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Wednesday, January 18, 2006

"More Fear" In Seattle Sellers?

The Seattle P-I and the Eastside Business Monthly both take a look at the newly-released NWMLS report on 2005. The reports are full of the usual ra-ra real estate talk:

"In the past, the market has absorbed home price increases with household income growth," said J. Lennox Scott, chairman and chief executive of John L. Scott. "Well, we had household income growth in 2005, but appreciation rates were higher than that, therefore we needed the low interest rates."
...
In 2005, even King County's price increases were outpaced by those of Snohomish, Pierce and Kitsap counties, though none of those three counties' median home sale prices broke $300,000 in the year-end tallies. In all four of the counties, the typical house sold for slightly more than its listed price.

Only 12.5 percent of the 67,237 single-family homes sold in 2005 in those four counties went for less than $200,000; Kitsap's prices jumped the fastest, rising 20.8 percent to $250,000 from $206,900 in 2004.
But there is also a hint of realism and a dying down of the hype:
"A lot of the sellers that we deal with are unrealistic, so we're seeing a lot of listings come onto the market overpriced," said Ryan Thompson, a John L. Scott Realtor in Seattle.

"There were a lot of multiple offers in the summer and fall when buyers had a 'devil may care' attitude, but there is more fear on their part now."

The result is that sellers are beginning to recalibrate prices after their homes sit without selling.
...
"Developers have followed the curve and are starting new developments because condos are so hot ... but I don't see how demand can continue like this."

Thompson credits investors for some of the heat in the downtown condo market, noting that "even some agents do this on the side."
I think 2006 may well be a defining year for the Seattle housing market.

(Kristen Millares Bolt, Seattle P-I, 01.18.2006)
(Eastside Business Monthly, 01.18.2006)

21 comments:

marin_explorer said...

"A lot of the sellers that we deal with are unrealistic...but there is more fear on their part now...The result is that sellers are beginning to 'recalibrate' prices after their homes sit without selling."

Would anyone venture a guess as to what happens next? Is the feel-good phase over?

Anonymous said...

Seattleites have gone thru many years of obscene price hikes (since 1997/8 IMO).

I think they've gotten very comfortable with the idea/belief in astronomical RE gains and will hold on with a death grip, even as inventories grow and hope of selling lessens.

The smart sellers will anticipate the new RE paradigm and undercut neighbor sellers by A LOT (not these paltry 10-20% reductions).

The rest will chase the market down and lose more in the long run.

That is my prediction.

Steady on buyers!

Hold out for the bottom!

Dukes said...

There is an old investment axiom: "when everyone is on one side of the row boat, it will surely capsize and sink".

That is how I feel about Seattle real estate, every one and their mother is on ONE sid of the row boat. They are CERTAIN that real estate can only go up.

Well, these people...er...um...sheople are about to be taught a painful lesson. This is not cruel, but it is just, this is the way the investment world works. Pigs always get slaughtered, this will be no different.

Prepare for much crying, wining and bitching about dishonest real estate practices, which there most certainly are, but it takes two to tango. Buyers and sellers both have had nothing but $$$ signs in their eyes for years, it will take time to change that mindset, but change it will

Anonymous said...

Just saw a house on N 80th near Greenwood w/ 4 BR 2BA come on the market for $599,999....woohoo ;-)

Dukes said...

anonymous said:

"Just saw a house on N 80th near Greenwood w/ 4 BR 2BA come on the market for $599,999....woohoo ;-)"

This is a perfect example of the lunacy up here in this market. 600K for a house in Greenwood?...come on...

You should get the email address of the listing agent and write him to tell him he needs to talk some sense into this seller.

Anonymous said...

Yes , somebody needs to advise these sellers that the party is over- that is if they really want to sell their house. Otherwise they will just get in deeper and deeper as the market bottoms out.

I've checked back records on some of the MLS listings.

