About ARDELL
ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: ardelld@gmail.com cell: 206-910-1000
I have a couple of other places I track for appreciation. Numbers come in at between 65% to the above scenario at 100% since 6/15/05 or there abouts to present. Basically two back to back seasons at 35% each, or 45% + 25% in prime locations. “in the Zone” meaning near Microsoft, or good commute to Downtown Seattle or Downtown Kirkland “proper” up through 13th Ave or so. Not all “pockets” enjoy the same appreciation levels. These are the highest.
So what does your taste buds tell you now since your prognosticating senses are so attuned to what will happen? I am curious as to where things will go from here. Thanks
Thanks, Ardell. As usual, you are a credible source for Seattle real estate.
Oh, I forgot. Please make sure to post if the taste becomes sour.
Problem is all of King County does not move in the same way, nor to the same degree. Much of Seattle has reacted more like the rest of the Country and showing some signs of weakness. The weakness only reacts in slippery slope fashion in areas where houses compete with new construction, which we only have in our condo markets in certain price ranges or “not close in”.
It’s more like the stock market here. The broad stats only affect those in pooled indexed funds, which in real estate is pretty much no one. Reality only exists in the individual product. Most of the West Coast is like that, as opposed to the East Coast.
Unlike the stock market, people buying real estate can’t hedge their bets by diversifying. Most have all their eggs in one basket. So the gamble of it is more like the restaurant business. One day everyone is at x restaurant and that continues until everyone wants to be at y restaurant. So following buyer trends is key right now.
Consumers do not value that which they valued previously, which will throw off some of the old timers in this business.
Brian, you say “Seattle”, but reality is the highest appreciation has been on the Eastside of the 520 bridge in Bellevue, Redmond and Kirkland. Each for different reasons.
We are about 10 to 15 days from the “Season Open”. Our season will be expanded by two weeks on the front end by the shift in Daylight Savings time to 3/11. The tail end won’t be affected, so will be interesting to see how this two week expansion of good market time influences the stats come September.
Gentlemen, start your engines. 3/11 is day one of the 2007 season.
“We are about 10 to 15 days from the “Season Open”
and I thought you were talking about baseball season; Go Phils!
I like your analogies, Ardell. Are there specific economic influences in the 206 (or 425) that affect the market?
ie- tech, defense, etc.. I’m wondering what, if anything, could go wrong there (think defense industry collapse in the late 90s in SD)
Ardell,
Hi, it’s me, your “center,” and I was just wanted you to know that I’m still thinking of you.
I too have a feeling in my bones. I smell a banking crisis. Do you have any friends in the industry, and what are they telling you?
All the best,
E
Ardell,
I like the comments-
“I could feel it. I could taste it. I could smell it. The ground was swelling.”
so, that was June 2005. what do you smell now? what do you think, market is heading north or south in Seattle?
Mark
Mark,
As I’ve said before, 2007 feels the same as 2006 and not like 2005. But there is a huge backlog of buyers who want what the market isn’t readily offering. I have my finger on a few pulse points. If inventory expands in the right places, we’ll see a 25% increase by August. If it doesn’t, we’ll see a 15% increase.
People who buy and have bought full flips (not simply remodeled homes) will be the ones who could go upside down if they need to sell in a short period of time. It’s time to do cosmetic fixers at lowest cost, not full blown rehabs putting too much money into existing structure.
The floodgates are standing behind tear downs and new construction in built out and popular neighborhoods. The builders can’t seem to get enough land. Contractors are really beating the bushes for teardowns at almost any price level. Three times in recent history contractors have been the ones smelling and feeling a piece of land may be available. They are trolling the streets the way agents used to.
Condos…a very mixed bag. There is a huge section of condos that are going to be seeing a very different market than they did in the last two years. Ceiling height is become key in the condo markets. 8 foot ceilings can’t compete with newer units with higher ceilings. That will put a lid on appreciation in condos with eight foot ceilings priced above $350,000 unless they have view.
E.
Stay on topic 🙂 Banks in Real Estate? We can talk. Bank’s generally…sorry, I don’t give a RA.
