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Wednesday, November 14, 2007

The Real Estate Boom is Over…

posted by on November 14 at 9:08 AM

…everywhere but here.

…Seattle will continue as one of the bright lights, which it’s been this year. Median year-over-year home prices have risen every month save October, when they were down slightly. But Seattle’s strength may go beyond the usual reasons: a strong local economy and good job growth propelling housing demand.

Yun suggested that Seattle may be joining such cities as New York and San Francisco as “superstar cities” whose desirability attracts affluent newcomers who bring the buying power to continue pumping up housing prices.

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Houses in our college town neighborhood are going for around what they were going for in 2001. Ah, Michigan. Thank goodness we sold our home when we did.

We're definitely not a "Superstar City".

Posted by Michigan Matt | November 14, 2007 9:22 AM

The housing boom is over here too Dan. Supply up, demand down, prices falling. Year-over-year median price is a bunk statistic. It doesn't mean much. Month-over-month everything is in the toilet sales, price, inventory, etc.

Posted by John | November 14, 2007 9:30 AM

Great. I'll never be able to afford a house in Seattle.

Posted by Greg | November 14, 2007 9:35 AM

Oh great, we get the prices of SF and New York with none of the good stuff like a vibrant night life, interesting neighborhoods, or a decent transit system.

Posted by Tiffany | November 14, 2007 9:39 AM

Yun suggested that Seattle may be joining such cities as New York and San Francisco as “superstar cities”

Yun forgot to mention PORTLAND

Posted by JMR | November 14, 2007 9:42 AM

@4 LOL I was about to say you'll be needing a superstar public transit system. From what I gather, the consensus among Seattlite sloggers is that the transit system is sadly lackluster.

Posted by Toby | November 14, 2007 9:53 AM

SF traffic is worse than ours. And talk about sprawl! But both NYC and SF have one thing we'll never have: a kick-ass central park.

Posted by DOUG. | November 14, 2007 10:04 AM

Trying to sell your house Dan?

Posted by Boylston | November 14, 2007 10:06 AM

There is also the school of thought that says the Seattle economy lags one year behind the rest of the nation. This seems to be true for things such as employment and could mean that we are just beginning to see what the rest of the country has been seeing for a year now.

When real estate people talk about how Seattle is such a different market from the rest of the country, it always reminds me of all the dotcom millionaires talking about "The new economy" right before the crash. The thing that makes me chuckle is that the person usually talking to me is someone who left the tech industry to get into real estate a few years ago.

Posted by Clint | November 14, 2007 10:21 AM

I may be able to retire after all.

Posted by Gitai | November 14, 2007 10:24 AM

@5: Portland? Never heard of it.

Posted by Brad | November 14, 2007 10:36 AM

"Oh great, we get the prices of SF and New York with none of the good stuff like a vibrant night life, interesting neighborhoods, or a decent transit system."

True. But to be fair, we don't have many negatives that SF or LA or NY have.....we have universally safer neighborhoods & far less crime; better views than NY, more access to varied outdoors stuff, our being smaller than NY and LA and SF also is a draw. We are not yet at NY or SF prices and there is a lot of room for prices to rise to their levels (after likely being flat for 1-2 years).

"Supply up, demand down, prices falling." ?? Demand is dampened right now as buyers wait it out but the demand and supply fundamentals point to higher prices long term. We have jobs. Rents are rising. People will continue to move here. There is hardly any land left to build on, and our transportation woes mean there is less land within 20 minutes of downtown/higher demand to live closer in. Major employers like biotech and Amazon are putting lots of new jobs in SLU. MS is adding employees in Redmond and Bellevue. Our future is going to be like SF price wise. Our future is not going to be like Seattle of 25 years ago or low-price havens like Detroit or Buffalo or upper Manitoba, etc.

We can choose to manage this change by getting on with building a real rapid transit system, stopping spending billions on new sprawl lanes, and encouraging good density and affordable housing in the varous downtowns in our region, including tying taller skinner buildings to providing more openings in the skyline and more affordable units.
But it really is the transit system that makes the more affordable areas accessible to the jobs, schools and entertainment venues across a region.

Given our past performance, this future is unlikely. Likely we will choose not to manage any of these changes, because many folks will focus on bemoaning rather than acting. Likely we will let ugly bulky buildings and more sprawl lanes be built. And over on the pro transit side we will likely continue the really fun inter-tribal mode wars (light rail v. busses v. bikes v. five new ferries v. monorail v. freeway monorail v. in city rail v. suburban rail v. electric cars v. live where you work, etc.), because it feels better to be 100% pure and morally in the right than to build a coalition that can pass a tax increase to build transit that works.

Posted by unPC | November 14, 2007 11:01 AM

Everything that comes out of Lawrence Yun's piehole is a lie. He's known as "funyun" for a reason. He's the paid shill of the NAR, following in the slimy footsteps David Learah.

Posted by dirge | November 14, 2007 11:06 AM

Chill, unpc

The intelligent design hss placed faults and volcanos to be activated long before we reach 'superstar city' status.

We'll still be PC and on the moral high ground as we rip food out of our neighbor's hands.

And we may sacrifice a few virgins as well.