People who bought for @ 200K several years back in the 90's, can certainly afford to sell their places for much less than current AP of @700K. At 500K they'd still be making a handsome profit of 300K.

To say nothing of those who bought BEFORE the 90's!

But I'm sure a lot of them will hold out for that 700K til it becomes an albatross around their necks worth no more than 350 on the market. Oh well...

S Crow said...

A few interesting comments about some price reductions in Snohomish County:

please visit: http://www.snohomishcountyhomes.blogspot.com

Anonymous said...

Admin-

Thankyou for pointing out the new Snohomish site (above).

I like the idea of keeping track of price reductions and wish someone would do that for Seattle.

The NNJ Bubble guy uses his realtor inside info to track the price/listing histories of properties sold.

It is very illuminating to watch them go thru the various Asking Price reductions and finally see what they actually sold for.

Any Seattle Realtors out there with access to the info who want to climb on the bubble blog train? We would wildly appreciate your efforts!

Thanks for doing your part Admin!

Anonymous said...

But I'm sure a lot of them will hold out for that 700K til it becomes an albatross around their necks worth no more than 350 on the market. Oh well...

Thu Jan 19, 03:12:22 PM PST
++++++++++++++++++++++++++++++

It would be great to know what homes "should" sell for. Since it costs $75 to $100 sqf to build a house and 7200 lot sells from $120K to $300K, what "should" the price of home in Greenwood be?

Anonymous said...

Things are worth whatever people are willing (and able) to pay for them.

Anonymous said...

Exactly right.

Houses are worth whatever people are willing to pay for them.

No more, no less.

Anonymous said...

Anon 6:40-

I've heard that the normal yearly appreciation for RE is between 4-6%.

If that is true, then a home that sold for 200K in 1995/96 "should" now be worth
$280-320K.

Does that help?

Anonymous said...

The quote by J. Lennox Scott is priceless. "In the past, the market has absorbed home price increases with household income growth. Well, we had household income growth in 2005, but appreciation rates were higher than that, therefore we needed the low interest rates."

Uh... let's see. I love this fuzzy realtor math. Interest rates hit the bottom in late spring of 2003, and rose at the end of 2003 and have remained relatively flat since then. Therefore, how have low interest rates rationalized/justified the last two years of +15% annualized housing appreciation?

Answer: They HAVEN'T. The fact is, Seattle is as unaffordable as it has ever been. Speculation, fear of being left out, greed and loose lending standards (including 0% down loans, negative amortization loans, teaser ARM loans, interest only loans) is what is driving prices up, not fundamentals. The tide has already turned in Boston, Las Vegas, San Francisco, parts of Florida and San Diego. Seattle is about 6-12 months behind those markets (just like back in the early 90's during the last collapse). The party is over, and the spiked punch bowl is being taken away. This is going to be a train wreck by the time it's over in 4-5 years. Hold on to your hats.

watching&waiting said...

Tim-

Thankyou for the new "Snohomish Co." link.

Others-

Check it out. It's a great place to see price reductions at work, among other things.

Dukes said...

These are the #'s from the NWMLS today: Notice the # of price reductions...

24-hour Market Watch

New Listings 655
Solds 278
Pendings 374
Expireds 34
Price Increases 111
Price Reductions 227

Anonymous said...

Thanks for the info Dukes-

Anonymous said...

Duke, what are your conclusions about those "price decreases" ?
I am watching the NWMLS for a few months and nothing has changed (only slowed down in Dec).

