My S.O. commented this weekend that she had seen just such a thing in the Greenwood area....
It is true; the sky is falling.
Wow. Outrageously overpriced and overvalued homes are now seeing price reductions? Cry me a fucking river. For how long now have homes been bought the day or two after they've gone on the market, sold for a hundred thousand (or more) above asking price?
I don't know and I've been chicken little-ing a lot lately (because it really does seem like the sky is falling in a lot of life lately) but the urban building boom is a bubble. It can't grow forever, and unless something changes drastically in the world, it won't just level off either. It is going to decline some time or another and I'm chicken little-ing that it's going to domino down across the economy. But I don't think that is happening RIGHT NOW, more likely we've just hit the ceiling in some areas (finally!). There is a limit to how much you can ask for a house in any neighborhood, and maybe they've just finally found it. I mean, if things kept growing at the rate they were at, we'd be at normal single family homes worth tens of millions of dollars in just a few years and that can't possibly happen. Had to hit the ceiling at some point, right?
@2: Price reductions in this market are more common than you think. It happens because sellers usually engage in a bit of gamesmanship in which they deliberately underprice their property, at least in terms of what the market will actually bear. This accomplishes two things: 1) creates more “action” from buyers who might then get into a bidding war, and 2) signals availability to buyers working within a particular price point. But sometimes sellers get greedy and try to price a property at, or even above, what it would actually sell for, mistakenly believing that plenty of offers will flood in anyway. However, if everyone is assuming it’s going to sell well above asking, then buyers might decide it’s overpriced (even though it’s actually not). And so they pass it by and sellers are forced to lower the price.
That snowballs sometimes, because if buyers see a property not selling or going through price reductions in this market, they assume it must be a real shithole...I mean, everything here sells, right? And so they may need to reduce the price even further to generate interest and overcome suspicion that the property is compromised in some fundamental way.
The point is, you can really screw yourself over if you miss on the initial sell price. That’s probably what happened here. Or, you know, maybe people are finally coming to their senses? It could happen.
Yeah, there's a 10 year old townhouse on the next block over from me that's been on the market for nearly a month and they just cut $10K off the ask. And I've seen several others in our neighborhood that have stayed on-the-market for several weeks before selling. Guess the foreign all-cash sale gravy train has finally passed us by.
Meh split level on my barely-not-in-Burien West Seattle block just sold for $800K. So. Somebody is still trying to own homes here.
@3 Well sure, you get a boom, followed by a bust, followed by a slow build up to another boom. Nothing chicken little about that, it's just the way capitalism works. People talk about a recession as though it's a calamity that befalls us like an earth quake or a forest fire, but really it's a phase in a normal cycle like the seasons.
@5 Where are all these foreigners? I keep hearing about how they dominate our real estate market, but I've yet to actually encounter any of these folks.
@8 That's because you don't spend enough time hanging out in Charles Mudede's imagination.
Markets correct, its a big part of what they do.
@8: Many are simply investors, and never intend to live in the properties. They keep them empty by design.
The home next to us was on the market for a while, and after they advertised it, groups and groups of Chinese dudes came to look at it for weeks. No families, just guys...clearly investors. One of them bought it, flipped it, and now I live next to a lovely pair of dudes that just got married about a month ago.
@8, I’ve yet to see hard data on these so-called foreigners ruining our housing market. I call xenophobic BS.
@12 I'm guessing real estate prices will fall farther in the next 6 months, who knows, maybe I'' have to eat my words.
There may be more houses on the market.
I don't know about Washington state, but in Texas, foreign investors in real estate account for like 10% of all property sales. I remember there was a big outcry about it shortly after the crash, but then when you started to tease out the details, it wasn't all just investment properties. A lot of it was foreigners who lived and worked in Texas- like people who came for tech jobs or whatever and lived/worked/paid taxes here- and they were being counted along with just rich people who lived abroad who bought American houses for investments. To me, those are two very different groups.
My gut is that it's wrong headed to give this too much emphasis- seems like the problem is people purchasing investment homes (second, third, fourth homes or buying buildings just to rent them out) rather than whether or not the person is an American citizen. So something like 1/3 of all residential properties are not primary residences. Again you have to distinguish between vacation homes (second homes that the buyers actually use) and investment properties though there's some overlap and sometimes the gentrifying effect is the same.