Posted by snark | November 14, 2007 11:12 AM

Tiffany - you insult LA by claiming they have a decent transit system. Nobody walks in LA and nobody takes the bus. It sucks.

Posted by subwlf | November 14, 2007 11:26 AM

Oboy, maybe the Stranger could assign an a reporter to this beat, to develop reliable and unbiased sources for a little perspective? The story of whether we precious locals might decline in real estate is something every dumb bitch and their pepaw is talking about right now, and somebody has to own the story.

P-I and Times ain't got shit except reprinting industry press releases like the above.

Posted by tomasyalba | November 14, 2007 11:41 AM

Seattle is not immune, and as previous poster mentioned, our market (and the market in Portland) tends to lag the national market by about a year to 18 months. Month-to-month statistics locally suggest we're entering the decline that started in other cities a year ago.

Posted by Cascadian | November 14, 2007 12:07 PM

Last stage of bubble denial? "It's happening to everyone but me."

Posted by josef | November 14, 2007 12:32 PM

@15, read my post again. I never mentioned LA. I mentioned SF and NYC.

Posted by Tiffany | November 14, 2007 12:41 PM

this city is is great! Let me tell you realistically what this so called "housing slump" really means. it means nothing. For bought a townhouse in 2001 for 150000 and in 2006 it was worth 265000 ok. Then the market cools down and now it is selling for 252000. yeah...the value has dropped but you still have 122000 in equity. The rents for similar sq footage and bedrooms run for 1300 a month. your mortgage is only 1050 a month so you are paying less than you would for rent. Eventually the value will rise again and you will gain more equity. essence if you bought at the right have a goldmine that you can also live in.

Posted by .... | November 14, 2007 1:05 PM

what'd i miss?
oh, another 'seattle sucks' slogfest.

Posted by michael strangeways | November 14, 2007 1:08 PM

there is always some gloomy news about how seattle is becoming so overpriced and blah blah. Cities will grow and there are not a lot of places in this country where economically viable places still have affordable real estate like seattle did up until 2 years ago. This will not last. people will buy the real estate raising prices. yeah there will be periods of drops and stagnation but that does not diminish the investment. there are few investments that get you $20000 a year in profit like houses here can.

Posted by =) | November 14, 2007 1:16 PM

Sure. Over the long term, real estate is a great investment. But I don't think that is what this post/article was about.

When you look at the short term, I don't think the things are so great for the real estate market here. Especially when you consider all of the new supply that is slated to open up in the next few years.

This probably doesn't impact the people who bought their homes in 2001 and have since seen a 100K return on their investment. But it does impact the people who bought 6 months ago and were counting on seeing their property values increase at the 2001-2006 rate - especially if interest rates start to increase in the next 2-3 years, their payments increase substantially and they can't refinance and lock in at a decent rate because the don't have the equity or cash to refinance.

Does anyone else remember going to the bank as a kid and seeing interest rates in the high teens?

Posted by Clint | November 14, 2007 1:56 PM

The boom isn't over for the King County Assessor’s office, either.

They are aggressively increasing their residential property tax revenue by playing with the levers that control how much property taxes we poor rubes pay.

The latest game seems to be changing the “Building Grade” on residential properties and hoping that property owners won't notice until it’s too late. The building grade is set when the property is initially constructed and inspected and isn't supposed to change over the life of the building unless it is significantly renovated.

A bunch of my neighbors on Capitol Hill noticed that their assessments shot up between 30% and 50% in just one year. When we all got to looking at the tax records for our properties more closely, we noticed that the building grade had been increased several times in previous years without any of the affected houses having been renovated in any way. Once the Assessor’s office has raised the building grade of your home, the only way to get it changed is to let them come in and do a full inspection (do remember to hide the grow lamps and porn, won’t you..).

So why is the King County Assessor's office changing the Building Grades of residential properties?

If you take a look at otherwise similar properties with different “Building Grades” you’ll see that properties with building grades of 7 and 8 have significantly lower valuations and taxes than those which are graded 9 or 10 or higher. Yes, it seems that it’s all about the money. It would be very interesting to see if the property tax assessments for business premises are being similarly stung. At first blush, it looks like residential property holders may be shouldering a disproportionate share of the tax increase burden.

So how does the King County Assessor’s office decide which homes they are going to lever up the tax scale?

Paint. Looking at a set of properties where this had happened, they all had one thing in common. The building grades went up after the building exteriors had been freshly painted. This is the kind of thing that can affect the "Condition" of the building, but it doesn't fundamentally alter the materials and workmanship in the original construction.

It shouldn't change the Building Grade at all.

Government is meant to deliver transparency and be subject to oversight. That said, try and find out the rules for how your taxes are assessed. Try and find out why your Building Grade has been arbitrarily upgraded when you haven’t even picked up a hammer. Try and find out why your taxes went up more than 30% while your neighbors went down 10%.

It’s all a big black box that we can’t see into or get anyone to explain to us. They make up the rules, and they don’t have to tell you what they are.

And that is just the way that the King County A$$e$$or’$ office likes it.

If you live in King County and own your place, go and pull your property assessment records and figure out if you have been a victim of King County’s “Magical Silent Building Upgrade” program. And whatever you do, don’t paint your property.


Posted by The Gay Curmudgeon | November 14, 2007 4:06 PM

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