My prediction has been, that the 2007 Market will be similar to the market of 2006, that being strong and upwardly mobile. Not necessarily as strong as 2005, when interest rates were lower, but on an even keel with, or better than, last year.
To determine momentum of the market, I look at absorption issues, and reduce the study to a somewhat predictable and mainstream market segment. To keep apples to apples, I target that portion of the market with the highest number of sales in a year’s time. The results are almost startling, with regard to upward momentum since the first of the year, and even better than I expected to see.
Where “in escrow”, which is both STI and Pending, is much higher than “for sale” and/or closed in January 07, the forward momentum of the market is strongest.
Seattle has too many new properties not reflected in the stats (i.e.”1 of 8 townhomes”), as does high end. I am using the market segment I find is best for prediction purposes using the MLS, that being Redmond (98052 only), Bellevue, Kirkland and Bothell (98011 only). I am also using “up to $650,000” as that is the segment with the most properties changing hands in a year’s time, based on the stats I did on a running basis last year.
I also use this market segment because I can readily visualise the properties involved, and so my conclusions are more valid than areas like Tacoma or Snohomish or even all of King County. The segment I use, accounts for both strongest and weaker markets and “residential” vs. condo.
98052 – Redmond – 37 residential for sale, 40 in escrow and 18 closed in Jan. 07; 44 condos for sale, 69 in escrow and 19 closed in Jan. 07.
98011 – Bothell – 40 residential for sale, 37 in escrow and 18 closed in Jan. 07; 15 condos for sale, 28 in escrow and 15 closed in Jan. 07
98034 – Kirkland – 35 residential for sale, 29 in escrow and 27 closed in Jan. 07; 32 condos for sale, 37 in escrow and 25 closed in Jan. 07
98033 – Kirkland “proper” – 23 residential for sale, 15 in escrow and 19 closed in Jan. 06; 50 condos for sale, 62 in escrow and 21 closed in Jan. 07
98004 – Bellevue – 4 residential for sale, 2 in escrow and 1 closed in Jan. 07; 27 condos for sale, 21 in escrow and 8 closed in Jan. 07
98005 – Bellevue – 5 residential for sale, 4 in escrow and 2 closed in Jan. 07; 14 residential for sale, 40 in escrow and 8 closed in Jan. 07.
98006 – Bellevue – 17 residential for sale, 13 in escrow and 9 closed in Jan. 07; 20 condos for sale, 14 in escrow and 6 closed in Jan. 07
98007 – Bellevue – 5 residential for sale, 9 in escrow and 5 closed in Jan. 07; 6 condos for sale, 12 in escrow and 16 closed in Jan. 07
98008 – Bellevue – 18 residential for sale, 20 in escrow and 11 closed in Jan. 07; 1 condo for sale, 4 in escrow and 4 closed in Jan. 07
98005 is a bit skewed, as Woodbridge and Oasis are long escrows, so 40 in escrow is not reflective of a less than 30 day market activity. New construction in escrow will always throw off momentum stats. That is why I don’t do the high end this way when I am looking for “people’s recent decision to purchase” forward momentum. There is some of that in others, but not as much as in 98005.
I also break it down this way, so people can see where they might most likely find a single family home priced under $650,000, or where they might most likely find a condo at an entry level price. The highest numbers will equal the highest ongoing availability, or whether you are looking “for a needle in a haystack” in that area.
2007? If you list it, price it well, it looks good and is priced under $650,000…it WILL sell.
Thanks for the update, Ardell.
Though I am unable to quantify it similarly, that’s about what I’m seeing on the NW side of the lake as well.
I did see a bunch of houses go off-market around the holidays, however. I think we are going to see a huge wave of houses coming back on the market soon. We will see if there are buyers available to absorb them.
Any predictions for how inventory is going to look throughout 2007?
I won’t be bringing any of mine back…all sold off in Jan. New listings will be some new and some another agent had for a short time in the fall and owner took off in December. No way to predict that yet, but some will choose to rent vs. sell. Some of my clients are waiting another year to grab more appreciation.
As far as inventory. I don’t play the inventory game, but did note it this way in response to a request Dustin had last year. I will post these in the same manner the first week of every month, so “inventory trackers” have some stats to work with.
I don’t get “the inventory” fixation. If someone wants to sell and can, if someone wants to buy and can, are the only two factors I am interested in tracking.
That fewer people want to sell or more people want to sell is a personal decision, and so high vs low inventory generally speaking, is irrelevant to me. I only want to know of the number of people who want to sell, how many can. I am finally seeing more of a buyer’s market in the high end…and yet the options in that “buyer’s market” suck, so not sure that’s a plus.