In any case, I don't know enough about this to know what the story is or what to do about it, but when I hear people say stuff like "it's all those foreigners" or "it's just people from California" or "it's just tech workers", I feel like these are simplifications of a deeper issue about houses as a commodity and about rich people needing places to put their surpluses.
Isn't Seattle like the number two most expensive place in the country now? Or up there in the top five right? Seems like that happened fast.
If its anything like New York you'll never see them because they won't ever move in or visit. They just park their cash in these properties. Maybe sometimes rent them out. They mostly just sit, though.
You can start with these: https://duckduckgo.com/?q=seattle+chinese+speculators+buying+homes+with+cash&atb=v102-3&ia=web
Regardless of the market, if the house is a POS and the owner is asking what Zillow says or more, especially 4 bedrooms or bigger, it will languish.
Could be what @4 said. Also, the seller might not have the time and energy for a bidding war starting from the basement, or maybe they just misread the comps. They call them "motived sellers"—some people need out sooner than later.
Mortgage rates are climbing as well, but historically (and against my intuition) that hasn't affected long-term sales prices much.
@15 Agree with much of that as well. FWiW Seattle isn't the most expensive market in the country, but it did just have the biggest y/y gains.
meh, sellers overprice or go on sale the same time as an underpriced comp nearby does. Happens all the time even in the really hot markets. If every house starts showing price reductions and sits on the market for a while then we can start asking questions.
I hear that high end apartments are starting to show a lot of vacancies lately so might want to keep an eye on that segment
Interest rates and home prices generally have an inverse relationship. In a rising interest rate environment one would expect housing prices to stabilize or shrink to make up for the fact that (since so many people are monthly payment focused), monthly mortgage payments are increasing because the cost to borrow is higher.
btw, my real estate agent neighbor said the switch has flipped in Seattle and it's now a buyers market. Take that for what it's worth/with a grain of salt. I sort of see where she is coming from because there was a flood of houses for sale on my street in the last 3 months. They are all about 3 bedrooms, 1.5 baths, about 2000 sqft. on a normal city lot. One was listed at $785k, sold for $918k. Another also listed at $785k, sold for $1.005M. A couple others sold for around asking @ ~$850k. All within about a week of going on the market. Fast forward a couple months and a house across the street from me, bigger and nicer than the ones aforementioned, and listed at $910k.... zero showings in 2 weeks! Another 5 houses down, bigger than the one I just mentioned, listed for $950k... zero showings in 3 weeks. They lowered the price to $885k about a month ago. Not sure, but according to Zillow, they removed the listing so it either sold or they gave up.
@15: “...I feel like these are simplifications of a deeper issue...”
Deeper issue often being, “I really, really feel completely entitled to live in Seattle, but somehow I’m being priced out anyway, so I think I’ll blame nameless, faceless, wealthy foreigners rather than question either my deep-seated sense of entitlement or my lifestyle choices.”
China has cracked down on people moving their money out of the country by investing in foreign real estate. Funny how little that's been reported in the American press. That's why they're having so many vacancies in the luxury apartments downtown. They built for buyers that aren't really there any more.
@17 Thanks for the link to your web search. It was amusing to read the articles from the spring of 2017 predicting a wild surge in housing prices in Seattle as the result of Vancouver's tax on foreign investment. As we all know, that didn't happen.
"Outrageously overpriced and overvalued homes"
How so? For you? Or for someone else who is willing to pay the prices?
That's the beauty of the free market. Buyers and sellers can determine what's a fair price, not some entitled barista with a gender studies degree and green hair who has never saved a penny in its life.
Actually, for a brief period of time it did - up until just the last couple of months we were still seeing housing prices continue to escalate at a far higher rate than anywhere else in the country. But, now there's a glut of new luxury-priced housing coming on the market due to some developers getting into the game just a little too late, and Chinese investment has come to a virtual stand-still, so now they're being forced to offer deals and incentives up the kazoo to pull in buyers, and that's being reflected in pushing down prices in the secondary/pre-owned market.
There's no such thing as a "free market" - that's just a thing people like you say to rationalize treating other human beings like disposable commodities. Everybody knows markets are deliberately rigged by those at the top FOR those at the top, and at the expense of everyone else. There is nothing in the least bit "natural" about how our economic system is structured; it's all about who gets to make the rules and who benefits as a result. In our system the so-called "free market" is a made-up game intentionally designed to capitalize reward and socialize risk; it's not about getting government out of the way so much as it's about getting government to actively collude in the rigging.