Brian,
Nothing affects our marketplace more than Microsoft. Lots of companies in the area who do outsource work for them too. That’s why we were all jumping out of our skin when they stopped the free towels. A little thing (and towels are back) but we were like, “Whoa, if Microsoft can’t afford a towel for a sweaty employee…what’s up with that?”
Microsoft burps and we crouch and listen. Other influences of course, but to answer your question of what could happen? Thank God Mr. Gates is firmly affixed. I’m still wondering when “Kiss Bill Gates Ass Day” is around here. It oughtta be a holiday with a big long line of people waiting for the opportunity to say Thanks! in a very big way. Sounds like a photo op for agents lining up to kiss it LOL.
Is the Boeing success and 787 production as influential as it was BG (Before Gates) ? I read that the Boeing employees have huge bonuses coming; the Wall Street bonus babies in Manhattan really had an influence on that market
Hmmm, hard to explain, but Boeing employees do not influence pocket markets as much as Microsoft does. Boeing employees live where they want to live. They buy what they want to buy and they are typically more savvy buyers than Microsoft buyers, generally speaking. They are also, by and large, not the type who run out to spend their bonus on a higher status lifestyle. That bonus will more likely hit all economic segments, and not just the housing industry.
In my personal experience, Boeing employees are primo. Reasonable and responsible people who have very grounded value systems. They are more likely to put that bonus in the bank to plan for their retirement better, than to go out and blow it.
I could be wrong, but that’s my perception. Boeing employees make fabulous clients. They have their priorities “in order and they enjoy working with someone they can trust, when and if they can find someone they trust. They don’t push any market out of proportion. They buy responsibly and only as their need for better housing arises, not just because they got a bonus.
Huge generalization, I know, but I think it is true.
Being a born and raised Renton girl with generations of Boeing family… I would call Boeing employees more old school or old money? I’m not sure if I’m making sense. And, there’s not Microsoft in my family…to compare. Renton, the birthplace of Boeing, is more of a blue collar working town. I served on the Community Development Committee of the Greater Chamber of Commerce for years. What Renton did right was to diversify their employment resources…so that when Boeing did relocate corporate offices to Chicago (not all but significant)…it was not as dramatic as it could have been. I think another difference between Boeing and Microsoft is that Boeing had more layoffs families had to endure…and then they would be rehired. I’m sure that made the Boeing employees much more conservative than a Mircrosoft employee.
Gee, Brian and Ardell…this could be a whole new post! Another difference IMO is that Boeing employees seem to be counting on retiring with Boeing at 62…Microsoft employees seem more short term…like they can’t wait to make their millions, sell their stock and either and start a new biz, or become a real estate agent…etc. I could be off base this one! 😉
Ardell,
“If inventory expands in the right places, we’ll see a 25% increase by August. If it doesn’t, we’ll see a 15% increase.”
are you saying that either way, we see a price decline due to increase in supply?
M
Hi Bill, I’m also speaking from “growing up” with my family and also from what I see on loan applications. You are correct about the MS contractors. Microsoft does hire alot of contract (temp) employees….
Ardell,
Banks that lend to the Great Unwashed so they can buy the homes you are selling are a subject you need to give a lot more attention to than just a RA.
If a bank books 2/3 of it’s profits on money it has never seen, and that money is subprime and will likely not be paid back, it is a BIG, BIG, BIG deal.
Requiring good credit, ample cash down payments, and very tight ARMs or fixed only mortgages on higher interest rates will make RE (even King County RE) gap down faster than the DJIA did today at noon.
Banking problems are nuclear winter for real estate. No amount of feeling in your bones will keep prices up.
I’m still seeing a good portion of 100% financed purchase transactions (80/20’s), with some based on 6 mos Libor Index 2/28 programs; yet payments based on 40 Yr amortizations. So that’s how some folks are qualifying. Pre-payment penalties are still going on, etc…so lender tightening, while we see some signs and news, does not mean these programs are being eliminated altogether, at least in our market.
Snippets from today’s Wall Street Journal:
“Investors’ loss of confidence is reordering the mortgage business. ‘A lot of loan programs that have been available for the past several years … are going away,’ says Jack Pevey, president of Integrated Mortgage Services Inc. in Denver. ‘It’s going to keep a lot of people out’ of the market.
