No housing woes here!

Reuters, No housing woes in booming Washington state (via Fast Times):

Lori Mason Curran, market research manager at Vulcan Real Estate, expects 135,000 people will move into the Seattle market over the next five years, propelling demand for housing that Vulcan’s property unit is building in South Lake Union.

I guess I should hang onto my west Capitol Hill condo then!

About Matt

Matt , Urbnlivn's publisher, has a love for lofts, floating homes and mid-century moderns.

For years Matt resisted becoming a real estate agent preferring to be an executive in the startup world but he recently caved in the spring of 2014 and became an agent.

You can also find Matt on Twitter or skiing.

  • jo

    let it begin

    and yes, hang on to it :)

  • jo

    let it begin

    and yes, hang on to it :)

  • Dan C.

    Of course Vulcan is forecasting people to move here. Ford also forecasts people will buy their cars, but no one is doing it. Every other line in this article is contradictory to the theory presented…Seattle will never be touched! Please…

    I belive we have a strong economy and it will only get better, but that doesn’t equate to real estate appreciating forever folks. California has some of the largest companies, biggest economic base in the country…and things are going amazing there!

  • Dan C.

    Of course Vulcan is forecasting people to move here. Ford also forecasts people will buy their cars, but no one is doing it. Every other line in this article is contradictory to the theory presented…Seattle will never be touched! Please…

    I belive we have a strong economy and it will only get better, but that doesn’t equate to real estate appreciating forever folks. California has some of the largest companies, biggest economic base in the country…and things are going amazing there!

  • Ross Jordan

    1. We’re in a housing bubble (house prices are rising at a rate much faster than wage or price inflation, which cannot happen indefinitely)
    2. Bubbles pop. The question is when, not if. And if it will be done invisibly by inflation (i.e. prices increase at less than the rate of inflation) of visibly by nominal price declines.
    3. “It’s different this time” or “It’s different here” arguments are almost always broken (Remember dot com bubble and books about the “new economy”)
    4. That said, you can still make a lot of money playing the bubble. We’re not necessarily near the pop, and it may be more of a gradual loss of flatulence than an explosive pop.

    Disclaimer: My opinions. Best of luck

  • Ross Jordan

    1. We’re in a housing bubble (house prices are rising at a rate much faster than wage or price inflation, which cannot happen indefinitely)
    2. Bubbles pop. The question is when, not if. And if it will be done invisibly by inflation (i.e. prices increase at less than the rate of inflation) of visibly by nominal price declines.
    3. “It’s different this time” or “It’s different here” arguments are almost always broken (Remember dot com bubble and books about the “new economy”)
    4. That said, you can still make a lot of money playing the bubble. We’re not necessarily near the pop, and it may be more of a gradual loss of flatulence than an explosive pop.

    Disclaimer: My opinions. Best of luck

  • christiangustafson

    How do you think the local economy will look when WaMu has collapsed? Or when Microsoft has a lean-n-mean re-org and cuts loose its various money-pit divisions? They have hired and hired to give us … Vista? And Vulcan is going to take such a bath on these condo projects.

    As much as I admire and respect your/Redfin’s work to make the six-percent REALTOR just a bad memory, I have to take issue with your plans for your recent condo purchase. Yes you should lose sleep at night. You have made the worst financial mistake of your life! Here’s why:

    And in response to the question about financing; I have a interest only jumbo ARM that I used stated income to get from Countrywide.

    You are not a “homeowner”. You are not paying principal, all you are doing is renting money from the bank, essentially you are buying a rather restrictive call option on your condo. Your entire plan depends on appreciation, but we know now that this “appreciation” has been caused by buyers like you with loose-money mortgages.

    As with any investment, you need to have an exit strategy. At what point are you prepared to send this condo back to CountryWide? When the comps are off 20 percent? 30? What if there are no comps because credit is GONE and Seattle looks like San Diego? Or will you soldier along making interest-only payments on a condo you will never own?

    Sorry to be so negative, but you really blew it. “Interest-only jumbo ARM” … what were you thinking?!

  • christiangustafson

    How do you think the local economy will look when WaMu has collapsed? Or when Microsoft has a lean-n-mean re-org and cuts loose its various money-pit divisions? They have hired and hired to give us … Vista? And Vulcan is going to take such a bath on these condo projects.

    As much as I admire and respect your/Redfin’s work to make the six-percent REALTOR just a bad memory, I have to take issue with your plans for your recent condo purchase. Yes you should lose sleep at night. You have made the worst financial mistake of your life! Here’s why:

    And in response to the question about financing; I have a interest only jumbo ARM that I used stated income to get from Countrywide.

    You are not a “homeowner”. You are not paying principal, all you are doing is renting money from the bank, essentially you are buying a rather restrictive call option on your condo. Your entire plan depends on appreciation, but we know now that this “appreciation” has been caused by buyers like you with loose-money mortgages.

    As with any investment, you need to have an exit strategy. At what point are you prepared to send this condo back to CountryWide? When the comps are off 20 percent? 30? What if there are no comps because credit is GONE and Seattle looks like San Diego? Or will you soldier along making interest-only payments on a condo you will never own?