@26 Be careful, your class resentment is showing.
Good luck turning Seattle into Caracas on the Sound.
@26: Did you intend for your first paragraph to eviscerate the rant that is your second paragraph, or do facts just normally have that effect upon your beliefs?
Whether you intended it as a written performance art or not, that was just brilliant! Bravo, sir!
Totally forget, the mortgage interest deduction is capped at $750k this tax year, so with 20% that's just about the size of loan Seattle is seeing pretty often these days. It's not going to make or break a mortgage, but I think it rattles the market a bit.
@27 like a true bootlicker; class resentment is deserved when they hoard the country's wealth
@28 how does the first contradict the second? He never denied the market exists, just that it's rigged by the people at the top
@31: His second paragraph does indeed claim (on the strength of exactly zero examples, yet much invective hurled against anyone who dares disagree) that markets are rigged; his first paragraph had already given evidence suggesting the housing market in Seattle is following the behavior pattern of a classic free market: prices begin to fall as demand falls relative to supply.
It’s an absolute classic of doublethink, holding two contradictory thoughts simultaneously whilst questioning neither.
Tensor @ 32
Whether you intended it as a written performance art or not, your position seems fairly flawed. While COMTE @ 26 does indeed mention the word “market” in the first paragraph, it is clear that it’s there to indicate “for sale” rather than a praise of the system. In both paragraphs COMTE provides examples as to why they think the so called “free” is heavily manipulated.
Your argument-addicted personality often steers you away from holding a civilized discussion.
@33: “In both paragraphs COMTE provides examples...”
Quote examples of “deliberately rigged” markets in the second paragraph.
(Your weird fixation on me may be distracting you from what is — and, more importantly, what is not — clearly on the screen in front of you.)
"In our system the so-called "free market" is a made-up game intentionally designed to capitalize reward and socialize risk; it's not about getting government out of the way so much as it's about getting government to actively collude in the rigging."
This is basically a summary of the 08 crash. Government policies that bail out banks with tax payer money, or rather using public foreclosures to pad the runway for private profit. This is rigging- there is nothing in the free market that would require this. In a free market, those banks would be out of business, not subsidized by taxpayers. The government sets policies which means they aren't getting out of the way as they would in a free market- and the evidence that they collude with private profit to capitalize that reward by socializing the risk is the fact that they intervened not by nationalizing the banks and bailing out the people, but the opposite. If you want a more straight forward example of this statement, consider when the government cuts taxes on the rich and or gives tax incentives to corporations and then raises property taxes on individuals to do things like pay for schools, roads, etc. Again, colluding with private profit to capitalize rewards- now the very rich can invest their surpluses in the stock market or distribute it among their CEOS or reinvest in their businesses meanwhile the risk is socialized- the taxpayer picks up the tab both for social investments (health care, education, etc) but also for the tax breaks- they subsidize private profit. Here's another example. DARPA or DOD funding which is taxpayer funding - public money that the government redistributes to private industry which uses that money for research and products that then they can sell for private profit. None of this would exist in a free market. Another control of interest rates and investment of surpluses in private profit (stocks, building) so that you cannot save your dollars (they will be worth nothing after a few years if you just keep them in the mattress) but must find a way to invest them so that they keep up with inflation. The things you have to invest them in are unstable- prone to crashes and bubbles. When the bubbles do burst, it's you that takes that risk and bails out the private industry. See first point. Meanwhile capitalists need places to invest their surpluses for the same reason that you do- it requires growth. The whole system is in fact rigged in this way, it's the fact that the US economy and deficit spending is entirely dependent on the dollar remain the capitalist world's currency. The moment it starts to decline, everything will spiral out of control because you can't have growth forever. Already there are fewer places for people to invest their surpluses, and the current bubble is the "glut of new luxury-priced housing". This is not sustainable and it will eventually crash. An economy that is rigged to socialize risk does not mean that bubbles will never burst, it means that when that burst happens, it is the public sector that will pay for it. The history of US capitalism at least since the oil shock has been one of wealth redistribution from the public sphere to the private. There are a million examples of this every day. Even pro-capitalist economists don't pretend we live in free market capitalism. The government obviously does not leave our economy to the free market of supply and demand- that's nonsense and I don't think anyone claims such a thing. The question is who their direction of the economy serves, and if you think it serves you, you are in fact an aspirational bootlicker who could use a hefty dose of class resentment.
