[photopress:flying.jpg,thumb,alignright]This might sound strange coming from a real estate blogger, but I just don’t find all the hype about a real estate bubble all that interesting. None the less, it seems that about once a week a new blog starts up with the mission to highlight all the “evidence” that there is a nationwide real estate bubble that is about to pop. The most popular site is the Housing Bubble 2, although there are many others.
In reality, I think I’d be way out of my league discussing a real estate bubble with the type of certainty the pervades the “anti-bubble” crowd. Most real estate agents simply do not have a great understanding of macro-economics and don’t follow the issue that closely. The real estate agents that I know do their best to prepare/market/sell homes for sellers and find homes for buyers, and spend very little time researching housing price trends over long time periods. Along those lines, I’d be VERY weary of any agent who said they had some inside knowledge on the long-term value of any property.
Besides, it seems to me that most of the people with the “sky is falling” approach to the bubble are not all that educated in macro-economics while many of the macro-economists I enjoy reading seem to have a much more nuanced view of the situation.
So I began this discussion on real estate bubbles because I was a bit surprised to find Rain City Guide listed as a “local anti-bubble site” on a new blog dedicated to highlighting issues related to the Seattle housing bubble . Apparently Timothy Ellis (author of the blog) sees the real estate world as pretty darn black-and-white, if he is going to call all realtor sites as “anti-bubble”. Nonetheless, Timothy has posted some interesting observations, and I look forward to reading more of what he has to say.
Since I’ve now gone down the road of discussing the concept of a real estate bubble in Seattle, I’d be interested to hear the response of people to the bubble-related issues that David raised over on the City Comforts Blog:
What I would like to hear is a “pro-bubble” argument which takes into account two secular, local Seattle conditions which both tend to limit the supply of urban land:
1. A firm political consensus for “growth management” which will not change & hence unleash a lot of land for at least the next generation or so. (Even if there is land to be found.)
2. Total inability to deal with traffic congestion which is having a centralizing force, making “in city” properties (where one can minimize travel) more and more valuable.
When you take into account these trends — both firmly rooted in our local culture — do you still get a bubble?
Please feel free to comment either here or on David’s site. I’ll check them both!
Hi there. I just wanted to clarify a couple of things. 1 – I definitely don’t consider myself to be any sort of expert, nor do I make any claims to having any sort of authority on the issue of a possible real estate bubble. As I stated in my “About the Blogger” page, I’m just a local guy that is interested in the subject. 2 – The “anti-bubble” title is really tongue-in-cheek. That’s why I clarified “aka realtors” beneath. It’s just a list of links to sites that discuss Seattle real estate and don’t really mention a possible bubble.
In any case, I appreciate the kind words, and I’m glad you find my site at least a little interesting.
Hi there. I just wanted to clarify a couple of things. 1 – I definitely don’t consider myself to be any sort of expert, nor do I make any claims to having any sort of authority on the issue of a possible real estate bubble. As I stated in my “About the Blogger” page, I’m just a local guy that is interested in the subject. 2 – The “anti-bubble” title is really tongue-in-cheek. That’s why I clarified “aka realtors” beneath. It’s just a list of links to sites that discuss Seattle real estate and don’t really mention a possible bubble.
In any case, I appreciate the kind words, and I’m glad you find my site at least a little interesting.
In re-reading what I wrote, I would say that I came across as a little more rough on your site that I meant to… I do enjoy your posts, and the beauty of blogs is that none of us have to be experts to have a reasoned option!
No worries, I didn’t take your comments as rough on my site. I’m pretty easy going, not out to offend or take offense. As I said, I appreciated the kind words. Also, I agree with you comment about the beauty of blogs.
Blog on.
No worries, I didn’t take your comments as rough on my site. I’m pretty easy going, not out to offend or take offense. As I said, I appreciated the kind words. Also, I agree with you comment about the beauty of blogs.
Blog on.
Just a thought on this issue–okay, two thoughts. One is, to me a “bubble” signifies a rise in prices that is brought about by outside forces and which is not sustainable over a long period. The behavior of housing prices in places like Las Vegas is a good example, where you see a lot of outside investors coming in and driving up prices beyond what the area might normally be able to sustain. This is not the case here in Seattle because the forces driving up prices are inherent to our market. The little usable space and unhospitable topography combined with growth restrictions result in a lack of supply, and a relatively healthy employment base and low mortgage rates results in lots of demand, therefore, prices go up. Even when rates go up and we go through challenges with the local economy, the long term trend will still be upwards…barring any sort of economic or natural disaster.
