Seattle’s median home price hits record: $700,000, double 5 years ago (Mercer Island: sales, mortgage)

[Walch1007]

Originally Posted by Xanathos

^I started to respond. Had gotten as far as "the bus would be on the road with or without the extra bus lane" and something about how 520 is still a parking lot. Then I realized that literally every single "point" you made was wrong, or at least displaying a lack of understanding of the subject material (and thus reading the data wrong). When starting from a position where you're talking to someone who is off on every point, that's an ideology that it's not worth trying to break down.

He's right about at least one point: most new construction on eastside is for rentals. Seems like the smart money you mentioned is betting the demand is there. If they thought this was a bubble, they'd be building to sell so they can gtfo with their money.

I'm not sure why everyone seems to think Chinese investors just come and go. Sure, they speculate, but real estate is a place to park their money. Once they move it into a market, it usually stays there for a while. Even if Amazon stops growing, as long as there isn't a mass exodus of people, the real estate prices will be sustained at current levels.

Will there be a market correction at some point? Sure. But that's a healthy reset that allows the market to continue growing.

Remember that warm weather and beaches are not the leading factors of a world class city. It's the economy. In every single case, that's what leads to the skyscrapers, the art, the food, and the insane.

Seattle's economy certainly has a lot more to look forward to than LA. I'd be willing to wager that 10 years from now, barring any major natural disaster, real estate appreciation in Seattle's Eastside will far surpass any comparable area in LA.

If you think you're smart by "getting out at the top," I'd agree, but only if you're investing that into Denver, India, or some other high growth city.

LA? Seriously doubt you'll end up ahead financially. But hey, at least you'll have a nice tan, permanently damaged skin, double the chance of skin cancer AND quadruple the chance of lung cancer.

[KonaldDuth]

Originally Posted by tommy64

I don't see it as a problem. It's an asset that is gaining value.

I sure wouldn't curse if my stock holdings went up.

Provided that the folks who want to be homeowners actually want to live in their home and be part of the community (as opposed to renting it out or living in it for a few years before flipping it and moving to another house), I don't think that homes are in the same category as stocks, because homes are ultimately a consumer good, whereas a stock is just a piece paper or digital certificate. Furthermore, there is a limited number of homes that can be built on a fixed space of land, whereas stock certificates can be printed ad infinitium. That makes the real estate market a zero-sum game. Someone's gain in home value is someone else's (the buyer's) loss.

[Ruth4Truth]

Originally Posted by noah

I actually think tech jobs are NOT the number one reason. Look at Spokane, Minneapolis or 50 other cities across the nation, similar story lines. Spokane has prices at all time highs with inventory down 25% YOY, the same as here, but certainly in no way because of high paying jobs. The drivers have to more along the lines of an improving economy causing everyone that doubled up to get by wanting their own homes + low interest rates including the easy money investors have used + no building all those down years + wall street investors buying up all the inventory. Now its a frenzy where every investor thinks its easy money, flipping houses is in style and people seem to think its up up and never down, a dangerous way of thinking if you ask me.

By the way, loans are no longer hard to get, there may not be liar loans but 3.5% down and 600 credit score gets you a house now...kinda scary when the next recession comes as they always do.

I agree. And you just answered a question I've had for a long time; how did flipping houses (i.e. rampant, unabashed RE speculation) become respectable? People now think it's normal.

[87112]

As a outsider looking in on Seattle's tech world It looks like the party will never end. I am being serious here, it would blow my mind if Amazon has one bad year or even slows down hiring in this region. They hire the best of the best right? And the pay probably makes buying any home here not hard at all.

[Xanathos]

Originally Posted by 87112

As a outsider looking in on Seattle's tech world It looks like the party will never end. I am being serious here, it would blow my mind if Amazon has one bad year or even slows down hiring in this region. They hire the best of the best right? And the pay probably makes buying any home here not hard at all.

Amazon has a salary cap of $160,000 per year. The majority of Amazon compensation comes in the form of heavily backloaded stock awards on a 4-year vest, of which most Amazon employees never see the majority of because the turnover is so high.

The party was "never going to end" at the turn of the century, too - and look how that turned out. Heck, I'm in tech. I'm rooting for that party to never end. But I can tell you unequivocally that the cracks are starting to show. At present, there are only a select few companies in full on hiring blitzes. And while a lot of tech companies have set up outposts here, the majority of those outposts aren't heavily staffed - we're talking about a couple hundred people per place.

[Walch1007]

Originally Posted by Xanathos

Amazon has a salary cap of $160,000 per year. The majority of Amazon compensation comes in the form of heavily backloaded stock awards on a 4-year vest, of which most Amazon employees never see the majority of because the turnover is so high.

The party was "never going to end" at the turn of the century, too - and look how that turned out. Heck, I'm in tech. I'm rooting for that party to never end. But I can tell you unequivocally that the cracks are starting to show. At present, there are only a select few companies in full on hiring blitzes. And while a lot of tech companies have set up outposts here, the majority of those outposts aren't heavily staffed - we're talking about a couple hundred people per place.

That shows such a lack of understanding of how the compensation structure is designed to work.

Amazon backloads RSUs because you receive a signing bonus spread out over your first 2 years. The RSUs kick in as the signing bonus fades, keeping your annual compensation fairly consistent with a slight increase each year. People whine about it only because their Amazon stock has shot up 3-400%, making it hard to leave with so much cash in their 3rd and 4th years. However, when the employee signed the offer letter, Amazon never planned for the shares to increase that much in value nor should any employee bank on it.

The situation now isn't even close to turn of the century. Yes, there are the ubers out there that are hemorrhaging money, but the biggest tech employers in the region all make money unlike the 2000s when even ideas without business plans were being funded.

SV is in a much more dangerous territory. There really isn't enough venture capital activity here to attract the early early stage companies that would cause a huge bubble.

[Stockyman]

So sad to see Seattle becoming like Vancouver. I wouldn't wish that on any city. I hope Seattle makes foreign ownership impossible ASAP. I don't want to see the same thing happening.

[DutchessCottonPuff]

Originally Posted by tommy64

Those who are priced out of Seattle commute from outlying areas. It's a balance between convenience/proximity to work vs dealing with a commute. Presumably housing demand will expand to the outlying areas to absorb any effects of a bubble before it gets to what you're describing.

It seems to me that supply/demand is operating correctly. I wouldn't be too certain that Seattle's economy will fail. It's not exactly Detroit.

If foreign investors are what's driving the market up, won't they take the biggest hit if your prediction comes true?

Yeah but at this point we are being priced out of Tacoma ( even without the layoff it would be the same) . Out of a 2-2 not a house - this year was 20% increase and so will next year . There is also nothing here I am willing to spend a down payment on either that doesn't look like a shack or covered in moss and garbage all over the yard with the roof caving in and the floors ripped up and sometimes a sticker on the door. I'm not going to waste what I do have on a real shack .

We were in Yelm of all places to pick up some hay and the loader told us he was leaving because he went to look at a 1-1 there in Yelm and it was priced at $1200 . NO way can a hay loader afford that and not many are going to want to commute that far . So it is beginning now that far away . Certainly no buses or trains from that area either .

[elkotronics]

Gettin' outta Seattle seems the ticket. My birth city has gone....batty. Real estate - wise, anyway. Good old greed.

[tommy64]

....I'm still trying to wrap my head around being priced out of Yelm.

Holy Cow!