@35: Thank you for showing that the second paragraph @26 is so vague, it can be made to fit almost any economic situation any reader happens not to like. That paragraph consists entirely of two groundless assertions: "all markets are rigged because I say they are rigged, so there," preceded by a pre-emptive personal attack on anyone who dares disagree, claiming that any such dissident is the moral equivalent of a slave-trading imperialist. There's no attempt to justify any of that, and the total lack of substance allows even your long-winded example to fit.
Little wonder all attempts to defend that paragraph -- including by the author -- devolved into personal attacks.
Tensor, if I'm not mistaken, the last time I had a conversation with you, you were criticising people for being grossed out by mothers fucking their teenage sons right? I gave you the examples you asked for in abundance. Comte mentioned the forest and I broke it down to trees for you, and apparently you have nothing to say about that. As for personal attacks, you began being unpleasant here in your first post, and yes, you are an class aspirational bootlicker and (again if I'm not mistaken) a defender of literal motherfucking as well.
And in fact, if you bothered to read, you'd see that I broke the big picture of Comte's response (about how the government in the US directs the economy generally towards socialization of risk and privatization of profit) through the natural outcome which is capitalists needing a place to invest surpluses which is a direct cause of the over supply of luxury housing- not free market supply and demand which would result in lower income housing rather than investment properties and unoccupied high priced flats, and that this is an outcome of a global capitalist system which requires constant growth to allow the US to run a deficit, and the only way this is sustainable for as long as it is is because the US has the default currency and the feds control interest rates. There's no possible way anyone can look at this situation and determine that it's the free market that has created this situation instead of government arrangements, even Greenspan never claimed anything so bone-headed as that. If you have any understanding of this bigger picture, then you see there is no contradiction between Comte's two paragraphs- he's just assuming you have some understanding of the situation that you clearly lack, which is fine. It's super complicated and I'm sure I have some details all mixed up too and no doubt so down Comte and just about everyone else on the planet, even most economists. But to claim that the massive building bubble happening in cities all around the world is all so simple as supply and demand in a free market with entitled consumers- that's just demonstrably wrong, and you shouldn't be so smug in dismissing everyone else b/c yes it makes you sound rude and foolish. And if you start comments with personal attacks (which you did- you began the unpleasantness @28) you can't later claim to be bullied when folks respond in kind.
I'd like to THINK Seattle is finally returning to its senses housing wise, before it's too late.
@37 & @38: You really just don't know what the definition of "rigging" in this context is, do you? You keep describing a huge scam -- which was an intentional set of economic swindles, no doubt about that -- and claiming it has something to do with COMTE's fact-free attack on anyone who might disagree with his baldly groundless assertions. (Note that he hasn't agreed with you on that...) But not every scam involves rigging.
In the sense of economics, "rigged" means what it does in elections: a participant cannot reach a desired, advertised state because of hidden cheating which is designed into the transaction. One example would be a predatory bank granting a person of known limited means a credit card, so that she can't ever pay off the principal she borrowed; all of her payments go towards interest.
In the context of this post and thread, the market in question is the current housing market in Seattle. No one here has yet introduced evidence of "rigging" in those transactions. Seattle's population increased very rapidly over the last few years, and many of those newcomers got high-paying jobs at Amazon or other places. Okham's Razor suggests those facts should suffice as explanation for the resultant change in the housing market, unless we have solid evidence otherwise.
I fully support what I wrote @28. The first paragraph of @26 describes the normal functioning of a regulated, but un-rigged housing market. The second starts with a personal attack upon anyone who dares disagree with the groundless assertions which follow. (Also, if you think the phrase, "...people like you say to rationalize treating other human beings like disposable commodities" wasn't a personal attack, then I suggest you learn to read.)
Finally, on the utterly irrelevant topic of incest, here's the first part of that comment thread.
From my first comment there (@53): "...the sexual abuse he suffered at the hands of his mother."
From my second comment there (@59): "...the victim of an incestuous relationship..."