30 year fixed at 5.75% for what orig./discount points? When you quote a rate, Tim, you should (or if you’re a lender) also quote the cost associated with that rate.
With the 80/20’s…it could be what is still in the pipeline since you’re talking closings… and these loans are still available for new borrowers only now they need credit scores of 620 and better instead of 600 (and possible 580). Guidelines are changing constantly…no doubt. I might have to update this tomorrow to say one needs a score of 650.
Prepays are sometimes optional, although, not usually with the 2/28 products. 100% financing…no one should plan on selling for 5 plus years (I know the key words are “PLAN ON SELLING”)….there’s no equity to pay for the cost of selling.
Tim, you won’t stop seeing these loans immediately…it’s just the bar is being raised to obtain them right now.
Mark,
Not following you. I said either way we see a price increase of 15% to 25% by Aug./Sept of 2007.
E.
Not gonna happen. Not going there with you. Talk Real Estate here. I was in the banking business way too long to listen to the banks all going under stories. In 1984 they said there would only be 5 banks in the Country by 1990. Didn’t happen..
Allen,
I’m on a smoke break. Have a client here for dinner (chicken cacciatore with spinach linguine). I saw your name in my email and said, uh oh…What did I do to tick Allen off now? Glad it was just a misposted comment 🙂
Tim,
Define Moulton’s “low credit scores”?? Kind of a vague statement, don’t you think? When conventional lenders stop lending on a zero down basis, there will be more FHA loans and VA loans like there was before. The world won’t collapse.
ARDELL – February 27, 2007
Allen,
I’m on a smoke break.
Huh. I guess not everyone plans on living long enough to pay off their mortgage. I’m too young to plan on that exit strategy. Maybe I should get back into motorcross racing?
Ardell,
Don’t know if you are referring to me on post 27. If so, I have no idea what you mean by Moulton’s low credit scores. Is it a question or a statment or ???. Maybe you were referring to someone else’s post? FHA and VA are still present and viable financing programs, so I don’t think there will be a pendulum shift towards more FHA & VA financing, IF, and it’s a big IF, 100% financing either goes away or is much harder to qualify for. FHA and VA financing has hardly been on the radar since the finance industry reduced the PMI problem by going 80/20 or some hybrid of it.
The portion of 100% financing that I’d like to see go away (wishful thinking) is jacking up the price of a home to offset buyer closing costs paid by the seller. But, appraisers seem to think the escalation in sales price is supported, even thought it is strictly a function of the buyers financing program.
Tim,
Was referring to your quote in comment #22: “No-money-down loans to borrowers with low credit scores ‘are going to be a thing of the past real soon,’ says Bob Moulton, president of Americana Mortgage Group.
Yes, I purchased my first place with an FHA ARM too. But the difference then and now is like night and day. Had to have two years 1040’s, W-2’s, last two months bank statements and my credit had to work. Oh, and my ratios could not exceed something like 28/36.
Here’s the problem as I see it:
It is artificial appreciation at its core when you have an increase in sales price soley due to the manner in which the borrower is financing the purchase at 100%. When Jane down the street was selling at $100K but received an offer from a borrower with 100% financing (typically a piggy back 1st & 2nd or 1st and HELOC) Jane increased the price to cover the closing costs for the buyer. Jack and his agent says, golly, that house down the street sold for $110K, so lets put ours on the market for $115K and see what happens. As luck would have it , Jack gets an offer from another 100% financed borrower who needs to have closing costs paid for by Jack. But Jack doesn’t want his proceeds to be less than full price, so the parties agree to increase the sales price to $120K. Guess what? Jack’s house is now the new comp for other similar homes. And the spiraling upward continues. Then, to complicate things more, what if those same borrowers were involved in multiple offers and got the house after beating out a couple other offers? The artificial appreciation was compounded further.
What is dangerous about this? A lot, starting with the conversation many of these borrowers have centering on ‘oh, I’ll just refinance again before my ARM resets and convert to a fixed rate.’ Really? Can these borrowers really move from an I/O into a fully amortized payment based upon a fixed rate? Yes, if their incomes go up, commensurate with the 30,40,50% increase in housing payment. Likely? No.