    Sorry to be so negative, but you really blew it. “Interest-only jumbo ARM” … what were you thinking?!

  • jo

    weak, i know you bubblers can do better than that

  • jo

    weak, i know you bubblers can do better than that

  • Eric K

    christiangustafson – Actually, Matt’s financing was probably the best option for him given that he wanted to own the Trace unit and wasn’t willing to take a loss (when you consider real estate commissions and 1.9% excise tax) on his Meritage unit.

    An ARM will cost less over the typical life of a loan (3-5 years) when the Fed is cutting rates. The rate on an ARM is tied to the short term Fed Funds rate instead of the 10yr, which is currently climbing as bond investors fret over the potential for inflation and/or a further slump in the USD. A fixed rate costs more because mortgage investors need an incentive to tie up money in a fixed rate investment for so long.

    Since you clearly think the housing market is falling apart, you should also expect that the Fed will continue to lower interest rates to give our credit-driven economy more fuel. In that case, an ARM makes more sense than a fixed rate. That’s why a few years ago Greenspan said that most homeowners would have paid less in interest if they had an ARM. I bought my condo in 2003 with a 30 year fixed mortgage, and I definitely would have paid less interest if I bought any form of ARM (3, 5, or 7 year fixed or completely floating.)

    I agree that it’s important to pay down a mortgage, but it’s more important to avoid missing a payment because the monthly bill is too much. A missed mortgage payment will hurt his credit, while an amortizing mortgage would only reduce the total interest he pays slightly over the likely life of this mortgage. (On my 30 year fixed mortgage, the principal payments only have a significant effect on the monthly interest expense after 10 years.) As long as Matt owns both units, his primary concern will be liquidity.

    While I personally wouldn’t want to own two condos, if I did and I found that I couldn’t sell one of them, I would definitely get an interest-only ARM. And the only way I could get that loan is through no-documentation, as the total payments for the two mortgages (minus rental proceeds for the Meritage) are almost certainly too high to qualify for a full-documentation loan.

    There is no point in Matt losing sleep over this as long as he can make the payments. It probably won’t be a great investment to hold both units, but 5 or 10 years from now it will probably just mean that he didn’t get a high return on his investments.

  • Eric K

    christiangustafson – Actually, Matt’s financing was probably the best option for him given that he wanted to own the Trace unit and wasn’t willing to take a loss (when you consider real estate commissions and 1.9% excise tax) on his Meritage unit.

    An ARM will cost less over the typical life of a loan (3-5 years) when the Fed is cutting rates. The rate on an ARM is tied to the short term Fed Funds rate instead of the 10yr, which is currently climbing as bond investors fret over the potential for inflation and/or a further slump in the USD. A fixed rate costs more because mortgage investors need an incentive to tie up money in a fixed rate investment for so long.

    Since you clearly think the housing market is falling apart, you should also expect that the Fed will continue to lower interest rates to give our credit-driven economy more fuel. In that case, an ARM makes more sense than a fixed rate. That’s why a few years ago Greenspan said that most homeowners would have paid less in interest if they had an ARM. I bought my condo in 2003 with a 30 year fixed mortgage, and I definitely would have paid less interest if I bought any form of ARM (3, 5, or 7 year fixed or completely floating.)

    I agree that it’s important to pay down a mortgage, but it’s more important to avoid missing a payment because the monthly bill is too much. A missed mortgage payment will hurt his credit, while an amortizing mortgage would only reduce the total interest he pays slightly over the likely life of this mortgage. (On my 30 year fixed mortgage, the principal payments only have a significant effect on the monthly interest expense after 10 years.) As long as Matt owns both units, his primary concern will be liquidity.

    While I personally wouldn’t want to own two condos, if I did and I found that I couldn’t sell one of them, I would definitely get an interest-only ARM. And the only way I could get that loan is through no-documentation, as the total payments for the two mortgages (minus rental proceeds for the Meritage) are almost certainly too high to qualify for a full-documentation loan.

    There is no point in Matt losing sleep over this as long as he can make the payments. It probably won’t be a great investment to hold both units, but 5 or 10 years from now it will probably just mean that he didn’t get a high return on his investments.

  • kpom

    “weak, i know you bubblers can do better than that”

    Well, I’m just waiting for a 80/20 no-doc loan so I can buy a Seattle condo to add to my vast inventory of highly-leveraged investment real estate properties. I could have gotten that loan in July, so I can still get it now, right?

    Bernanke’s Fed rate cut has certainly done a good job of cutting mortgage rates, hasn’t it?

  • kpom

    “weak, i know you bubblers can do better than that”

    Well, I’m just waiting for a 80/20 no-doc loan so I can buy a Seattle condo to add to my vast inventory of highly-leveraged investment real estate properties. I could have gotten that loan in July, so I can still get it now, right?

    Bernanke’s Fed rate cut has certainly done a good job of cutting mortgage rates, hasn’t it?

  • Dan C.

    christian,

    I agree with every point you put on here, but I don’t think it is right to attack someone personally.

