hello?

My inspection business is down 80% from January of last year. Good thing I started investing. Seattle is now feeling what the rest of the country has felt for two years. The cycle is not even at midpoint yet, only 80%. Lots more to go down. Fatalistic? Nope, just looking at the chart...

[St.Croix to Seattle]

One thing is for sure A good deal will always be a good deal,,,and for me personally compared to some of the places where I have lived and owned property Seattle is a great deal,,I don't listen to the media with their scare tactics,,so what I can afford will still be what I can afford whether the market falls,stays the same or continues rising,Considering the jobs available in the area if the collapse does come with will a lot less severe than what is happening in California,Nevada or Florida....

[41Willys]

It mite go down, but nothing like the amount it goes up.
I lived in Colorado in the 90's and saw the house boom there. I sold my townhome in 1997 for 127,000. By 2001 it was going for 200,000.

The same thing in Jersey, my buddy bought his home in 2000 for 220,000. It is now worth 500,000. It has gone down, maybe 10- 15 grand. But nothing like the increase it has taken. I believe that holds true for most realestate.

[argo69]

Originally Posted by pshinspections

I own a home inspection/appraisal firm in Seattle, and have bought and sold real estate for decades. Regarding an inpending crash... it is all part of a cycle. If one makes a chart from the last 50 years with housing prices, they will see the cycle. High demand accompanies rising times, low demand accompanies falling times. Supply and demand. Of course prices will fall in Seattle, as they already have elsewhere. It is only a surprise to those who rely on news or gossip for their facts.

My only caveat to the above paragraph would be regarding wars. Not military actions, but wars. Iraq is not a war. Real wars affect the economy and shift the cycle. Military actions simply function in the flow of the existing cycle, as Iraq has.

Real Estate is a poor investment if held less than ten years, IMO. Yes, you can buy it on the way up and sell at the peak, but most people cannot do that, and wind up getting their heads chopped off trying to sell after the peak, and paying two mortgages waiting for the house to sell. Just like mutual funds. If you are going to hold onto them for a long time, great. But if not, look out, the cycle can rip you to shreds. Most Realtors will not tell you this. I know thousands of Realtors, most of them are liars. They will likely tell you what you want to hear, or that prices will always go up. Well, it just ain't so. They are in sales... hello?

My inspection business is down 80% from January of last year. Good thing I started investing. Seattle is now feeling what the rest of the country has felt for two years. The cycle is not even at midpoint yet, only 80%. Lots more to go down. Fatalistic? Nope, just looking at the chart...

I certainly agree with pshinspections. As mentioned, as long as you are buying to have an asset instead of an investment and plan to live in the house/condo for a number of years...you'll be fine. The problem has been that for the past few years, it's been near impossible for some of us to make the leap from renting to owning due to prices.

[MichaelinWA]

Real estate is always a dangerous game in the short-term, but Seattle has similar characteristics to San Francisco and Boston. Limited room for expansion, limited supply, and continued demand should provide a long-term floor on pricing within Seattle.

[70Ford]

From what I've been reading on the Realtor's side, it's a slight "softening" of the market, 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.

[no blogs/url]

Spooky.