patrick.net

Happy Mother's Day All!

*austingal* affirms WWII worst fears as the "rolling bubble" seeks "fresh meat" in an 11th hour attempt to keep it self alive and kicking. Of course it's all the MEDIA's fault that people ran out and got NAAVLP's in an effort to circumvent "traditional financial architecture" and defy the laws God, gravity and in the end, man. We're fresh out of greater fools!

"Peso Palace (TM)* actually started in the Philippines. Gals that married "dashing young sailors" (well, we were young anyway) would muster all their vacation pay and max out their lines of credit to build their parents back home a ridiculous "manse". For the longest time I was O.K with it until the bubble. People started using their HELOC bubble bucks to build even greater P.I Playboy Peso Palaces! Stucco California sub division nightmares square plunk dab in the middle of swaying palm trees and fishing nets drying on bamboo poles. Yes folks, the bubble has reached the furthest reaches of the globe. There was a tribe so remote in the P.I I'd heard they hadn't seen westerners until the 1970's. They now have P.I Peso Palaces. Great........ In Baja, a place with climates so severe that they challenge even NASA they now have a bubble too. I was going to have a star named after my wife for Mother's Day in the Star Registry but there was a bidding war! Peter P, it is the "Star Registry" isn't it? How far does one have to go to find a place so remote as to be "unscathed" by the bubble? I await all of your considered opinions.

Affectionately,

DinOR

Oh, and if you want a real hoot check out www.islandsproperties.com for a goof! My wife showed me a listing in Zamboangita (it's a real place, you couldn't make a name like that up) with a sprawling estate and a f@cking pool no less than 30 yards from the ocean! Yeah a pool! When my wife was in high school they used to swim out to Apo Island from Zamboangita (about 11 land miles) as a dare. These kids are almost born with GILLS! But someone built them a pool! Yet another case of "bubble bucks" gone mad.

Now I could see if you were in Tarlac (outside of the old Clark Air Base) and miles from the ocean but that's an extreme example! Because most of life in the Philippines gravitates toward the shore lines for the fishing it's got to be like 98% of people live within a mile of the beach. Of course excepting the Igorot peoples which still hunt the highlands for wild boar. Please leave these people be.

astrid, could you please check my spelling on Igorot? I've heard even the most casual remark perceived as a "slight" can result result in a life long hex being put upon you. Man, I'd hate for that to happen.

DinOR,

That spelling looks fine to me. Google checked out and didn't recommend an alternative. I doubt the Igorots can track you down in the wilds of Oregon. (hmmm, was that a slight?)

Also, I heard there's some land that just opened up in Greenland. The land used to be under large sheets of glacier. Get in on it before the next ice age.

Just to show you all my "devil may care" attitude I will tempt fate by identifying the "Ifagau Tribe" as the extras used in the final scene of Apocalypse Now as they sacrificed the carabao (water buffalo). If I have spelled either Igorot or Ifagau incorrectly this could have major repercussions on my soul in the "after life". There are no ends that I won't go to prove the existence of the bubble in the furthest reaches of the planet (at great personal risk to myself) for your bubbletainment!

The Ifagau are now contractors.

If kidnapping and healthcare are not issues there, I wouldn't say no to this.

http://www.islandsproperties.com/properties/beachfronts/negor-dau-bf-68/index.htm

I can grow some taro on the front lawn and make my own coconut wine.

ASD,

Thanks for the correction and the curse retraction. I need DinOR around for 2008 cold calls to those Iowans with $1M in savings and $40K annual salary. It would suck if the excellent Igorot people decided to go all Medea on him.

My personal feeling is that Seattle will be one of the better markets for surviving this housing bubble. There's a lot of manufacturing and shipping in the area, so any dollar weakening will help a lot. The prices might now seem high to the locals, but they seem pretty reasonable to anyone in CA, FL, or AZ.

Having said that I still think this is a bad time to buy anywhere in the US (or the world). There's a huge credit bubble that needs deflating, and nobody knows exactly how that'll happen. The uncertainty and the upside already built into the RE prices make buying now extremely risky.

Even if you intend to stay in the home for 10 or more years and weather it out, buying in now can still be a dumb decision. If the housing bubble does indeed burst, there will be tons of inventory for you to pick and choose. Even if you have an ironclad relationship and employment, things can still happen and force you to move at inopportune times, will you be financially ready to deal with that scenario?

The only scenario where I can be okay about buying is if money was no object. That is, even if that house's price drops by 70% at some point in the future, I can still be comfortable with that decision and able to bail on the house if I have to. Riding a market up is fun, but very few people find the ride down much fun.

Not investment advice.

Seattle will crash harder than California, because there are NO jobs aside from Microsoft. Previous Microsoft employees benefit from the stock option plan, unfortunately stock option plans are no longer offered at MSFT, plus its stock has been FLAT for the last 6 years!

