Goldman-Sachs predicts 20% drop in home values in Seattle (sales, home sales)

[Ira500]

Originally Posted by Patron of Wrath

Dropping property values is a great thing for Seattle.... if you don't own a house anyway. If you do, then the drop is deserved, you're house is over-valued.

If you own a house and the value drops, it should mean that you won't be paying higher property taxes. So that's a good thing.
If you're the government, lower property values are not your friend.

[Patron of Wrath]

Originally Posted by Ira500

If you own a house and the value drops, it should mean that you won't be paying higher property taxes. So that's a good thing.
If you're the government, lower property values are not your friend.

Because the government is always trying to spend more than they make. If they were fiscally responsible then ups and downs in the economy and housing market wouldn't matter. We (we as a society) rely far too much on the government these days.

[newguy416]

Glad I just bought a house here. Wait...umm...

[Under The Clouds]

I'm not an expert on RE values, but I'm I'd be shocked if prices in Seattle didn't drop considerably over the next few years. Still, 20% seems a little sharper than I'd guess. We'll see. I bought last summer with a longterm horizon (10+ years) so I'm not any more concerned about falling prices right now than I am about the fact that my retirement fund has dropped since 2007. It's something I won't see for 30 years anyway.

As Ira pointed out, real estate is a risk, like any other investment, and investors or short-term, distressed sellers are the ones who'll face the fallout. Good luck to them.

One of the things that both Portland and Seattle share is that both regions have some of the tightest land use restrictions in the country. That clearly pushes up real estate values, and I wonder if GS's analysis factored that in when forecasting property values (I haven't read it yet).

[silverfox]

Even though the article I refered to earlier stated that "in general" not just Seattle .. we could see Up To 30% still to come, I realize that all of these type statements are estimates/guesses/what ever.
That statement did not reflect my personal estimate.
Home price reductions will vary from area to area within Seattle, so one Solid figure does not tell the whole story.
Only time will reveal what will happen and I would put my best guess at 15 to 20% depending on the location etc.

[Ira500]

I think what GS was focusing on was that Seattle was late to the game, that our price declines started later than many other cities and will last longer, not to mention the classic affordability ratios of median household income to home price and median rent to home price.
Up until 15 or so years ago, ordinary working stiffs could afford to buy homes in many Seattle neighborhoods. In 1979 my landlord on Capitol Hill told me he was going to put the house up for sale, and I could have first dibs at 36,000 dollars. I told him he was nuts, that nobody would pay him that much money for that house. That house is probably worth 500,000 dollars now.
Salaries have not kept up with home price increases, so if there's going to be a healthy amount of home sales, either salaries need to increase, or home prices need to come down. I'm betting on the latter, but I don't think it'll be 22%. Maybe another 10%.

[eskercurve]

Zero Hedge is a notorious blog for being perma-bears when it comes to the economy. The information to be gleaned from that website should be taken with a grain of salt.

On the other hand, I too believe that rentals are the way to go for first time home buyers in this economy. I did a quick search for what is affordable in the city to those who earn the King Co. median income and … not much came up. When I searched for applicable rentals, however, more properties came up.

Are home prices overvalued by 22%? I think the answer is no. But are they still overvalued? I believe so. I agree with many aspects of the research here. Home loan defaults, the coming wave of Alt-A loan defaults, and oversupply in the Puget Sound area have to take their toll on the market eventually. I think the extension of the first time homebuyer credit was a mistake – it only delayed the inevitable drop downward to market stabilization. People will likely go into a spiral of “home prices keep dropping, I’m going to wait it out” for a while.

The saving grace, though, is the echo boom of Gen Y parents having children. Most people I know still want houses and not condos to raise children. Eventually, that combined with the continuing influx of people to the Puget Sound region (typically for medical or high tech companies) mean that demand should be solid in the medium term, but short term, nope.
Long term is a different story. I, for one, am worried about Microsoft completely imploding and being taken over by Google and/or Apple, and Boeing’s eventual departure from this region (no thanks to the unions, way to go idiots).

[jm31828]

I suppose it could happen, but quite frankly I think to be on the gentle upswing economically means we won't see this big of a drop- those drops happened elsewhere when the economy was still in freefall, with stabilization happening once bottom was hit. Here the fall was much less, of course, and seems to have stabilized somewhat. With the economy and job market around here slowly improving I just don't see house prices dropping much more- maybe staying as "low" as they are now, but not dropping much more. When we were looking for a house back in January, homes in the lower more affordable price range were going fast.

I'm no expert, though- that's just my observation.

[Ira500]

Originally Posted by jm31828

I suppose it could happen, but quite frankly I think to be on the gentle upswing economically means we won't see this big of a drop- those drops happened elsewhere when the economy was still in freefall, with stabilization happening once bottom was hit. Here the fall was much less, of course, and seems to have stabilized somewhat. With the economy and job market around here slowly improving I just don't see house prices dropping much more- maybe staying as "low" as they are now, but not dropping much more. When we were looking for a house back in January, homes in the lower more affordable price range were going fast.

I'm no expert, though- that's just my observation.

But you're absolutely right. Homes that are priced in the lower more affordable range that are in decent condition do sell fast.If you're buying a home and see one that's in good shape that you like and it's priced lower than comparables, it might not be in your best interest to wait for the price to drop further But there are still a lot of houses that have been on the market for months and months, and the sellers either won't/can't fix the house up to make it stand out or won't/ can't lower the price to allow it to sell.
Around the country, price drops started around Spring of '06. In Seattle they started in summer '07. But in 2009 prices stopped dropping in a bunch of places but continued in the Seattle area.

[silverfox]

If the Feds decide to give us another Tax Program, (and they mite) that should spur some additional temporary buying again.
As IRA 500 said, the lower priced homes are within the reach of a higher percentage of potential buyers so they will show the most action.
If someone needs or wants to go ahead and purchase a home in the near future, you should have your monies ready, keep looking, line up some good acceptable possibilities so if we do get a Tax Program and you qualify, you will be ready to "boogy" before the next guy makes a move ahead of you.
These current rates are very attractive and that is partially why sales haven't totally tanked.