Thank you. Now I have something to point to the next time someone asks me why I don't buy a house.

How much was your house, Dan? Hmmm?

A friend of mine pointed out a nice but unspectacular new house that had been built in Wallingford that sold for $1.6 million. It was no mansion, and in fact the lot wasn't any bigger than the other crammed house lots in the neighborhood.

Someone got suckered. The sale was recently, and I have yet to find out who the buyer was.

The thing with the market setting prices this high is that new residents from NYC, SF and other expensive locales can afford it. The influx of richer people is pricing out the incumbent population.

Unsustainable, no matter what realtors tell you. Try graphing the median wage in Seattle vs. the median home price over time. It can't continue forever; a correction is due here, just as has been happening elsewhere.

I appreciate that the wages required for a half-million home were mentioned. Amid all the real estate hype in recent years, the math has never added up. My fellow renter friends and I have asked, "Who the hell are these people buying these homes?" No one I know makes enough to carry a 3 grand (or more) mortgage.

@5 - It's a facade, built mostly on debt. Wait until the foreclosures really start happening here.

@6 but why haven't the foreclosures happened yet? Other relatively high-wage cities have been feeling the pain. I have friends that bought a little dump for almost 1 million in Silver Lake in LA, which is now worth $100K less than what they paid for it. My house in West Seattle jumped 60K in just one year, the largest one year increase since we moved in in 95. What makes our region different? It's not like median wages are lower in LA. It's not like people aren't attracted to So. Cal, so what gives?

Why is no one buying my g%$#$#n house then?

@6, supply has been a little tighter here due to natural geographical constraints (it's not as appealing to just build further and further outward here) and less crazy speculative development as compared to some other towns. But the recent condo-building frenzy will change this to some degree, I suspect.

I don't see a correction happening before we normal people are literally priced out of the city. There are enough rich people out there in America, who want to live in Seattle, for this ridiculous spike to sustain itself.

We'll end up with a glass wall around Seattle city limits, with the rich living within the city and most of the commoners living in Shoreline and Kent, maybe the run-down, disconnected south end of Seattle if they're lucky, and being forced to bus in to work here.

9. The condos themselves are approaching unaffordability. I'd side with that line of reasoning if the asking prices weren't starting at $320K, and rising.

our valuation came yesterday - raised it $99,000 in one year, the same year that a builder blocked our view with a megahouse. ridiculous.

my parents paid $19,000 dollars for the house i grew up in.

It's only a matter of time before the decline hits here. For some reason, our real estate market seems to trail the national market by about a year, but otherwise the curves look about the same. Part of what's happening is that Seattle gets a certain amount of buying from people priced out of other markets in the country. But eventually, even the out-of-towners can't sustain our market, and we're hit just like everyone else.

Right now, housing supply is increasing and demand (in term of number of sales) is declining. You'll notice in that article that King County prices actually went down last month. We're probably at the top of the curve right now, with other counties to follow in a month or two. This is the worst possible time to buy a house.

For the other side of the story, see http://seattlebubble.com/blog/.

Well, they're unaffordable right now, @11. But the supply is drastically increasing, and I still believe it's a bubble. In fact, for what my anecdotal evidence is worth, condos are already starting to be a harder sell: I've had three friends try to sell theirs recently, of which one succeeded after a few months, another hasn't yet in the same time, and another gave up and is putting it up for rent. (Keep in mind, BTW, that because rents more or less have to be tied to wages, they can't rise too high, which will limit the profit potential of flipping when the rampant speculation dies down a bit.)

Expensive?

Housing prices in Vancouver BC were at a median of $500,000 when I MOVED HERE in 1989.

Get over yourself.

Median price is a bunk statistic. The bottom is falling out of the King County real estate market right now, since median price is a stupid stupid way to judge heath of the market, people get duped into thing things are rising.

Since the cramp on lending has kept first time buyers out of the market, the share of expensive homes getting sold has gotten larger, thus the median price increases, even as the market falls apart.