Best stuff still selling with multiple offers. Worst stuff no one wants. So tracking inventory and broad stats doesn’t tell the story I need to hear.
I DO stats for myself and my clients, so they are geared to relevant info.
I POST them because I have them here on a piece of paper, and it’s easier for me to go back and check online, than to save all my scribbles 🙂
Transparency in this manner, showing how an agent views stats, I hope will lead some away from looking at stats for the pure numbers, and learn how to do them in a relevant manner.
Making conclusions based in irrelevant data, has obviously held some people out of the market for the last two years when appreciation was highest. Now they have to sit back and wait for the market to become affordable again. So doing the stats in a wrong manner is dangerous to consumers, especially first time buyers.
Last year I posted as people asked, but I decided that’s not helping anyone. This year I will stick to true market indicators.
If 10 people want to sell now vs. 12 people same time last year, how is that relevant? “Inventory is down” means nothing more than 2 less people wanting to sell in Janaury. A personal choice, not a market indicator.
I don’t think inventory is irrelevant. Perhaps if some of that inventory is so poorly priced that it’s like it’s not on the market at all (because noone in their right mind would buy it), and not competing with the houses you are trying to sell, then perhaps that share of the inventory is irrelevant.
But if inventory of properly priced inventory that is directly competing with your market niche triples and the number of buyers is cut in half, I simply have no idea why you wouldn’t think that is extremely relevant to how you would be advising your clients to price their property, if they have any desire for that property to sell in a reasonable amount of time, right?
Here’s a nice discussion by economists of the ratio of houses for sale to houses sold as a predictor of the course of the residential investment cycle.
Agree, but I can SEE that, I can’t stat it out. So yes I do take that into consideration from “in the trenches”.
If and when I ever see something good and priced well not selling that will be a significant event, but you won’t see that in the stats. I will see it on the street and come blow the trumpet.
So far, not happening.
I am looking at two new listings this week. That some dog isn’t selling is not their or my concern. I price against the ones that sold in 2 days…not the ones that are on market for 164 days.
“inventory” by definition equals “not a factor”. SOLD is how you price, not inventory. “Higher than the last one” is the name of the game.
Biliruben,
I tried looking at how other people “do it” it last year and I was right and they were not. So this year, I’m sticking to Ardell’s Way. I have 16 years of happy, no loss clients in my wake…I’m going back to just doing it my way.
Gotcha, Ardell. Nothing like immersion in the market to give you the best perspective. As a statistician, I know that numbers can often deceive.
I bought more than two years ago, despite scary numbers. It’s very hard to time any market.
In any case, I think I’ll be putting some heavy weight on the Ardell index. It will interesting to see where it goes as we get into the spring and summer seasons.
Like last year, I think the market is going to be and stay strong from 1/1 until 7/15 and not a “spring and summer” market. It could be “a Seattle” thing, our market doesn’t operate the same as most of the Country. Spring and Summer is a “family trade”…maybe Issaquah. But our main markets are not about school year here, like a lot of the Country.
I was thinking about you when I was driving over to the hospital to pick up my daughter.
Our “inventory” breaks down like this. Stuff I and those like me will sell. Stuff most agents will sell. Stuff bad agents will sell. Stuff no one will sell. Four tiers of inventory.
I have nothing TO sell and I have several buyers in all price ranges and places (I won’t take on two that want the same thing). To me there is NO inventory today, regardless of stats. The one I sold last week I jumped on within an hour of it coming on market. The one I’m working on this week is not listed. The one I’ve been working on since forever may have to be one that has been on market for 160 days that will now undersell due to time on market.
There is ZERO inventory for me and my clients today. So there is none.
Does that make any sense to you?
Ardell–I can back you up on the “upward momentum” up here in Snohomish county too. I am going off of what I’m seeing going on around my office but it is like the floodgates just opened up this month. Wish I had time to sit down and actually compile the numbers because I think they would be surprising for us too.
I think a LOT of people waited out 2006 and must have had as their new year’s resolution “buy real estate,” because since the first of the year we have seen what inventory was on the market move fairly quickly (except for high end–unfavorable rates being the reason I am sure–and the “dogs”). Seems we have lots of buyers–at least for regular SFR homes and condos. Now we just need some listings to sell!
But wouldn’t changes to the price of the house or condo change the tier in which you you consider it?
For instance, if a poorly remodeled flip goes from 500K to 350K necessitated by a looming default, wouldn’t you think again about stearing a client towards it who is looking for a bargain in the rough? 4th tier to 1st tier just with one simple change: price.