As an aside, it cracks me up that folks are freaking out about bubbles when we are sitting right in the middle of one of the most seismologically active regions of the world, less than 100 miles from one of the worlds most dangerous volcanoes… It seems like if you want to worry about something, Mt. Rainier blowing up or a 7-9 richter-scale earthquake might be just as valid a concern. 🙂
The other is, the rise in prices is not limited just to within the Seattle city limits–we’re seeing it across the eastside and Snohomish county as well. I think one of the things we are going to see over time if Seattle can’t get this traffic situation figured out and as gas prices keep going up, is a real solidification of the neighborhoods and suburbs, with folks making more of an effort to keep their commute distances as short as possible. People will be trying to live and work in the same place. We’re already seeing this to some extent as what used to be bedroom communities (Bellevue, Redmond, Kirkland, etc.) have grown to become commercial centers, and as gas prices continue to rise people will be forced to make choices about where they are going to work and live. Which, frankly, is why I don’t particularly mind that gas prices are now topping $3 a gallon. The sooner we get to the point where people stop thinking it’s okay to drive their cars 100 miles a day roundtrip, the better for the environment and for people’s sanity too!
Just a thought on this issue–okay, two thoughts. One is, to me a “bubble” signifies a rise in prices that is brought about by outside forces and which is not sustainable over a long period. The behavior of housing prices in places like Las Vegas is a good example, where you see a lot of outside investors coming in and driving up prices beyond what the area might normally be able to sustain. This is not the case here in Seattle because the forces driving up prices are inherent to our market. The little usable space and unhospitable topography combined with growth restrictions result in a lack of supply, and a relatively healthy employment base and low mortgage rates results in lots of demand, therefore, prices go up. Even when rates go up and we go through challenges with the local economy, the long term trend will still be upwards…barring any sort of economic or natural disaster.
As an aside, it cracks me up that folks are freaking out about bubbles when we are sitting right in the middle of one of the most seismologically active regions of the world, less than 100 miles from one of the worlds most dangerous volcanoes… It seems like if you want to worry about something, Mt. Rainier blowing up or a 7-9 richter-scale earthquake might be just as valid a concern. 🙂
The other is, the rise in prices is not limited just to within the Seattle city limits–we’re seeing it across the eastside and Snohomish county as well. I think one of the things we are going to see over time if Seattle can’t get this traffic situation figured out and as gas prices keep going up, is a real solidification of the neighborhoods and suburbs, with folks making more of an effort to keep their commute distances as short as possible. People will be trying to live and work in the same place. We’re already seeing this to some extent as what used to be bedroom communities (Bellevue, Redmond, Kirkland, etc.) have grown to become commercial centers, and as gas prices continue to rise people will be forced to make choices about where they are going to work and live. Which, frankly, is why I don’t particularly mind that gas prices are now topping $3 a gallon. The sooner we get to the point where people stop thinking it’s okay to drive their cars 100 miles a day roundtrip, the better for the environment and for people’s sanity too!
Great post!
Bubble Talk is all the rage down here in the Bay Area as well. While holding an open house yesterday, I estimate half the people asked me my views on the bubble.
Like you mentioned, as a agent, my primary job is to prepare/market/sell homes for sellers and find homes for buyers. But as a full time real estate professional in one of the “bubble” markets, I feel that I should be keeping up with the latest news and feel comfortable discussing the subject should it arise.
Great post!
Bubble Talk is all the rage down here in the Bay Area as well. While holding an open house yesterday, I estimate half the people asked me my views on the bubble.
Like you mentioned, as a agent, my primary job is to prepare/market/sell homes for sellers and find homes for buyers. But as a full time real estate professional in one of the “bubble” markets, I feel that I should be keeping up with the latest news and feel comfortable discussing the subject should it arise.
Those are some great comments Sandy and Andy.
And Sandy, I had never made the connection between the “bubble talk
Those are some great comments Sandy and Andy.
And Sandy, I had never made the connection between the “bubble talk
“One is, to me a “bubble
“One is, to me a “bubble
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Making up the news
For a number of months now I have been following the popular press reporting of what many had come to refer as the “housing bubble
Making up the news
For a number of months now I have been following the popular press reporting of what many had come to refer as the “housing bubble
There’s another Timothy with another site about the alleged Seattle Housing Bubble, called SeattleBubble? It’s at http://www.seattlemetrorealestate.blogspot.com. It focuses on facts and figures, not hype and hysteria. I focus primarily on local rather than national facts and figures.
Tim,
I’ve definitely noticed your blog and I think you’re making a valiant effort! I’m shocked that any realtor would spend as much time as you have on disputing the “bubble”, but it can make for an lively conversation… and being interesting is half the battle, so I say “keep up the good work!”.
Tim,
I’ve definitely noticed your blog and I think you’re making a valiant effort! I’m shocked that any realtor would spend as much time as you have on disputing the “bubble”, but it can make for an lively conversation… and being interesting is half the battle, so I say “keep up the good work!”.
Realy? That’s 56452 crazy!!
10% drop
http://seattlepi.nwsource.com/local/334420_housing06.html
I always find it interesting to talk about the real estate bubble whether the local bubble, state bubble, or national bubble. Its a way to get a different prospective on the markets. I find it very important to listen to others, to open up my mind.
Walt