Just for fun I looked up my index & margin on my I/O ARM with WAMU. My payment will increase by roughly $900.00 + per month if it reset today. Will my income increase by $900.00 per month to cover a fully amortizing loan? Hard to say, because our income is dependant solely on whether or not our market share increases and dependant upon how well our market performs.
I don’t like to see people get themselves into a financial pickle. Can I control it, no. But do I care? Hell yes. I genuinely believe that a lot of people do not plan for the future interest rate resets, or if they do plan, it is a plan of refinancing or selling because “my house will appreciate and bail me out.” Trouble is, when financing guidelines start to tighten as they are, or markets shift into slow or reverse, then what? I have listened to a conversation or to from borrowers who are presently sitting idle, WAITING, right now,for their pre-payment periods to expire, so they can refinance and not have a major financial hit. Obviously, these borrowers started looking to use the house piggy-bank to refinance WELL BEFORE their 2 yr ARM reset.
I think many loan officers would agree, many of these homebuyers with 100% financed homes have fairly tight budgets to work with from the get-go. If for any reason spending habits increase or they want some new furniture or the kitchen appliances don’t work, or something needs repair or improvement (roof, water tank, remodel) the budget becomes more burdensome. If the borrower decides that the monthly payments are beginning to become difficult, or they are facing a reset of mortgage interest rates because their 100% loan program was based upon a 1 yr or 2 yr ARM, sometimes with pre-payment penalties, then they turn to refinancing to shift the debt burden back on the house, not eliminate it. For a lot of borrowers across the country who used this form of financing, planning ahead was not on the horizon. Planning for a market shift was not part of the vocabulary.
100% financing has been a major player in enabling the movement of our markets and is somewhat risk adverse in an ever increasing housing price environment. However, take away that housing price environment and the risk pendulum swings more forcefully against the borrower. The program has benefited borrowers who do not not necessarily have a down payment, and that’s a good thing. Houses then sell. People become homeowners. Escrow, Realtors, LO’s, title, 3rd party providers get paid. Unfortunately, I also think 100% financed programs are going to help some homeowners become renters again. And that is not the foundation we all meant real estate to be anchored upon.
Great post Tim, I agree 100 percent.
Tim, if your personal loan officer didn’t explain what your payment would be when your ARM recast, shame on them. And, responsible Mortgage Planners should always explain to home buyers with the 80/20 ARM scenarios that it is (1) temporary financing (2) they must change their spending habits–cut up their credit cards and be responsible so that (3) they’re in a position to refinance into a long term mortgage when it’s time for the rate to adjust and/or when the prepay is up.
I have many many successful borrowers who have used these loans as vehicles to become homeowners. They have since refinanced into 30 year fixed mortgages and are doing great! Zero down will not disappear, however, it will become more challenging to obtain–which I believe is good. FHA and VA will become more popular again. We’ll probably see more grant programs too.
Ardell:
I love that you can post an answer to a very direct question, and a hockey game breaks out from the people who hate banks.
Well, in the vein of ignoring your request to stay on topic, do you think the Phillies will win the NL East?
Ardell:
I cannot believe that a responsible person like you can say this after looking at the local and national MLS data.
“I said either way we see a price increase of 15% to 25% by Aug./Sept of 2007.
you are making statements as if you not going to be in RE business after Aug/Sept 2007 and so don’t care.
Ardell,
i can also claim using your phrase-
IF inventory expands in the “RIGHT PLACES”—we will see 5% to 10% decline in prices.
i’d not make insane claims of 25% drop in prices.
Why on earth would we want to discuss trivial thinks like financial institutions and easy money, subprime implosion, and people who otherwise wouldn’t have a cold chance in hell of buying a house in Seattle other than the fact that they are able to qualify for a 100 percent financed loan based on a less than stellar FICO score and a make believe stated income verified by no one???
Why would we want to discuss this when we have someone who can predict a 15-25 percent increase based on SMELL????
Lending institutions have just now figured out that loaning money to people that aren’t going to be able to pay you back is bad for business. Now what does that mean for the rest of the market now that Joe and Mary first time homebuyer with less than stellar credit are no longer going to qualify for a 80/20 subprime on their little 400,000 love nest? Probably means not as many first time buyers, which in turn means more inventory, which in turn means more pressure forcing home prices down.