Here are the stats:

Date New Solds Pending Expired Price+ Price-

2005-10-12 622 335 469 63 71 297

2005-10-13 608 354 414 62 66 272
2005-10-14 561 436 446 58 69 252
2005-10-18 592 465 477 48 72 333
2005-10-19 559 460 417 68 59 280
2005-10-20 558 401 461 35 42 257
2005-10-21 560 389 410 66 64 252
2005-10-23 218 61 117 45 35 99
2005-10-24 375 339 404 33 57 266
2005-10-25 535 464 504 49 80 351
2005-10-27 535 467 412 43 64 269
2005-10-28 531 470 356 55 62 275
2005-10-31 187 174 221 166 20 125
2005-11-01 530 614 557 415 43 317
2005-11-02 583 782 511 150 96 286
2005-11-03 542 428 387 41 51 266
2005-11-04 551 408 393 42 49 270
2005-11-06 240 68 150 74 35 76
2005-11-07 202 80 172 36 13 107
2005-11-08 527 342 446 52 54 285
2005-11-09 489 340 392 38 60 275
2005-11-10 489 340 392 38 60 275
2005-11-11 507 356 435 50 39 239
2005-11-12 373 109 207 80 50 140
2005-11-13 198 39 121 49 31 95
2005-11-14 169 68 149 36 25 83
2005-11-15 558 315 411 41 49 299
2005-11-16 497 419 434 127 59 246
2005-11-18 489 529 443 43 82 250
2005-11-19 496 449 388 50 65 247
2005-11-21 154 139 168 45 32 113
2005-11-22 443 452 409 44 91 219
2005-11-23 410 471 423 35 83 196
2005-11-24 375 424 387 44 74 144
2005-11-29 456 433 464 47 37 250
2005-11-30 457 449 404 39 59 238
2005-12-01 458 530 360 491 44 222
2005-12-02 477 588 322 183 43 204
2005-12-05 181 157 164 25 18 94
2005-12-08 439 383 360 69 62 165
2005-12-09 370 338 318 65 43 151
2005-12-10 303 297 265 38 48 127
2005-12-11 160 58 99 56 26 57
2005-12-12 114 100 136 30 11 48
2005-12-13 459 478 410 69 49 184
2005-12-15 341 391 313 42 45 150
2005-12-16 369 405 330 182 44 127
2005-12-19 80 115 126 34 14 30
2005-12-20 312 429 324 55 45 92
2005-12-21 280 437 341 81 37 75
2005-12-22 218 421 300 50 38 75
2005-12-23 217 334 282 47 33 49
2005-12-28 274 362 294 44 26 107
2005-12-29 268 396 285 64 56 111
2005-12-30 241 419 287 46 71 111
2006-01-03 336 158 140 52 45 86
2006-01-04 734 471 387 88 110 188
2005-01-05 588 367 299 50 62 207
2006-01-06 606 347 279 56 72 215
2006-01-08 220 46 99 60 29 53
2006-01-09 257 85 128 42 42 77
2006-01-10 659 301 323 49 55 231
2006-01-11 555 242 254 72 76 202
2006-01-12 523 258 266 43 55 197
2006-01-13 533 275 339 59 59 190
2006-01-16 518 182 312 162 64 150
2006-01-17 511 183 330 46 51 177
2006-01-18 582 262 359 63 65 203
2006-01-19 459 269 449 47 57 168
2006-01-20 474 277 349 34 69 200

Dukes said...

I am not sure, but 227 price reductions over a 24 hour period sounds like a decent number to me.

As we move forward I am sure this will get higher and higher. There are still many fools up here in Seattle - but fools get burned.

Anonymous said...

From where I sit, ANY price reductions in Seattle would indicate that the market is turning.

Let's not forget: It was just a short while ago that a house could not be put on the market here w/o being bid up.

Now I am watching homes in N Seattle reducing their asking prices while they languish on the market for months.

This indicates a serious turn.

S Crow said...

Sunday's Everett Herald Headlines contradict builder market behavior. Builders bullish, yet drop prices.

Visit: www.snohomishcountyhomes.blogspot.com

Marlow said...

I just saw this article on Realtor.org website. You'll have to cut and paste into your browser to view. It's a forecast by an economist of the Seattle real estate market that you might find very interesting, considering the title of your blog: http://realtor.org/reioutlook.nsf/pages/forecast?opendocument