Boeing is gone, Starbucks and Amazon don't pay much (I have friends in management positions in both companies so I know their payscale), certainly not enough for a Bellevue median house price on a traditional 30-year loan. Weyerheuser? Another low-pay family-owned company. So tell me what other jobs are there in Seattle that can support the current median price? At least the Bay Area can boast about GOOG, who are the recent lottery winners in Seattle after AMZN went public?

Seattle is one of those markets pushed up by CA escapees, so when CA crashes, there won't be any supply of bigger fools from out of state to take over the overvalued properties. I won't touch Seattle until CA is done bursting.

TOlurker,

a typical lot in South Bay, if built before 1970, is about 9000-10890sf (1/4 acre). I have seen lots of homes in older neighborhoods with exactly 10890sf, so I believe this must have been a norm at some point.

The lot of a typical home built in the 1980s here is usually 6500-7000sf. Then, a whole bunch of "SFH"s built from 1990 and onwards have a lot of only 3000-4500sf. I am talking about subdivisions, of course there are lots of custom homes built on larger lots from 1980-now, just not that common.

There is a term called California lot, I believe that it refers to a lot size of around 5000sf. While I personally prefer larger lot, I believe most people can manage a lot of around 7000sf just fine, and if they don't build a monster home, the layout should allow plenty of privacy.

Ryan,

Sorry. IKEA was a jokey reference to the last thread, where it was frowned upon by the sophisticates here. I like IKEA a lot. It's good design at a good price. Having said that, I do see the other side's point. IKEA is primarily designed for smallish European flats and houses. They look really out of place in a stucco McMansion. They also look best in a minimalist concrete and glass setting, which is not to everybody's taste.

TOLurker,

I think a carefully planned small lot can yield beautiful results (thinking of interior courtyards and artfully placed walls). The problem with post 1995 small lot construction is that the houses on them are too big and the builders do not design to fit them into their environments. The result is ugly, energy inefficient, and gives no privacy. Overall, my preference is for good design, and I actually prefer houses with smaller lots, because they are designed with more discipline and better space usage. They are also cheaper to maintain compared to larger properties, which is always nice.

WWII wanted to be more anonymous, to avoid the harrassment of angry specuvestors. Now, we just have to get a search and replace for wordpress and he'll be completely safe.

Owneroccupier,

From wikipedia

Seattle = "The median income for a household in the city is $45,736, and the median income for a family is $62,195."

BA = "the San Francisco Bay Area has the highest median household income in the nation with $62,024."

Firstly, what you say may be true for upper end neighborhood, I'm not familiar with that market. However, BA area homes are much more than 40% premium over Seattle comparables. It also seems to me that Seattle would benefit from a strong loony and strong commodities, since the PNW's economy is more commodities dominated than than CA's.

As for MSFT and Boeing. I'm not knowledgable enough to comment specifically, but it seems to me that if the dollar weakens, their products will be more profitable/competitive worldwide, leading to high profits. I don't see a California equivalent (except maybe Pixar and Hollywood) that have a similar global reach and can benefit from forex arbitrage.

Astrid,

the commodity part of Seattle is 1) lumber and 2) apples (not sure if fruit is counted as a commodity)

Seattle's job market is extremely concentrated on one or two companies, I know that pretty well because I considered moving there before, and after talking to friends and doing job search around that area, I came to a conclusion that Bay Area offers far more career advancement and lottery winning opportunities.

Another problem is the geography. Unlike the Bay Area which is indeed confined by mountains on both sides, providing a natural barrier to certain established neighborhoods, Seattle is like LA in geography, you can go any direction you want. There is much less zoning and restrictions compared to down here. Look at our Santa Cruz Mts, there are lots of natural reserve. The mountains in Seattle are packed solid with new houses, tons of supply.

burbed:
Boeing's HQ is now in Chicago, so the highest paying jobs are not in Seattle any more.

Owneroccupier,

I was thinking of the median wage and not of the high paying wage. I was not considering high end real estate but the average house in Seattle. ASD sounded like a first time buyer, so I assumed he was not loking at the high end.

Thus, I was only looking at median wages and median home prices. And Seattle didn't look too bad. I didn't consider California's artificial constraints to development. Perhaps those are sufficient to make up the remainder of the difference btwn BA and Seattle RE prices. However, I thought that the most desireable Seattle RE are on the waterfront and already pretty well developed. However, less desireable neighborhoods may not hold their price up very well.

I wouldn't eat a Washington State Red Delicious if someone paid me :) That may make them a commodity, as hard apple cider biodiesel.

However, I assume Boeing still manufacture some planes there. Also, Seattle's overall economy is much smaller than BA's, so I'm not surprised that there are fewer players. The big players like MSFT and Boeing ought to still be big employers whose payroll would dwarf GOOG, Starbucks, and Amazon. And while the former two would benefit greatly from a weaker dollar, the latter three serve primarily American customers. This stuff is speculative anyways. My main point in the original comment was to put off buying. This credit and housing bubble is so big that I don't think there are safe RE bets anymore.