I don’t think E was stating that he “hates banks”. I think he is merely pointing to the fact that many normal credible banks (such as WAMU) have been swept up in the frenzy that has become this RE market, and have been issuing loans that they would normally not issue in the past, and issuing them to people that they normally wouldn’t qualify for them.
We probably won’t see any of this tightening until April or so. This is just the tip of the ice berg. Buckle your seat belts.
BTW, the Mets are going to win the NL East!
Matthew,
Great post. i wonder if any agent has ever predicted a price decline even in those years when real estate market really crashed.
Good, we didn’t have blog to document statements in those days but we do have now. and so, we’d be able to verify this in couple of months–whether prices increase 15-25% by Aug/Sept 2007.
Stay tuned folks.
Mark,
See you in September. Ooops. Something tells me you are not old enough to remember that song.
Matthew,
I was 100% correct as the data shows. Give credit where credit is due. Make fun of my methods if you want, but at least own up to the fact that I apparently was able to tell what was going to happen.
There were plenty of first time buyers purchasing homes before 80/20 loans. BECU runs a stellar first time buyer program with no exotic seconds for first time buyers. FHA is still alive and well.
If you want to think that no one is going to be able to buy without 20% down at sometime in your lifetime…dream on. Ain’t gonna happen.
E. is perfectly capable of speaking for himself. More than capable. immensely capable.
Mark,
Of course we can predict that the market will tumble just as easily as we can predict that it will rise. When there are three good properties priced properly sitting on market and not sold…I’ll let you know. The market has to get flat before it tumbles…we are not even at flat yet.
Forget the coupla months baloney…see me in September. Rises are not incremental. Often they happen in two back to back months. Usually May and June or June and July. Look at the numbers above. Actual Sales. See where the appreciation took place and which months were flat. 15% appreciation doesn’t happen at 1.2 per month…it happens in two or three months of 5% or more each.
Brian,
I just don’t know why they are ignoring the facts and going around them? Those predicting the crash have been wrong. The facts as shown prove I was right. But I guess the facts be damned for some…who woulda guessed?
Mark wants to know why I stop at predicting “this season” through September of 2007. AS IF! Of course each season stands alone…always has and always will. That’s real estate.
Is the fact that I was in fact correct ticking them off? I’m not sure what the heck is going on here…but I do know you started it, Brian 🙂 Next time send me an email.
I wonder what your average banker is going to think about his borrowers not having sufficient skin in the game, once this market resets to its proper level.
Keep in mind that many things will have changed. First off, a 20% + retraction in home prices is likely to be remembered with fond nastalgia. Home price discounts off of today’s prices of 50% will be the norm, so a 20% down payment will amount to a trip wire, rather than a true buffer.
Second, that banker is the guy that replaced the one the BOD just sacked for driving the company to the brink of CH7. He is going to be very conservative and will eschew anything related to the Bacchanalia of the US housing market of the past few years. Kinky loans, adjustables, PMI, hollow seconds, HELOCS, etc will all be a curious historical footnote or the long-lost dark art of the finance industry.
I do smell a banking crisis. There are a lot of factors keeping our banking system afloat, and almost none of them are remotely sustainable. Many banks will survive, but there will be the financial black holes that will be the Enrons of the finance industry. This spectre will haunt us for many decades.
None of this is bullish for housing – even King Cty housing.
No, I don’t hate banks anymore than I hate semi-conductor capital equipment manufacturing companies. Both have huge holes in their business models, and both are operating as if there is nothing wrong. Both are selling for prices that make Beanie Babies look like a good value.
When the tide goes out, there will be a lot of people swimming naked. Unfortunately, they won’t be remotely attractive.
Again, what moron came up with the idea to lend money to riff-raff that will never pay it off and have as their only recourse an asset that will likely be decling in value, in disrepair, and expensive to carry on the books? Are airline executives running banks?
“I just don’t know why they are ignoring the facts and going around them? Those predicting the crash have been wrong. The facts as shown prove I was right. But I guess the facts be damned for some…who woulda guessed?”
