Misleading Media on the real stats on house prices (Opportunity: apartment, renters)

[irrational exuberance]

Originally Posted by Kim Emmons

Here's the skinny:

Median price for all of King County for December 2006 was $525,000 and the median for all of King County for December 2007 was $499,800. This data comes from the Northwest MLS. Our average market time in December 2006 was 84 days on the market and December of 2007 was 106 days on the market.

mod cut: link removed

Im glad you bought those stats on. Because I have been pleading with Mthomson that econ 101 tells us that increasing supply and decreasing demand = decreasing prices. But some people are so stuck in their beliefs that they will disregard conventional economics and not realize their own biases that are dismissing logic and fact. Thank you for your stats

[mthomson]

Originally Posted by irrational exuberance

I think one person on here told me that demand is increasing but with decreasing sales by 25%+ each quarter where is this demand coming from/at? ......

Those are your own words IR...pretty straight forward.

[mthomson]

Well, I'm done arguing. I got on this forum to assist people who are looking for information on our area, not to argue numbers. Congrats on sucking me in...usually I don't fall for it, but you got me pretty good.
Your house is a liability, not an asset theory is from Kiyosaki, one that I fully agree with. A rental property pulling in positive cash flow, which can be purchased with 0 out of pocket if you have enough equity in your other homes, IS an asset. How do you think Trump and Kiyosaki got so wealthy?
Bottom line is pretty simple. You can keep preaching doom and gloom and sit and do nothing, and that's okay. It doesn't hurt anybody, and it makes you feel good.
I'll keep being optimistic, and in full agreement with you I'll make sure my clients understand the market and the options that they have, and putting people in homes that they love and that they can afford. I've slowed my working with my "flipper" investors for a time, because there's no market for them anymore. There are a few opportunities to take short sales or bank owned and turn them around, but not in the 30-60 days that we used to.
So you have your approach, I have mine. I'll call that good.

[mthomson]

Ooops, one final thing. Kim's stats are great, but you'll notice the 3 areas that I work aren't in King Co, so they prove my points as well. Real Estate is a LOCAL market, not national, not regional. Gig Harbor, Tacoma, and Port Orchard are NOT King County, and you've already seen the numbers for those areas, taken from the same source as Kim's. Yet Kim's are valid because they agree with you, mine are not because they disprove you. Odd.

[70Ford]

Feature: 2007 Economic Outlook

Chief Economist David Lereah.

Lereah predicts that sales in many markets throughout the country are poised to pick up in 2007 and get on track for a full turnaround in 2008. He points to steadying mortgage interest rates, the top-out of home inventories, and declining new-home production as indicators that many markets are reaching a sustainable sales pace

[irrational exuberance]

Originally Posted by 70Ford

Feature: 2007 Economic Outlook

Chief Economist David Lereah.

Lereah predicts that sales in many markets throughout the country are poised to pick up in 2007 and get on track for a full turnaround in 2008. He points to steadying mortgage interest rates, the top-out of home inventories, and declining new-home production as indicators that many markets are reaching a sustainable sales pace

Yeah and usual these guys are over optimistic and flat out wrong. The last half of 2007 was a disaster, inflation is 4.1% highest in 17 years, but the media keeps pointing out that if you take away food and energy its 2.6% but food and energy are the two things everyone needs to live not new cars, new flat screen tv's etc. and I think the GDP growth for the entire years was under 2.0%, I think in the 4th quarters it was under a half percent. But like I stated earlier to others. Its there job to say things are good.

[irrational exuberance]

Originally Posted by mthomson

Well, I'm done arguing. I got on this forum to assist people who are looking for information on our area, not to argue numbers. Congrats on sucking me in...usually I don't fall for it, but you got me pretty good.
Your house is a liability, not an asset theory is from Kiyosaki, one that I fully agree with. A rental property pulling in positive cash flow, which can be purchased with 0 out of pocket if you have enough equity in your other homes, IS an asset. How do you think Trump and Kiyosaki got so wealthy?
Bottom line is pretty simple. You can keep preaching doom and gloom and sit and do nothing, and that's okay. It doesn't hurt anybody, and it makes you feel good.
I'll keep being optimistic, and in full agreement with you I'll make sure my clients understand the market and the options that they have, and putting people in homes that they love and that they can afford. I've slowed my working with my "flipper" investors for a time, because there's no market for them anymore. There are a few opportunities to take short sales or bank owned and turn them around, but not in the 30-60 days that we used to.
So you have your approach, I have mine. I'll call that good.