Hmmm, in reality it doesn’t work that way. A poorly remodeld flip is never a bargain. Only the diamond in the rough is a bargain. The flip that doesn’t sell, is usually more about the wrong house in the first place, and so not a bargain for anyone. The flipper may get less than he thought, but the buyer of it never gets a bargain. In fact “buying a flip” and “getting a bargain” is probably an oxymoron.
No two buyers have the same objective, even though those that blog about buying do. Blog Talk about the market is very far from the reality of the market.
Buyer getting married: Will buy a nice home to start a relationship in. Not the bargain of the market and not the joke of the market (as in over priced). Usually it is “the next one out the gate that is “of value” and not one sitting on market.
Family needs 3 bedrooms and good schools: Can’t readily afford that: Can’t compete on “next one out the gate” and multiple offers. I have to find one not for sale yet, or catch one BEFORE the price reduces to the point where it will have multiple offers, and just before that happens when the seller is about ready to reduce it.
Most properties on market have an issue that isn’t JUST price. Some, actually many, were left back there after a bad inspection. So if you are going to go for price reduction, you need to be especailly wary and watchful throughout the process before it closes.
Usually there’s more to it than just price, and a reason why the price needed to be reduced and why the initial price was wrong. As in “if it didn’t have this problem then that price would have been correct”. Always assume a house not selling has a problem that isn’t price, that is causing price to be too high.
No one is going to tell me what that is, I have to find it like a dog on a drug scene 🙂 Sometimes it is just price, but not very often. Usually I find the problem, and if it is easily corrected, then that is a bargain. Sometimes it is impossible to correct, and then it is just a dead end. Finding the why, and not listening to what the listing agent or seller are saying is key. But get them talking and read between the lines of what they are saying, and you will find much truth.
Sandy,
And that has been true for all of my 16 years in five states and 7 markets. Every January is the same. More buyers than things for them to buy.
Hmmm… looking at the FATREPORT and it would appear that the condo market is slowing down BIGTIME.
I’m predicting massive increase in inventory this spring, and a YOY drop in median price!
Looking at the housingtracker.net website it appears that inventory is back on the way up! To the moon Alice!
BTW billiruben, why would you want to look at inventory and other empirical data, lets instead look at anecdotal observations from realtors! All the inventory on the market are undesirable houses, you can still get your 1300 sq ft 1940 Ballard rambler for 500,00!
Matthew,
We all know some condo projects sell out like hotcakes and others can’t get rid of them. The last one I liked sold off more than half in 7 days and all but 2 in two weeks. So I’m still calling my shots.
That the one no one wants isn’t selling isn’t reflective of market conditions, it is saying “no one wants that”. Doesn’t mean there aren’t plenty of buyers lining up for the next one everyone wants.
Again, I’m capping this at $650,000. What happens higher than that affects less of the population, and skews “your stat facts”. At least bring your facts down to reality with a price cap.
Does anyone really care if there are too many properties on market over $1.5 million? Why include that in market condition stats?
Matthew,
Please don’t call me a realtor, and I won’t call you an idiot. I am not a Realtor. You don’t even know what “a realtor” is, apparently.
If you are going to imitate a real estate agent, at least do it well. You said “you can still get your 1300 sq ft 1940 Ballard rambler for 500,00!” Everyone knows the hot ticket in Ballard is a new townhome. They can’t build them fast enough for people who want them, and they don’t show in your silly stats either. If the builders could knock down every rambler in Ballard they would. And they would sell everyone of the new townhomes they put in its place.
When you see new townhomes sitting on market and builders not wanting to buy any lots, then you have a slow down. In the meantime, stat games are like playing with yourself…just makes you happy to do it, so be honest.
Ah my bad, “real estate agent”. Whats a title anyway?
I don’t know about Ballard townhouses, but I know how the condos are doing.
Hjarta 79 units 7 sold
Noma 90 units 70 sold
Metropole 30 units 23 sold
Canal Station 109 units 74 sold
again sorry for the “numbers” and “data”.
By the time builders stop building, it’s already too late and you’ve bought at the peak!
Matthew says: “By the time builders stop building, it’s already too late and you’ve bought at the peak!”
Matthew, get real please. I had two calls this month from builders looking for land in Ballard to build on. They are paying top dollar for land, tip top dollar.
They will be paying less than tip top dollar LONG before they stop building. Before that there will be some townhomes that are having a hard time selling…there will be fair warning and it won’t be in the stats. It will be in the phone calls and the new townhomes completed and sitting on market for more than a week.
You guys have been screaming this “buying at peak” bullshit for two years. If the lot of you had bought something when you started freaking out, you’d all have your downpayment on a nice house by now.
