Bellingham, the ugly truth.... (Seattle, Longview: real estate, housing, rent)

[Ultrarunner]

I would imagine that he means no Taxable Income due to offsets from business losses, depreciation, etc. There are also many older people who are cash poor and house rich. Most lenders don't really care about assets... they only care about income as in income to debt ratio.

Just my guess...

[rkcarguy]

Bantering bear, what I am trying to say is that the cost of homes and living here is WAY OUT OF PROPORTION to what people make here. Tell me why my wife and I, who both make above average incomes, both have to work to pay for a crap-heap of a home? How can you have a family and children when you both have to work to pay a $2000/mo house payment? To clue you in, a recent article written by a reporter in NJ about the housing bubble commented about Whatcom County, WA, that "when home prices increase 87%, and income only goes up 7%, something is really wrong"

I think a home here is a poor investment, we simply do not have the jobs here to support these kind of prices. The good things about bellingham that got it called "#2 best place to retire" are now dust in the wind. Foreclosures are up 72% and alot of the builders are squirming because their $300K+ homes are not selling. Even with our jobs(good by local standards), we do not plan on staying here. If it continues to be such an overpriced cost of living here we will be moving out of state. There are plenty of places to go where you make $2-$3 per hour less, but it's like twice as much.

[janb]

and... for those of us who already have our homes (at previously 'reasonable values'); increased prices in WA state = increased property taxes (as we are taxed on 100% of Perceived Fair Market Value). Thus taxes soon overburden your housing costs (my taxes are ~ 2x the cost of my payments, and 8x the cost of utilities). And... just b'cuz your assessor thinks your house is worth a bundle, it takes CASH to pay taxes. The big hunk of equity that is suppossedly tied up in your home is of NO VALUE unless you borrow against it (that takes CASH), or sell it... (then you have to replace it...). No winners here. WA is shooting themselves in the foot. I used the cash flow ratio of 10% of value should come back in rents (if you had to rent it... (long term disability / job loss / move...) ) thus a $300k home would require $3000/month market rent. Unlikely , even in a college town where you parcel the place into $$/bedroom.

[BanteringBear]

The hideous increases in housing costs (coupled with
the cost of living in general) are why I left WA
state. I love the area, but most likely will never
return. I know many who have done just the same. The
tax burden, as janb illustrates, is also squeezing
people who didn't pay a lot for their homes. Many
people on fixed incomes are forced to sell. The
hyperinflation of real estate in general is due
entirely to the national loose lending which fueled
massive speculation. Many like to loudly proclaim that
these excessive gains are here to stay, but they're
simply not sustainable. Wages pale in comparison, and
many now realize the economic advantages of renting
instead of buying, or even leaving the area
altogether. The Puget Sound area is at the peak of its
boom in regards to real estate prices, popularity, and
economic prosperity. The fallout of all of this will
be felt for years to come. While the area is
undeniably beautiful, a much higher quality of life
can be found in many other places in this very large
country.

[nunusguy]

Usually the biggest contributor to soaring home prices are local regulations
on such things as land use and buiilding codes.
If large areas of land (improved and unimproved - vacant land) are put off limits to residential RE development, that obviously has upward pressure on
home prices because less housing is available.
Usually these kinds of factors have more effect on RE prices than macroeconomic factors like interest rates.
If I'm not mistaken, the mentality of WA is for a lot of regulation ?
So there's the trade-off: pretty countryside is retained for nice views, but the
price of housing may soar to unreasonable heights and may make it unaffordable for many more.

[rkcarguy]

Yes, now we are seeing the light........

All the above is true in the last couple of replies, and yes they regulate the crap out of everything, I'd say way too much. I'm a member of our local Autocross club(we race cars one at a time thru a cone course in a closed parking lot about 6 times a year for best time, usually doesn't exceed 40mph). Our club, all participants, spectators, and the property we compete on are all covered by insurance we carry and pay dearly for, and we limit our event times from 10am-6pm to minimize the nuisance factor. Evidentally it hasn't been enough, because this year, after over 50yrs of autocross, we have no race season because too many people whined and complained and now we have nowhere to run our events.