  • Dan C.

    christian,

    I agree with every point you put on here, but I don’t think it is right to attack someone personally.

  • Dan C.

    This just in…

    Washington ranks 7th if fastest growing state popultions! We were beat out by the likes of:

    Texas, Florida, Califoria and Arizona!

    We all know how their story went.

  • Dan C.

    This just in…

    Washington ranks 7th if fastest growing state popultions! We were beat out by the likes of:

    Texas, Florida, Califoria and Arizona!

    We all know how their story went.

  • http://twitter.com/mattgoyer mattgoyer

    At least I didn’t go 0% down on either place! :)

    I should be glad that many of you are concerned about my financing choices. Just keep in mind that I’m young, have no dependents, have a high tolerance for risk and work in an industry where salaries are raising because the labor market is tight (yes, I’m gambling on both a tech and real estate bubble!)

    Plus I can always run back to Canada when I declare bankruptcy or my work visa expires (thankfully neither country respects the others credit score/reporting systems.)

  • http://blog.mattgoyer.com Matt

    At least I didn’t go 0% down on either place! :)

    I should be glad that many of you are concerned about my financing choices. Just keep in mind that I’m young, have no dependents, have a high tolerance for risk and work in an industry where salaries are raising because the labor market is tight (yes, I’m gambling on both a tech and real estate bubble!)

    Plus I can always run back to Canada when I declare bankruptcy or my work visa expires (thankfully neither country respects the others credit score/reporting systems.)

  • http://caseypedia.com Casey Serin

    Hold! Hold!! Sweeeeet.

  • http://caseypedia.com Casey Serin

    Hold! Hold!! Sweeeeet.

  • Eric

    Recent rate cuts by the FED actually raised rates. Traders realized that the cut could encourage spending, as borrowing is now .5% cheaper on car loans, credit cards, and HELOCS. This increased spending translates into increased inflation, which in turn erodes the value of mortgage bonds causing rates to rise. Conterintuitive, but a reality that the media fails to grasp. These cuts take months to filter out into the economy. The FED walks a fine line between accelerating the economy, and grinding it to a halt. The FED will meet 5 more times before we will know if the recent ct was effective.

  • Eric

    Recent rate cuts by the FED actually raised rates. Traders realized that the cut could encourage spending, as borrowing is now .5% cheaper on car loans, credit cards, and HELOCS. This increased spending translates into increased inflation, which in turn erodes the value of mortgage bonds causing rates to rise. Conterintuitive, but a reality that the media fails to grasp. These cuts take months to filter out into the economy. The FED walks a fine line between accelerating the economy, and grinding it to a halt. The FED will meet 5 more times before we will know if the recent ct was effective.

  • richard

    “The rate on an ARM is tied to the short term Fed Funds rate”.

    Most ARMS are tied to LIBOR lately. Even if his loan was tied to Fed Funds, a Stated Jumbo IO ARM can’t be used as collateral when borrowing from the Fed discount window since it is a non-conforming loan. Any bank holding his loan has probably already lost money on it. That’s just how things have gone, housing bubble or not.

    Besides, the Fed can cut rates all they want in the face of a global liquidity crisis and it’s not going to make banks any more willing to make, or buy securities containing exotic loans. That market is done. The banks still issuing these things are just holding them in their portfolios now in the hopes they’ll at one day be able to securitize them. Not gonna happen any time soon. Too many buyers have already been burned.

    The big risk buying now with one of these loans is that the only way you’ll be able to refinance it is by bringing alot of cash to the table.

  • richard

    “The rate on an ARM is tied to the short term Fed Funds rate”.

    Most ARMS are tied to LIBOR lately. Even if his loan was tied to Fed Funds, a Stated Jumbo IO ARM can’t be used as collateral when borrowing from the Fed discount window since it is a non-conforming loan. Any bank holding his loan has probably already lost money on it. That’s just how things have gone, housing bubble or not.

    Besides, the Fed can cut rates all they want in the face of a global liquidity crisis and it’s not going to make banks any more willing to make, or buy securities containing exotic loans. That market is done. The banks still issuing these things are just holding them in their portfolios now in the hopes they’ll at one day be able to securitize them. Not gonna happen any time soon. Too many buyers have already been burned.

    The big risk buying now with one of these loans is that the only way you’ll be able to refinance it is by bringing alot of cash to the table.

  • http://www.totalnoid.com/ CHESSNOID

    Hey Matt,

    Personally, I don’t think any city is going to be insulated against the housing pricing drops. I have been watching certain condos that I particularly like through redfin email alerts. I do see drops every week and I have been wanting to buy a condo in Seattle for awhile, but am holding off until I see the prices become more stable.

    Is either country’s credit reporting or scoring better than the other in your opinion?

  • http://www.totalnoid.com/ CHESSNOID

    Hey Matt,

    Personally, I don’t think any city is going to be insulated against the housing pricing drops. I have been watching certain condos that I particularly like through redfin email alerts. I do see drops every week and I have been wanting to buy a condo in Seattle for awhile, but am holding off until I see the prices become more stable.

    Is either country’s credit reporting or scoring better than the other in your opinion?