I see 70 of 90 sold and I see the 20 “inventory” leftover. What are you seeing? I see 74 of 109 sold, and I see a whole bunch sold…what are you seeing?
You seeing some kind of market downturn up there? I’m wondering if Hjarta is brand new presale or just something no one likes as well as they do Noma and Metropole and Canal Station.
Where’s Matt when you need him? I’ll have to get him over here to play downtown condo with you. He’s our downton condo guy.
Of course some day the market will stop increasing. Stop acting like that will be Doomsday. This is the real world. People are buying homes to live in, getting appreciation, getting tax right offs, and loving their homes. I know. I’m one of them.
And you know what? If Doomsday comes for a few years, I’ll just stay in my home loving it and enjoying it through the whole thing. Happy as a pig in shit.
Actually I just used Ballard as an example, I live in Belltown. As for personal observations, I’ve seen 5 units in my condo building come on the market, a couple of which have been on for 70 or more days. The market is definately changing from what I can see. We’ll see, time will decide this argument!
I haven’t been screaming anything for two years. “You guys” I love how everyone gets lumped in the bubble group! Apparently any opinion other than real estate is going up forever isn’t tolerated on here!
Matthew,
How about “You guys” I love how everyone gets lumped in the “realtor” group. Apparently any opinion other than real estate is on the bridge of collapse isn’t acceptable 🙂
As to the 5 units in your complex…lump them in with the rest of the thousands in inventory. Time doesn’t tell and stats don’t tell. It’s in the indivudual stories. Anecdotes speak volumes, stats are for wallpapering your apartment or lining the bird cage. unless you know the story behind the stats.
Maybe your complex is run down. Maybe they are pricing them too high. Maybe they smell like cat piss and sweaty socks. Maybe no one sees the value there and are waiting for the next one out the gate, just like the rest of the “inventory”.
When there are no buyers, and nothing sells with multiple bids on the first day on market, I’ll let you know. Until then…they are just 5 units no one is buying. Trends are changing. What people want is changing. And the market is reacting to that.
So Matthew…what is your vantage point if you are not the Matthew from Bubble Blog. Biliruben is a bubble guy or gal and we can talk just fine. We just want to tell the truth, the good bad and the ugly. And we don’t want to have to avoid truth for our readers because it brings out people like you who don’t want to hear the truth. Go talk ALWAYS bad stuff over there where they do that. Here…it is truth, which is always a mix of good and bad.
Every single market is a time to buy for someone who needs a home! Get over that. I’ve bought and sold homes for 16 years and I have never had to look at someone across the table and explain why I had to sell it for less than they paid…NEVER! So get over it. Buy wisely, buy with smarts and enjoy your home. That’s really what it is all about.
Sorry I didn’t know that a realtor was a real estate agent that belongs to a special group of people that joined an association of some sort. Kind of like a real estate agent union? So is calling a real estate agent a realtor an insult? Forgive my ignorance regarding your profession.
Yes I am the same Matthew that posts on Seattlebubble.com. I believe that there is a credit bubble in the United States of America. I believe that the dramatic and unprecedented run up in real estate is not based on strong market fundamentals but rather on loose lending and easy money. I believe that many people in this country and living outside of their means and that it will come back to haunt them. I believe that a negative spending rate and a “buy now, worry about the consequences later” attitude will catch up with people. I believe that this market will correct itself, I don’t know when, but I’m betting on sometime in the next couple years.
You haven’t had to explain to anyone why they are selling their house for less than they paid for it? Maybe that’s because we haven’t been in a bubble in the last 16 years! We are witnessing a housing market unlike anything seen before. How it plays out is up to speculation. But I’m betting it won’t be good!
Realtor is to me, as one of the Bubble People is to you 🙂
You are kidding right? I have worked in at least two markets, one on the East Coast and one in Los Angeles that have increased much more than Seattle.
In Jersey in the late eighties people were sleeping out front of the sales office the day the new construction site was scheduled to open. By the time they opened the door there were more people in line than they had lots. They went outside and announced a major price increase to thin the herd, and no one left the line. They had to raise the price by 40% just to get enough people to leave the line so they had enough lots for the rest.
The house I bought for $115,000 at five years old, built for $85,000, went up to $260,000 from 1985 to 1989. The townhome I bought in L.A. for $545,000 I sold for $685,000 ten months later (with no changes) and three years later sold for $1,330,000.00 (with no changes)
Unprecendented increase in housing prices in Seattle? Where are you getting that? Have you ever been to San Jose?
Do you mean “unprecedented here in Seattle History”? Not sure if that’s true either, but most of the Country went straight up from 1998, unlike Seattle which lagged the rest of the Country.
You are a Realtor. A better descriptor is “Real Estate Clerk”.