I agree about the loose lending. It's my belief that the Bush Administration, to keep themselves from looking like bigger morons than they already are, have kept interest rates artificially low during a time of record national debt to stimulate construction and the resulting job market. Our job market in general already sucks, millions of jobs going overseas, factories closing, and corporate price gouging. Now imagine all those construction jobs gone, all the demand for building materials gone. What would be left?

The bad thing is that it will come. It has to get worse so that we can get out the hole the bush adminstration dug us into. The next administation will take the blame, but in reality they will have to do what must be done to fix bush's mess. The government is already pouring on the government work just like they did to help pull the US out of the great depression. Government money spent on roads, railroads, bridges, and more to provide jobs. Our job board at work says it all. Work for the state and oil refineries, otherwise I'd be on unemployment now. Another scary factor as quoted from the American Press:
"People are saving at the lowest level since the Great Depression, and that could be a problem for the millions of baby boomers getting ready to retire.
In fact, the Commerce Department reported Thursday that the nation’s personal savings rate for all of 2006 was a negative 1 percent, the worst showing in 73 years.
The negative rate means people are spending all of the money they have left after paying taxes — and then some. They are dipping into savings or increasing their borrowing to finance current spending."

[brightcopperkettles]

The reason people (regular folks--not big earners) aren't saving is because they have nothing left over to save when they live in Washington State. Sad but very, very true....

[janb]

Originally Posted by nunusguy

Usually the biggest contributor to soaring home prices are local regulations
on such things as land use and buiilding codes...

I note that was what happened in Boulder, CO in the 70's but...actually in our specific WA area... the rules (clearcut...) have been reduced, and timber companies are selling big chunks off for 5 - 10 acre lots. It is truly the demand and available wealth that has driven our prices (thus I'm not expecting a significant local downturn, in rural props).

Federal regulations in the Columbia Gorge torpedoed land values in the '80's, but as soon as the local counties got control of building permits (~2000) the land values rocketed. Most of the new places have been built out of compliance with the federal rules, but the Dr, and Lawyers have been able to payola their approvals through the county. I have a good friend who is an inspector, and he asked several folks how they got approval. consistant answers... It's not who you know, but who you PAY... He also claims there is A LOT of money (crime...$$) from eastern europe being funneled into WA properties. It can be easy for folks to 'get lost' in the outer areas. He has had a very tough time finding english speakers to deal with code violations (and he is quite fluent in spanish... but not so in russian dialects.)

[nunusguy]

Originally Posted by janb

I have a good friend who is an inspector, and he asked several folks how they got approval. consistant answers... It's not who you know, but who you PAY... He also claims there is A LOT of money (crime...$$) from eastern europe being funneled into WA properties. It can be easy for folks to 'get lost' in the outer areas. He has had a very tough time finding english speakers to deal with code violations (and he is quite fluent in spanish... but not so in russian dialects.)

First off, I'm totally for enforcing the existing laws including prevention of such things as "payola" or any other forms of illegal paynents to local officials.
But I get the impression you might endorse prohibitions against non US
citizens and/or non US corporations being able to purchase WA RE ?
Guess this is a different issue under the label of protectionism ? As you might
realize, I'm a "free-trader" and totally opposed to such policies and very much
"for" international trade and investment, though there are inequities there
related to foreign exchange rates. But that's totally apart from this discussion. You may feel differently ?

[WOW!]

Man, how do you people get up in the morning? rkcarguy sounds like the typical liberal/socialist who lives in a world of doom and gloom. Everything is someone else fault, everyone owes him something. If you don't like it here, get out. I know you think you live under some evil dictator, but you are actually free to go and do what ever you want! If you are stuck because of your family, why is everyone else NOT supposed to do the best they can for thier family income. Why don't you buck up and sell your families house for the 2001 price you yern for, oh wait, you only expect other people to go back in time to make you feel better. Why shouldn't someone move here if they want to? If they sell thier crappy house in Cali and buy a great house here, its none of your bizz. If you can't take care of yourself lie everyone else, quit crying and move. Your problems don't trump others. You have complained about every single aspect of this town from the people to crime to cops, try and figure out why everyone is still moving here. You mean there is crime here? or traffic? or over worked police?, where is this magic town that has none of this that you are comparing us to? Typical Liberal.