Think of it this way: if ten houses get sold at an average cost of $400K one month, but then then market collapses and only one house gets sold the next month at $410K, then the average price has gone up! The market must be strong!

Here's a little more to add to my post above:

First, there were 26% fewer home sales last month than in August 2006. That's HUGE.

Secondly, here's a great article about how stupid the median price statistic is:
http://seattlebubble.com/blog/2007/08/14/median-price-not-telling-the-whole-truth/

@7: Foreclosures don't happen when the price is still going up. People sell when they get into trouble, instead. Right now there are still enough people with money coming into the area to keep prices propped up. I don't think that will change unless the job market here goes through a recession.

17, something to add to your comments is that housing sales are seasonal and August is typically a big month for sales and September usually sees a decline. But this year, month-to-month sales went down in August. You canu see that as September coming early or the bottom falling out of the local housing market. We'll know more when September numbers come through a month from now.

while the median may not be perfect it is much better than using the mean.

@ 15, you have a point, but who pays that much attention to what's going on north of the border? I mean, I can name the PM of Canada for ya and all, but it is in Canada which means it doesn't count or is not comparable.

The house next door to mine is asking 725K. It isn't a mansion by any means. It is just your run of the mill early 20th century bungalow that has had some work done. It doesn't have ponies, whores or a pool in the backyard. What gives?
But hey I am a great neighbor. I bake cookies and I don't bitch at you to trim your trees.

@21

Could we just go with not comparable? Doesn't count hurts our feelings. Really. Why don't we count? I think that's why we (Canadians) get so excited anytime there's even a minor Canadian reference in American media. Little bytes of validation. We count! We count! They know we're here!

13. Supply is increasing in the region, but not so much in SEATTLE, which is where the median price issue arises. I don't give a shit about houses in Issaquah or Kent, and they're irrelevant to this particular discussion.

15. Canadian dollars aren't worth American dollars, wiseass.

Have you checked the value of the Canadian dollar recently? They aren't on par (yet), but they're damn near close. Not far enough apart to warrant a "wiseass", at any rate.

Dang, when you guys find the guy who promised you could afford a house in Seattle without having to spend a decade or more building equity in a dinky condo, you're really going to kick that dudes ass!

Glad I'm not the one who said that.

25. What was the value in 1989? IIRC not even close to what it is now.

26. We already know where Greg Nickels works.

@24
where are you getting historical inventory data with Seattle separated out?

@27 In January of 1989 the value of the Canadian dollar was 1.1913 to 1 US dollar, compared to $1.0579CAN (August 2007) to $1US now. Again, not on par, but not as far off as you implicate. That means his $500,000CAN house would cost $419,709US. A moderate difference, but still considerable for 1989. Sigh. It's a slow day at work. Again, I don't think "wiseass" was deserved. But I'm just a hyper sensitive Canadian. Whatevs.

you can still afford a house. do we have to go into the discussion abotu budgeting again on 30k a year?

also the numbers for theoretical income needed to buy a house are for a single worker, not dual income households.

fuck it, i'll leave it at this;

if you don't think you can afford a house you most likely can't but where there is a will you can find a way.

I was reading a column today that implied the people who got caught up in the subprime mortgage mess were mostly real estate speculators, or greedy people who bought more house than they could afford. I'm sure that's a lot of it, but I suspect a fair number of those loans were to people who couldn't afford *any* house without them. The old rules of thumb for home buying (20% down payment, don't finance more than 4x your annual income) rule out a majority of middle-class wage earners when home prices get this high.

Jaime-Leigh @ 29,

The Canadian dollar may not have passed the US dollar (yet), but you have 22 Minutes and Royal Canadian Air Farce, and those two treasures are worth way more than some stoopid Seattle houses.

gomez, the inventory data I'm looking at puts Seattle on par with the rest of King County...