Sorry, but that’s what you are. Why not embrace it?
2007 will not be anything like 2006. During the first half of 2006, we still had some price appreciation, however since May of 2006 there’s been a steady decrease in the number of sales and inventory levels have risen.
When the weather changes, you’re going to see a lot of home debtors looking to sell but you won’t see a lot of buyers.
Seattle will join the rest of the other areas of the country currently experiencing a severe lack of Greater Fools.
Jonathan,
Realtor is a member of the National Association of Realtors. I am not a member of that group that is currently being sued by the Department of Justice.
You can argue with me, but you can’t be correct.
We are already seeing record high sales both on the Eastside and in Seattle. Newer townhomes in Seattle are selling for higher and higher every day. A propery in Lochmoor just sold at a price never seen before in that neighborhood.
Median sale price up or down is not about appreciation. Each property that sells for more than anything else ever sold for in a neighborhood, is appreciation;
All of your facts are incorrect, including who and what I am.
Congratulations, Ardell. You’ve become Bubble Bait! You must be doing something right.
Ardell, we have been using a listing to pending ratio for a couple of years. Momentum=velocity.
Of course, if listing number doubles with same amont of buyers the ratio number is halved. Looking at just the ratio is only half the story, but a still a great indicator.
Bob,
Here’s what I am seeing on the Street, and I’m not quite sure what happens as a result.
Plenty of buyers to purchase something of value to them. Plenty of properties not deemed to be of value to them.
Plenty of buyers ready, willing and able to purchase something of value to them, who don’t want something not of value to them, at any price.
Look at this comment from Matthew:
“you can still get your 1300 sq ft 1940 Ballard rambler for 500,000!”
That comment speaks volumes about our marketplace. When an area is completely built out in 1963, and everyone wants a new house THERE, what do you do? The tear downs come, the new houses go up in their place and sell for much more money. Plenty of buyers for new townhones in Ballard and newer housing close to Microsoft.
When no one is buying because what they want doesn’t exist there…what happens next? If the average purchase price goes up $200,000, but only for things people want, and much of the inventory is simply housing no one wants…too many old ramblers…is that a sign that the sky is falling due to economic reasons? Or is that simply a store that doesn’t have the inventory people want to buy?
We can’t keep on the shelves for a week, that which everyone wants. And we can barely give away, that which no one wants.
What kind of market is that?
Ardell, any reason why you limit your data to 650K price cap? i am observing some new construction in education hill in redmond that has sold about 7 homes each with multiple offers, some before the property was listed.
As a first time home buyer I am observing exactly what you said. A nice house, well priced below 700K$ (i would argue this is the cap) especially in desirable areas in Redmond and Kirkland (the areas I am watching closely) sell quickly. Even in those areas there are homes that have inspection problems, over priced for very old home (lead issues etc), and shoddy upgrades. Those dont move as fast now. Perhaps a year or two back I guess they would have.
Question is how long will this momentum last? And how badly will a national deflation affect us:?
Just to clarify I am not the same ‘sandy’ who posted above 🙂
please stop with the insane bolding.
No 🙂
My clients like it. All agents are not the same, I am one who bolds those things I don’t want my clients to miss, in person I bold all the time, so why not in print as well?
Don’t like it? Don’t read me. Don’t like an agent who makes sure to impress on you things you may be missing? Don’t hire me.
My writing style is a true reflection of who I am. When people hire me after reading a blog, they already know Who I Am and How I Will Act. It’s a fabulous advantage and the purpose of blogging.
Want an agent who is never “bold for you”…there’s plenty of them. I don’t need to change.
“Ardell, any reason why you limit your data to 650K price cap?”
When I did the stats at the end of the 2006 season, $650,000 and under affected the most number of people. I have different blog platforms and am starting a new one. When I write on RCG, I try to write in a manner that addresses the issues of “most” people in the marketplace. “The marketplace” being areas in which I work. Most being defined by the actual number of sales.
Personally I like to track the high end, as that tells me more about the future of the market than up to $650,000. The houses NOT selling West of Market interest me in terms of, will remodels take precedence over tearing down and building new regardless of cost. At what point do we have too many options over $1,500,000? That’s is where the trouble lies, not in the main market stream.
When someone hits the brick wall…it will be the builders and not the consumers. Too many want to build the most expensive of homes. The glut is in the nosebleed section.
“Question is how long will this momentum last? And how badly will a national deflation affect us:?”
It just doesn’t work that way. There is never a day when no one wants to buy a home, regardless of market conditions. Even double digit interest rates did not prevent people from buying homes.