Ardell,
This was on the last quiz, and you passed. Again, let’s refresh…
The price action is not a repudiation of the bear argument. The underlying imbalances are still skewing toward unsustainability. If this market was becoming more stable, you would be right.
It is the risk, not the price action.
12 months ago, subprime lenders were the darlings of Wall Street. Now, they are shunned. Nothing, ABSOULUTELY NOTHING, has changed in their fundamentals. They have been loaning money to morons and using inflated appraisals and unrealistic price models to justify thier positions for the entire run. Leveraged debt obligations are not helping much.
It’s the risk, not the price action. If you miss this again, I’m going to make you stay after school and write sentences.
Ardell,
What facts have you shown? That you supposedly spoke with some lady and pleaded with her to put in an offer? How is that proof?
That’s like me rolling in to court, telling the judge and jury that a suspect confessed to a crime without a tape/video recording or anyone else in the room to hear what was said.
I don’t know many people that were predicting a “crash” in 2005. I don’t know that many people that predicted a crash in 2006. I do know some people that sighted that we were in a bubble in 2005. I don’t even believe we will see a crash in 2007, I do think we will see small YOY decreases toward late 2007, early 2008. I don’t think we will truly see a crash for 5-10 years to come.
But whatever, history will show who is right and who is wrong.
Price is a slave to fundamentals – not the other way around.
Ask Enron. You can have a party like Bacchanalia, Mardi Gras, and the MTV “Lost Weekend” with David Lee Roth all rolled into one, but that doesn’t obviate the need to wake up and still pay the bills for the party.
How’s this E? I will go back up to the actual data in this post and see how many of those were zero down. If 0 to 5% were zero down, then I win on all counts. No I havent’ checked yet…it’s not a stacked deck. If that appreciation happened with NO, NADA zero -5% down loans on those exact sales…can we stop talking about the freakin banks already??
Maybe I’m stacking the deck against me there. I think there are 17 sales shown. Let’s say only 2 can be zero – 5% down. If most were at least 10% or more down, then that appreciation happened on a sound basis. Fair enough?
I had a long post about my financial outlook for RE in 2007, but apparently it disappeared. Oh well.
Matthew! You are kidding me right!?!? You are jamming up our site because the market is going to crash five to ten years from now?! Give me a break! You mean we have to put up with your BS for 10 years!? We can’t talk about NOW without the “gloom and doom typhoon” running in to spout garbarge that may happen in ten years?
At least I put my facts where my mouth is. As far as Ms. was with me on June 15, 2005. I can clearly get her to comment. But you’d probably claim it was a phoney one. She moved away. She would have moved away with $80,000, but she chose to rent. I helped her rent. I didn’t twist her arm. The facts speak for themselves.
You wanta call me a liar…do it someplace else pal. You think I had those facts in my back pocket to answer Brian’s question within a short time if I didn’t LIVE IT! What a joke.
God forbid what would happen to this market if it actually reverted to people buying houses at 3x their REAL income, and not 7x+ or whatever we are currently at! Even if people paid a premium 4x or 5x to live in the cold confines of the PNW this market would be in for a shock.
But hell, let the good times roll. Let’s not worry about how we got here, just that we made a lot of money! Enron all over again!
What percent of King Cty homes were 30y fixed, 20% down loans (I’m not talking piggyback loans or PMI)? I did see that the PNW market is in the upper eschelon of kinky financing. King county is probably in the best shape, but it is still pretty leveraged.
The other X factor is the amount of Californians that move here and transport their equity. The California market is the zaniest and most leveraged in the country. When that market dries up, our market will be taking a huge swirlie.
Yes, prices have been going up. Do you have a nose for what inventory will do these next six months?
The reason banks are significant to real estate is obvious. That’s where your customers get the green stuff for the closing. If that raging torrent of liquidity for every one gets clamped down to anything close to normal, a HUGE swath of eager beaver buyers gets removed from the pool of buyers.
Those buyers in the past few years are looking down the gun of a huge ARM reset. Either way, the lower layers of people in the RE pool are having banking forces move against them. They are the lower layer of the pyramid. This contagion will spread to the more sophisticated players. Once people see their mortgage as a greater liability than their house is an asset you will see A paper default.
That is why it is important.