I dont want preach doom and gloom. But when things going bad what is the last thing that people are going to purchase? Houses. Especially when they are overpriced by an estimated 20-30%. We can have differences of opinions and thats okay. But the ignorance of the market is perpetuating the slump. If a house is priced right it will sell. Its the builders and uniformed people who take on the aspects of investment based pricing and the shorterm trend of multiple offers/ goldrush mentality and price accordingly. I have ran into so many people who can build anything but when it comes to taxes and finances they are lost. Greed and ignorance is the reason the market is the way it is. You wouldnt need the carrot on the stick approach with all sorts of incentives and dropping prices about $8k + a month or so. Your a real estate agent, how many subprime loans have you recommended for your clients? or ARMs? And its widely known/accepted that Pierce county is doing far worse than any other county in the state.Why, Tacoma is an industrial town and Seattle is an highly educated corporate city the wages of the two are substantially different, plus if you take away the port of Tacoma and Downtown Tacoma where are people working? Retail. As of September 2007, Pierce county had 520 foreclosures, King county had 580. Pierce county is under half the population of King county so you can see the rate is over 2 to 1 foreclosure for Pierce to King County. So how is it possible a county with a more volatile market, the biggest decline in sales, and the most days on the market is increasing? and King county is decreasing? One more interesting stat is that the areas leading the foreclosures are no surprise, Spanaway, Bonney Lake, Fife, and Puyallup. So you feel comfortable with your NWMLS stats and I feel comfortable with economic data. When a house is priced at the way my wife and I are comfortable we will buy and I dont think it will be long.

[Condorll]

Why is it that I believe most of the posters that claim gloom and doom for the Puget Sound real estate market do not own a home or have never owned a home.

They are wannabe homeowners that are afraid to invest in their own lifestyle and future. If you were a long term stock investor, would you worry if your strong growth stock declined 5% or 8% on a pullback? Probably not. You would be looking at the future potential of that sector.

Buying a home accomplishes two things.

1) Stability, a place to live "forever" if you wish. A place you can furnish and equip to suit you without ever having to worry about rent increases, conversions to condo, the possibility of bugs and noise from the folks in the apartment next to you.

2) A long term investment. Most homebuyers will stay in their homes a minimum of 7 years in my experience before even considering moving to another location.

That said, I have owned 5 homes in my lifetime (all over the country) and made an excellent return on all of them, far exceeding stock market returns, with the exception of one condo I owned for only 3 years during a flat market, broke even on that one. The 4 others were all owned for over 7 years each.

With Washington state no longer totally dependent on Boeing (that is a proven fact with the head office move to Chicago and outsourcing of assembly etc) and the constant INFLUX of people moving to this area,
Interest rates at HISTORICAL lows and GUARANTEED payments for 30 years, you have to be absolutely blind not to take advantage of the current lull in the market. Fact is, MOST people do not know how to save money. Owning a home is a forced savings program.

What is your option? Paying at least $1500/ month for a small boxy apartment? That will mean $2100/month rent in 7 years based on a 5% increase every year. Go ahead, throw $155,000 right out the window renting and have NOTHING to show for it after 7 years.

People who rent their homes land up POOR in their retirement years. Look at ANY 55+ retirement community and do a survey, ask the owners if this is their first home? Then ask what they did for a living. You will find average folks, that did average middle class jobs, raised families on average incomes in their own homes, and are enjoying their retirement in style.

Do you really believe a home purchased today will not be worth more in 7 years?

[irrational exuberance]

Originally Posted by mthomson

Those are your own words IR...pretty straight forward.

Your right those are my words so your going to say since I was right 2 out of 3 measurable quarters and I am wrong. Let me find the source of why I said that, its in the Tacoma news tribune

[Condorll]

Originally Posted by irrational exuberance

So how is it possible a county with a more volatile market, the biggest decline in sales, and the most days on the market is increasing and King county is decreasing? One more interesting stat is that the areas leading the foreclosures are no surprise, Spanaway, Bonney Lake, Fife, and Puyallup

It is my opinion that many who got Sub Prime loans had nothing to loose. They went from an apartment or a double wide into a real nice home for 3 years (on a teaser rate ARM) with nothing down and payments the same as their apartment. They couldn't afford the home any other way, No downside. If it doesn't work out they walk away and head back to the apartment.

Why is the Seattle area not experiencing the same level of foreclosures? Simple, highly educated population earning good incomes.