The problem in Seattle is not the market. It is the first time buyer who doesn’t want to “start someplace”. They all want to start at the $700,000 new home. Those who bought a condo and then a townhome and then a house, aren’t crying the blues. The ones in deep doo-doo are the ones who continued renting and didn’t build equity in steps. Very few people bought their long term home as their first purchase, going back throughout history. You have to start some place, and for many that some place is not an ideal home.
The ones in deep doo-doo are the ones who continued renting and didn’t build equity in steps.
Huh? How is that, Ardell?
If I’d continued renting for $400/mo in the heart of Fremont, my wife and dog wouldn’t be as happy, but I certainly wouldn’t be in deep doo-doo. I’d be paying less for gas, be in better shape and may even be richer and more ready to buy a long-term residence in a few years, if I’d tossed my down-payment into Akamai like I did with my few extra bucks left over, and the decline in housing prices I expect comes along.
I agree with a lot of what you say Ardell, and your perpective shouldn’t be ignored, but now you are bordering on the “buy now or be priced out forever” mularkey, and I have to call BS on that.
There ARE times when it doesn’t make sense to buy a house.
The 100+ K in my 401k I have saved so far due to paying low rent begs to differ with you Ardell!
Viva la Wall St.!
I would rather live in a nice condo in Belltown for half of what I would pay on a mortgage, than live mortgaged to the hilt, but thats just me!
I don’t care when you get started or IF you EVER DO get started. Just don’t cry that you can’t buy a house, EVER, going from $400 rent to “buy a house”. It just doesn’t work that way most times.
I’m going back a couple of years to, Oh, I don’t know, maybe the day Seattle Bubble Blog started 🙂 Buy condo at $130,000 sell at $200,000, take $50,000 and put down on townhome which you buy for $$240,000 and sell at $350,000, take the $50,000 from the first appreciation and the $100,000 from the second appreciation and you have $150,000 to put down on your house.
Building equity in steps.
Want to rent forever…no skin off my nose. But then why are you asking about “where is the market” or tracking it at all? Why do you care? If you are asking because some day you want to buy…then get on the gravy train. No difference to me one way or the other.
If bubble people only want to rent forever, why are they so vocal about market conditions? Makes no sense to me.
People don’t want to rent, because they want to own their homes…or not. Most families have a harder time finding a nice home to rent once they add children and dogs, and if they didn’t start at condo…they may get stuck at renting and have fewer options. Many don’t want to rent to someone with three wild kids and two dogs. Fewer housing choices as time goes on.
The older you get the harder it gets, if you don’t start someplace. It serves ME no purpose whatsover to convince someone to buy a house. NONE! It is not self serving for me to give you the same advice I would give to my children, and my Mom gave to me. “Ya gotta start someday and someplace or you end up in your Mom’s basement cause she’s the only one who will have you with three kids and two dogs.” Actually, my Mom wouldn’t let me bring the dogs 🙂
I understand that a house CAN be a good investment. Not as good as people think when they take into account lost opportunity costs, maintenance and inflation, and probably never again as good as we’ve seen over the last 5 years, but not horrible.
I would just hope you can admit two things:
1) There are points in history and at particular locations where housing can be a TERRIBLE investment.
2) There are other investments – ways of accumulating wealth that may be BETTER investments. Those investments can also be used to generate a downpayment and allow you to move to a place that is ideal right away.
If you can’t admit those to things, it’s going to be very difficult to have a rational conversation.
Biliruben, Matthew, bubba, bob and all the Bubble People,
Here’s my problem. I MUST talk to people who are buying and selling homes. Why else would I blog? It is what I know best and what I do. If someone should rent…I’m done talking 🙂
Example: Someone called me the other day who wanted to buy something. Husband wants to move out of State. I say you should continue renting as long as your husband doesn’t want to stay here at all. She wants to stay for three years. I tell them I cannot predict where the market will be in three years, so if your short term (within 5 years) objective is to leave town and you have no compelling reason to buy, you should continue to rent. (other considerations like affordability, strength of job history, income, etc.)
Once my advice is that they should rent. I’m done talking Biliruben. I talk to people who buy and sell real estate for their own reasons. If someone shouldn’t buy, I tell them that. But it is not often, in fact rarely, a conversation about buy vs. rent.
People come to me and say I want to sell my home or buy a condo or townhone or home. They don’t ask me if they should rent or buy, nor do I EVER try to convince someone to buy. I’m not in the business of shoving something down someone’s throat.
Now…all you Bubble People…I “HAVE” to talk about market conditions for those who are buying and selling. But everytime I do, you guys run over here like I just opened up the cake and ice cream.