Matthew and Eleua,
You’ve touched on one of my favorite topics in real estate… However, it is clearly off-topic for this post.
I’ve created a wonderful place for this lively conversation over on the Seattle Bubble Forums where it is very appropriate. Any further discussion on this post with regard to international (or even national) banking issues will be deleted.
Watchin,
I like where this conversation is going, as I think there is much fertile ground to be plowed.
However, I can’t imagine that RCG wants this to continue here. As much as I love a provocative discussion, I am mindful that I am a guest here and I don’t want to put my feet up on the furniture.
We can continue this at my
http://tabootopic.blogspot.com/
blog that is dedicated to exploring thorny issues.
I hope to find you there.
E
I just deleted to a bunch of off-topic conversations… Please consider taking them over to the bubble forum where they are extremely appropriate.
Ardell will still be helping people sell and buy real estate in any market, probably for years to come.
I’m shivering at this moment because I just got back out of the cold (putting on tire chains due to the snow) from picking up my wife stuck at our office. Now, back out into the cold to feed our horse and break up the ice in the water trough.
Dustin- you are the delete maestro today!
Tim, you should move to Seattle. Yeah, you’d have to give up the horses, but you’d never need tire chains to get to work. While the people in the outlying areas get stuck in their cars for 8 hours – people in the city are able to take advantage of less crowded restaurants and traffic free streets.
Ardell, You are right on with you recount of the 60-01 saga. I sold one last fall in that 220k to 230k range and was actually almost sick about it. I remember when they were around 50k. Even then it was never one of my favorite communities. Where will it stop? Can you see these same units in 5 years going for $500k and more? Gawd helps us.
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Stan,
60-01 is the least predictable market over the long term. It is still selling at a huge discount to the rest of the market. But it may always do that. The properties are still undervalued, by and large, say for the G or H Model on Swan Lake, by $100,000 or more.
But all it takes is 1 person, of 770 or so owners there, to file a suit against the Board, and the values can plummet. The key there is that for many years, due to somewhat frivolous or administrative type lawsuits, the properties were not able to be financed at zero down.
In that price range, not being able to finance with less than 10% down is a real value killer. Much the same as the co-op market. These are NOT co-ops, but the value considerations run more in line with co-ops, than the condo/townhomes that they are, because of financing limitations created by lawsuits.
Even if that phase is over…one or two people out of 770 getting a bug up their butt about something, and filing a suit about it, can create price havoc for the rest of the owners.
I’d like to see them split out the 8 midrises into separate HOAs, either individually or separately, so the elevator midrise buildings are separated from the townhomes for valuation purposes. There are of course many things that can be done, but segregating the townhomes into their own HOA would make a lot of sense for the complex as a whole.
Don’t hold your breath though. Big changes like that take massive approval by the owners and someone brave enough to spearhead a movement. Don’t see that happening.
All that said…I love the place, and hope that Gus the Swan is still alive and well.
Stan,
Why were you “sick about it” and not happy? You lost me there. You must have had a good profit on that sale…why “sick” about that?
Banking crisis… nope,that’ll never happen.
Nice call Eleua.
Several months later, I’m gonna respond to Ardell’s post number 13 from way back in February. By and large I’d agree with Ardell’s assessment of the character of Boeing employees. Here’s some insight into the why’s of that assessment. Aerospace is more prone than most industries to a boom and bust economic cycle. Layoffs happen about every 10 years (we’re 5 years into one of these cycles right now). Also, there are strikes periodically. So, the wise Boeing employee always has at the back of his mind, the idea that he’s going to need to have that money socked away somewhere that he can get to it if need be.
They don’t tend to put it into their houses as much because generally there is the expectation on some level that if Boeing experiences hard times and they get laid off, selling their home will be difficult to do. By that I mean, they just don’t tend to buy the more expensive houses. And they tend also to be somewhat conservative about financing.
Just saw Rhonda’s posts now, and would generally agree with her characterization. I would lower that retirement age goal for most of the younger set, however–most of the Boeing folks I know under 40 are hoping not to be working by 55.
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reading these are funny now. Indeed, as you said “history will tell who was right”, well, every real estate “guru” was wrong. Seattle is not immune. You can’t have 30-40% appreciation without consequences.