Seattle Bubble

I think this deserves its own (very brief) post:

By early next year, many will come to regret their decision to delay buying a home.

- King County Executive Ron Sims, September 4, 2008

Spotted by commenter “K” on Twitter.

Well golly, if Ron Sims “tweeted” it, it must be true!

I expect August stats from the NWMLS to be posted either today or tomorrow, but here’s something from the lighter side to kill some time until then.

Mark Zimmerman (zim) had a problem that many have been faced with thanks to the housing bubble:

A few years back, I got tired of living the American Dream and struggling to keep up with a horrendous mortgage and rising credit card debt. I know there’s really only two ways to balance a budget, spend less or earn more, and I didn’t see a huge wage increase in the future. Also, I have always been interested in unusual homes and can’t pass a two or three hundred square foot enclosure without wondering what interesting living space could be made there. Less space, less stuff, less consumed, less owed. It sounded like where I wanted to be.

So what was his solution? Convert an old bus into a cheap home, of course!

Then, I got a call from a buddy that purchased a pair of used school buses from the Texas A&M surplus property auction. He knew I had been interested in one and was willing to hold on to it until I could head out to pick it up. I got myself to College Station, spent a few days changing fluids, ripping out the seats and doing general preventative maintenance. Then, for about $1400 for the bus and another $600 in diesel (probably twice that, now), I headed back to Florida with the beast. Two years later, I’ve got a fully functional, comfortable, clean living space for about $12,000 and my monthly housing and utility costs are less than $400/month.

It’s no Ballard Craftsman, but I guess it’s a step or two above living in a van, down by the river.

Hat tip: Boing Boing

I received the following in an email from a reader:

About the condo—comment article… the real issue is not the really cheap/ugly/tasteless and likely unlivable condos (apartments). Nor is it the equally horrible “townhouses.” It is about greed and lack of public (government) oversight and control.

The developers wanted the money, the government wanted the taxes and fees. The people were too busy raking in the first real money the bulk of Seattle has ever seen in history… to say HEY, what the heck are you doing.

Sad, the city I have loved for years is nearly off my list. No wonder the lovely, polite, civil people have turned rude and nasty (in a Northwest passive-aggressive kind of way).

This kind of behavior and housing greed has ruined many cities in this country…

How about opening a dialog on how to take back our city and stop being passive-aggressive whiners and start being organized and vocal about KEEPING our fabulous city just that.

This is not about money or affordability, it is about planning and demanding our rights as residents of a wonderful, (almost) world class city and LIVABILITY.

So what do you think? Has greed and lack of government oversight ruined the culture of Seattle? If so, can anything be done about it, or is it too late?

I’m interested to hear what people think about this topic.

The Tacoma News Tribune reports on a $7.2 million shortfall in the city budget, thanks to a 36% drop in expected real estate taxes:

The City of Tacoma may have to delay or slow construction on some projects in order to patch a projected $7.2 million shortfall from real estate taxes this budget cycle.

The shortfall represents a 36 percent drop from what the city expected to generate from real estate taxes: Officials budgeted for about $19 million of the $45 million fund from real estate taxes this biennium, but now project only about $12 million will come by the end of the year.

The drop comes because of a slower real estate market: Taxes collected from real estate sales are lower than expected, meaning there likely won’t be enough money to cover the projects slated for this biennium.
…
On the list of possible cuts, according to City Manager Eric Anderson: deferring maintenance on City Hall, and eliminating $400,000 for major repairs to city buildings and seismic upgrades to fire stations around the city.
…
Anderson told the City Council during an August study session that the city could also buoy the capital budget with funds from other areas, but that could be a dangerous proposition if the market doesn’t bounce back.

Hey no worries. It’s probably a safe bet to assume things will bounce back any day now. I hear we’ve been at the bottom since February or so.

So now that Puget Sound counties have been in a “buyer’s market” for around a year, there are probably some good deals to be found out there. But how do you find them?

To be clear, my personal opinion is that we’re still in for another year or two of declining prices. However, I’m sure there are some that see the drop we’ve had so far as “good enough,” and just want to buy a home now even if prices drop further. If that’s you, here are a few suggestions of how to start.

Look for houses that have been owned for a long time. Sellers that bought their house in the last 4-5 years are likely to have unrealistic expectations of price appreciation, while someone that bought in the pre-bubble years is more likely to accept a price that reflects 3-5% yearly appreciation. The bigger the equity cushion the seller is sitting on, the lower they can afford to drop their price.

Look in the weakest neighborhoods. The NWMLS publishes “neighborhood” data for King, Pierce, and Snohomish counties. You can also spend some time looking on Redfin, where they are now publishing nifty stats by city, neighborhood or zip code (full details on this post).

Look for houses that have been on the market longer. This one’s pretty obvious, but a lot of “casual” buyers tend to write off homes that have been on the market for a long time, even if they’ve had significant price reductions. Especially with the NWMLS recently allowing cumulative days on market (CDOM) to be published on public sites, it is difficult for a seller to escape the stigma of being on the market for a long time. If they really need to sell, they’re likely to take a lower offer.

If you are using an agent, be upfront about what you’re looking for. Some agents are happy to help you make lowball offers on as many properties as you want, but others will consider such a buyer to be a waste of their time. It’s better for both of you that you be forthcoming at the start about what you’ll be asking them to do. This goes for discount brokers like Redfin, too.

Those are some basic strategies I would use if I were actively in the market right now. What tactics would you suggest? What about those of you that are out there now or have recently bought? How are you finding good deals in what is still largely an overpriced market?

Happy Labor Day. For whatever few people happen to be hanging around here today, here’s an open thread to talk about whatever you feel like (within the bounds of the comment policy).