If you want to talk about the reality of the market, fine. But if you want to talk about renting…this ain’t the place to do that. You have a place to do that…do it there. When you come here, let’s talk about the market of buying and selling real estate…not the option going to the movies instead. OK?
I like talking with you, I really do, but not about renting. I don’t do rentals.
Biliruben:
“I would just hope you can admit two things:1) There are points in history and at particular locations where housing can be a TERRIBLE investment.”
I see 19 bad investments every day and 1 good one in 20. It’s not about “time”. I see 19 bad locations every day and 1 good one. It’s not about “Seattle vs. Oklahoma”. Bad time is about selling, not buying.
“2) There are other investments – ways of accumulating wealth that may be BETTER investments. Those investments can also be used to generate a downpayment and allow you to move to a place that is ideal right away.”
I used to be a Trust Investment Officer and when I was, I talked about which stocks and bonds to buy. I NEVER talked to them about buying real estate instead of stocks and bonds. Now I am in the Real Estate Industry and I don’t talk about stocks and bonds anymore…rarely…sometimes bonds 🙂
It’s apples and oranges. I am not talking about whether someone should buy here or in Peru or if someone should buy a Jag or a condo. It just doesn’t work that way. I talk about buying and selling real estate.
“If you can’t admit those to things, it’s going to be very difficult to have a rational conversation”
If you can’t stop talking about renting, we can not have a rational conversation. There is no way to equate renting to buying. I had a client who called me to sell the place I sold to him over two years ago. He said he was going to sell and rent. I sold his place. He called me a few months later and said I want to buy something.
I do not determine IF people should buy or rent, NOR do I talk them into it or out of it unless, like the example I gave, I see buying as not a good move FOR THEM. In order to do that, I have to know them. And when I speak “on a blog”, I am ONLY talking about buying and selling real estate.
You are saying “We renters are not your audience, but we want to talk to you anyway.” What am I supposed to do with that? It’s like hecklers coming in to change the show to something they have in mind vs. what the show is about. What the heck do we do with that?
Seriously, when I come to BubbleLand, I answer questions about the MLS or why something does what it does. I don’t come in there and tell you all to buy stuff, now do I? If and when I come there, I come to talk about what YOU want to talk about. Over here…it ain’t about renting or the world blowing up. It’s about buying and selling houses and other real estate related topics that affect property values and the real estate industry.
I’m trying to give info to people who want to buy or sell and you keep coming over here and changing the subject. My article is totally ruined and you have no remorse for that.
We CANNOT have a real estate blog without talking about the market. Every time we try to have a talk about market conditions you come over here and throw a monkey wrench into the conversation and start talking about renting vs. buying.
Trust me…RARELY does the topic of renting come up in a conversation between me and a consumer. It just isn’t in the picture. It’s not part of the show. And MOST people get annoyed when I point out the potential problems of buying THAT house that they want. But I do lay out ALL of the pros and cons…then it is their choice.
Sounds reasonable, given your field Ardell. Talk about what you want. I just took exception to stating not buying now would be some disaster, which I don’t agree with.
I own and likely will never rent again. My plan is to start looking to buy a bigger place in the next year or 3. It would be great to buy now. I have a ton of jack saved up (mainly from other investments, not equity in my current house, though the last few years have been kind on that score too), and if I could find a house that satisfied my families needs for the next 20 years, I would move up now.
Anyway, good luck to you. I seem to be annoying you, so I probably won’t pop in here too often in the future. You seem to be an honest agent with a reasonably open mind that is easy to discuss things with, and I hope you weather the slowing market without too much pain. If we end up looking on the east side, we might even talk again face to face someday.
Biliruben,
I have three daughters ages 18, 20 and 22. I have NEVER told them they should buy something. Their lives aren’t stable enough for that. I BOUGHT something to give them some stability.
You don’t annoy me. What annoys me is that the subject is buying a property under $650,000 in the Seattle Area. Not WHETHER someone should do it, but IF THEY ARE doing it…what they should be considering.
Stay on topic and I’m more than happy to talk with you…I even like you. just don’t use the “R” word 🙂
“I hope you weather the slowing market without too much pain.”
Now that annoys me because it is nonsensical.
What “slowing market” are we “weathering”? That is not how real estate works. Someone is always buying and selling in every market, up, down and sideways. Slowing markets, terrible markets…all the same to me. Really. Why do you think agents like me suffer in a slowing market. Hell, we suffer a WHOLE LOT MORE in a strong market than we do in a slowing market.
Now you’re getting off topic. 😉
Anyway, I’m looking for a house
Shoot. My post vanished into the ether.
Shorter version:
On topic:
I’m looking for a house. I don’t think there are any houses less than $650K that are within 200K of being worth what the seller is asking. None. I have stopped looking for a house.