SW King County +50.4%
SE King County +55.8%
N King County +55.16%
Eastside +48.7%
Seattle +49.6%
Total King County +50.8%

#16 and #17 nailed it- median price is a terrible market indicator. This is not rocket science guys, it's econ101: supply is up, demand is down. You know what happens next.

Original Andrew--

How Canadian is it of me that I'm feeling all warm and fuzzy right now? Thrilled that you appreciate our underappreciated gems--that's something many of our own don't do. Thanks for the smile!

@33: Don't forget the Rick Mercer Report! :)

Jaime-Leigh @ 35,

I know! I watch the CBC religiously, even The National with Peter Mansbridge and The Hour with George Strombolopolous or whatever. For us in the States, it's like getting news from an alternate reality run by sane people (except Stockwell Day; it blows my mind that he's not in a rubber room somewhere - it's only a matter of time)

: )

Actually, Vancouver and Seattle are pretty comparable, salary and housing wise.

You just need to shift to thinking condos are normal. Like my brother in NYC who lives in an apartment the size of my bedroom but who makes 8 times what I make.

@29 ... so, in other words, pretty darned close.

Plus, remember what comparative salaries for educated professionals were like in 1989.

Point of interest, my first house in Seattle cost $115,000 in 1994. It sold for something like $230,000 in 2000. My condo cost $265,000 in late 1999 (bridge loan). Current assessment is $400,000 but a neighbor condo (almost identical) just sold for more than $500,000.

[caveat ... it is true I used to work for Century 21 Real Estate Canada national HQ and wrote software for them in English and French ... it is also true that I read up a lot on the US market when I did that]

29. The 'wiseass' comment was actually directed at Will, which I'm sure he appreciates ;P That said, Jamie-Leigh and Will, who was living in these homes? Was Vancouver a city of wealthy elites? Homes sure as hell didn't cost that much in the US at that time, not even in more expensive locales. It makes me wonder about Will's upbringing, and that, given he champions this sort of price level as okay, maybe he grew up in an upper crust background... which would skew the validity of his perspective just a bit.

34. Taking your data at face value assumes the data itself and the criteria for collecting it are legit, which I notice you failed to elaborate on. I can throw a bunch of numbers and a link on the screen. So what? Tell me why they're right and you're right.

Hey Gomez,

If you don't want to look at inventory statistics from the NW MLS just drive around Seattle for an afternoon and see how many houses are for sale. Between the time I spend in Capitol Hill, Ravenna, View Ridge, Green Lake, and Northgate... there way more houses for sale than I've ever seen before. Seems like it's hard to find a block that doesn't have a house or two for sale.

Gomez-- Those are NWMLS numbers, and the link is to its August county breakdown. Doublechecking the link, it looks like they don't like to be linked to... Try this one then click "Current King County Breakouts" in the upper left. Everyone uses that data.

You still haven't addressed my question from #24: What data are you looking at?

At the current rates of appreciation and inflation, my Craftsman bungalow in West Seattle will be worth over $1,000,000 when my mortgage is paid off in 2024.

That is absurd and insane. How the hell will anyone be able to buy my house, even if I could afford to sell it and move somewhere else - that's the downside to the rapid appreciation around here. My property taxes will be as much or more than my current monthly payments.

You know what's not going up?

Our salaries!

If everyone's salaries were going up, wouldn't that just mean more people bidding up the price of your house in West Seattle?

The only way you could avoid being priced out of the city is if your own income rises faster than the incomes of all the people who would rather live in the city than in like, I don't know, Kent? What's the name of one of those places on the other side of the moat where it's cheap? I've seen pictures... there's like fat people and Republicans there. Idaho?

Whatever. You know what I mean.

Compared to Manhattan, Seattle is cheap. My condo was $650,000 and about twice as big as anything in New York. I've got killer views, I can walk to the farmer's market, and great restaurants are sprouting up everywhere. Seattle rocks!

Yes--but at the end of the day, you're still just living in Seattle.

^And that, my friend, is a good end of the day!