From my comment @70: "... was in fact a victim, who should not be made to suffer further for his having been victimized."
In that last was my entire reason for writing all of my comments: I was disgusted by the attempted further victimization of an already-helpless victim. You may attack me for that motivation all you like.
Despite all of my efforts, the double post appears. I apologize.
I'm not going to play the game where we argue about what it is exactly we are arguing about nor some pedantic semantics bs- neither are among my own pedantic pleasures so you can do what you like with those aspects of your talk. I explained how the Seattle building boom is a part of a larger international building bubble- capitalists investing their surpluses in urban luxury housing- and how this is not simply a part of supply and demand (note the huge demand for lower income housing yet no capitalists are building that, note also that in a city with a huge demand for housing, there are luxury buildings with empty flats). Comte explains some details of this situation in the first paragraph and then zooms out to the bigger picture in the second. I have likewise tried to explain it to you. I would say that we just disagree, and as I've already said, probably none of us have the details down correctly as it is a massively complicated topic so I'd even welcome some criticism of what I've said - it's one way to learn- but I can't apply either to your response since your response demonstrates that you don't understand what I've said in the first place. I did not discount the role of the rise in tech jobs and the resultant gentrification in Seattle- it's why Seattle's (and the Bay Area's, etc) housing crises are much greater than Houston's. But you do in fact have evidence to the contradict that this is all a result of simple supply and demand- I keep repeating it to you and you keep ignoring it. Primarily that the supply does not meet the demand (empty luxury housing, investment properties not primary residences, a lack of affordable housing) and secondly the fact that this is happening in nearly every city in the capitalist world (this is the main area where capitalists are investing their surpluses post 08 crash). I don't know the details to have the slightest opinion on what specific Chinese investors are doing, but what Comte is describing is within this context I have described which is directly linked to what he says in paragraph two. You are having trouble putting them together, probably because of stubborness. It would be like if someone talked about how elements form molecules in one sentence and then talked about water in the next and you kept saying that one has nothing to do with the other because no one spelled it out for you that water is a molecule.
"I explained how the Seattle building boom is a part of a larger international building bubble- capitalists investing their surpluses in urban luxury housing..."
Construction of urban luxury residences may or may not be a bubble, in Seattle or the world, but you have provided zero evidence in support of @26 claim that this market is rigged. (Of course capitalists invest where they believe they will make money. Is that some kind of amazing revelation to you?)
"...and how this is not simply a part of supply and demand..."
Of course it is. Capitalists demand profits, and investments are to supply them. Hence money flowing into construction of urban luxury residences, because that is where profits seem to be (in your telling; I have no idea whether any of your claims are true or not).
"...note the huge demand for lower income housing yet no capitalists are building that,"
You really don't know anything about basic economics, do you? There's no "demand" in a capitalist system if there's no payment associated with satisfying that demand. Any number of persons can be starving, but if they have no money, then from the perspective of capitalist economics, they have no demand for food. More to the point here, angry hipsters in an alt-weekly can vociferously "demand" the immediate return of plentiful $500/mo one-bedroom apartments to the Pike-Pine corridor all they want; from the capitalist point of view, they are whining, not creating demand.
"...note also that in a city with a huge demand for housing, there are luxury buildings with empty flats."
There's always a non-zero vacancy rate for such properties. Again, all you're saying is that you really have no useful knowledge of this topic.
"Comte explains some details of this situation in the first paragraph and then zooms out to the bigger picture in the second."
(And the part where he attacks another commenter personally is in which of those paragraphs? Because you have yet to take him to task for that.)
All throughout these meandering morasses of words that you just won't stop typing, you continually confuse the economic definitions of supply, demand, market, and so forth with what you want to see happen. A residential property bought as an investment and not rented has satisfied a market demand, just not the one you want to see satisfied -- it has no one living inside. That you disagree with this outcome from a non-economic perspective does not mean the market was rigged to produce that outcome. (That capitalism exists to serve capital, not human beings, is one of the longest-standing and most damning critiques of capitalism, of course.)
Finally, it's up to COMTE to supply the examples of market-rigging he claimed exist. Your having typed a whole pile of economic gibberish and claiming to have done so does not mean anything. I'll note again that COMTE is a prolific commenter here, but has yet to return and say he agrees with your claim to have supported his argument.
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