You say:
“I have nothing TO sell and I have several buyers in all price ranges and places (I won’t take on two that want the same thing). To me there is NO inventory today, regardless of stats.”
So it sounds like we agree. Not much to discuss.
Off topic:
There are something like double the number of agents working now compared to 10 years ago. The population hasn’t come close to increasing to support that.
What has increased is the number of transactions and the fees per transaction, so the market has been able to support these agents.
If the market slows, then then the number of transactions declines.
When we see innovations, then some portion of the work an agent traditionally has performed, some sellers may choose to do themselves, because there are tools that allow them to do that.
Therefore the market can no longer support the number of agents it currently does, or they won’t make as good of a living.
Agents such as yourself may adapt to and do quite well. That doesn’t sound nonsensical to me.
YES!! Now you are talking my language. Let me go find your house. I bet I know what it looks like LOL!! I may have to delete it when I’m done because I’m not allowed to do this, but I’m doin’ it anyway.
Do you really think the markets in 16 years in five states have been anything but everything up and down inside and out? When the market is bad, some leave and fewer get their license. It’s all good. I can only handle 2 or 3 people at a time. 8 max including houses for sale, and still know all of the people and their various idiosyncrosies. There’s always 2 to 10 people wanting to buy or sell. That’s my world.
I started in the worst market in history, rode it up, and down again, and back up again and everything in between. Still no clients with any losses. You just have to know what you’re doing.
Losses equals someone who MUST move at the wrong time. Same as buying a good stock, but having to sell it when it’s down. When you get relocated in a bad market, the job offers start including your loss, it’s part of the package. Life changes with the market, businesses act differently with regard to relo packages and very few people have to sell during the correction phase.
Many that DO have to sell, sell for less but not loss. Market goes up 100% and then backs up and then goes back up again past the place it was last. That’s life, as my Frank would say! Stop fighting it and stop being afraid of it. That is life.
Okay, I’m going to post your house now. Tell me how close I am. I’m going to go between $600,000 and $650,000. I will post it as Biliruben’s house :0 this is fun.
Geez. I’m intrigued in spite of myself. Don’t you want some hints?
Nope…I never ask first. Real Estate doesn’t work the way everyone thinks it does 🙂
I also follow the stats fairly closely however having lived in several parts of the world and gone through so many regional bubbles, crashes, buyer’s and seller’s markets – here are the pearls of wisdom I have found in personally buying 15 homes in all markets in all countries.
1. Every house we liked and wanted to buy always cost more than what we wanted to spend
2. Every house we bought was over our initial budget
3. Every house in our budget range – we didn’t like
4. Every house we sold we thought was the best house in the neighborhood and should get top dollar
5. Every house we sold went for less than we wanted
C’est la vie
Did you ever have to bring money to closing? Were you ever upside down on any of them due to downturns?
Hi Ardell,
We always made good money or broke even, including closing costs.
Real Estate in the long term is always good. There are constantly more people arriving on this earth but the number of centers to which people want to move to remains the same. The number of prime locations, view properties, airport hubs etc remains the same.
If you take places like London, San Francisco, Cape Town, Amsterdam, Monaco, Paris etc prices do not depreciate over time.
Go back 30 years and people were having the same arguments back then. I am pretty sure Seattle is one of those places.
The more people there are, the more accommodation is needed. As people migrate to the city hubs then price pressure on properties closer to the city centers will always remain.
Ian,
I have the same experience except all here in this Country. 12 houses, made money on most, broker even twice on short term holds when my husband took a job elsewhere quickly.
Thank you for your comments. My home ownership is from 1982 to present. What is the time span of your 16 homes.
As to people being afraid always, my second house I almost got a divorce when my husband wanted to take on a $100,000 mortgage. My Uncle Morris explained the facts of life to me at the time, but honestly, I was still freaking out about it.
I owned my first house in 1978. We now have investment properties in Seattle – Green Lake and Queen Anne as well as our primary residences in Seattle and Mexico.
So I guess I have put my money where my mouth is.
I agree with you whole heartedly – you only realize a loss if you choose to sell during a downturn. If it is a forced relocation then that is taken care of with the relocation package. If you don’t have a relocation package then just stay put and enjoy the low interest mortgage repayment until the market turns up again.
Don’t forget the extra benefit of the interest being tax deductible. This is not the case in many parts of the world so there is not that much difference between renting and owning in terms of cash flow – if people in Europe had the interest payment deduction then real estate markets would boom even more than they are right now. The UK is still seeing double digit annual house price increases and has done so for the past 9-10 years and the bubble talk has been right there all through this time period.