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Thursday, May 04, 2006

Home Buyers Most Interested In Thurston

Seattle has basically reached the saturation point of unaffordability. How do I know this? Because people that want to buy a home are mostly interested in the South Sound.

Thurston County's three largest cities were among the most popular destinations for home buyers in the first quarter of the year, according to data released by an online real estate company.

Olympia, Lacey and Tumwater ranked among the top 5 cities around Puget Sound based on users requesting information on homes in the area, according to HouseValues Inc., a Kirkland company that offers online real estate services, such as matching prospective buyers with real estate agents.

Home buyers interested in Olympia, which ranked No. 1 among Puget Sound-area cities in the first quarter, grew by nearly 40 percent, followed by Lacey in second at 35.2 percent and Tumwater in fourth with almost 24 percent, the data showed. West Seattle ranked third.
...
"What Thurston county offers is affordability, quality of life, excellent schools and recreation," said Steve Garrett, the designated broker and co-owner of Windermere Olympia. "That really kind of drives those numbers."

The difference between median home prices in Thurston and King Counties is substantial, according to multiple listing service data. Last month, the median price of a home was around $245,000 in Thurston County, while in King County it was nearly $400,000.

As a result, Seattle ranked 15th in the number of people requesting information about homes in Puget Sound, [HouseValues spokesman Matt] Heinz said.
Come on Steve, let's not kid ourselves. Olympia may have "quality of life, excellent schools and recreation," but so does Kirkland. Thurston County is nice, but the primary driving factor here is price. People have been priced out of Seattle, and are slowly being priced out of the Seattle suburbs as well. As a result demand is dropping here. Thurston is still at least marginally affordable, so people are still buying houses there.

(Rolf Boone, Olympian, 05.04.2006)

30 comments:

meshugy said...

I was just in Olympia last weekend and it occurred to me that it would probably be a good place to invest in while it's still cheap. With Seattle prices skyrocketing, other Puget sound cities are bound to benefit. In my opinion, Olympia is much nicer then Tacoma...although it's not a very practical commute to Seattle. But it will always have Gov. jobs....

Looks like we're seeing the Manhattanization of Seattle....greater density, higher prices, and inevitable overflow into adjacent cities. A hundred years ago northern New Jersey was mostly farms....look it at now!

'm

Anonymous said...

"Looks like we're seeing the Manhattanization of Seattle...."

I agree. Many of the properties in Seattle are worth about a handful of wampum.

Seriously...Manhattan has the world's financial and business centers, many of the world's best shopping, restaurants, museums and galleries, and population density so far beyond most "large" cities, that real estate prices on the island are actually justified.

Seattle has what? Dick's?

Dukes said...

Here is today's 24Hour Market Statistics from NWest MLS:

New Listings 822
Back on Market 86
Price Increases 61
Price Reductions 272
Contingents 36
Pendings 550
Solds 455
Expireds 40
Inactives 115

Lots of New Listings compared to Solds. 272 Price Reductions, on average it looks like between 250-300 Price Reductions per 24Hour period. Interesting stuff, if the market was so great as many here in Seattle like to spout, WHY SO MANY REDUCTIONS?

Dukes said...

Meshugy you just don't get it do you?

You are like the guy would have shifted cash from Cisco to Juniper because, "business might be better over there," when the tech bubble burst.

Don't you see that we are in the midst of an EPIC BUBBLE of mammoth proportions? Don't you see that? All bubbles end, and they end badly, the fools are still buying. Really, if someone is buying now they are TRULY a fool.

We are also over the crest of that mammoth bubble. God damn, idiotic comments like yours just amaze me.

Anonymous said...

Meshugy-

good idea to invest right now in Olympia. Maybe you can take a second loan out on your place in Ballard? I'm sure you can find somebody to do a loan for you.

better hurry though, the Federal Reserve met today to discuss cracking down on bad lending practises. Seems they are very concerned about what could happen to banks. Oops!

http://www.federalreserve.gov/boarddocs/speeches/2006/20060504/default.htm

So don't waste any time buying that Olympia property.

It's a can't lose situation- think about it! In 2 years you could be a millionaire!

meshugy said...

Hi Dukes,

I think prices will go down...I'm just waiting to see it happen.

According to your reports we should see some pretty big reductions in median prices for Seattle and King Co. as a whole. The April MLS #s come out tomorrow.

My guess is that the median went up somewhat in most areas of King Co.

'm

Anonymous said...

Ah, there's the key "the median went up SOMEWHAT in MOST areas of King County".

A hot market means "the median went up A LOT in ALL areas of the county".

Since it's not doing that anymore, we're not so hot here in King County.

meshugy said...

anon 11:09

I was just speaking generally...I'm not a real estate investor and probably never will be. But I do think over time Olympia will do pretty well.

My brother inlaw bought a house there last year, but is now moving to Yakima. If he sells he might do OK.

'm

meshugy said...

Last month the median prices went up in all but three areas....that's only three areas down out of 30. YOY appreciation for the whole county was 12.32%. It was 14.65% for Seattle.

See: March MLS

Mikhail said...

Well, according to Yahoo, we should all start just getting used to living in the remote burbs since the Seattle area prices are destined to keep rising forever.

Yahoo real estate bubble story.

Mikhail said...

I am just astounded at how resilient the real estate market is in my area (Eastside)! Ziprealty has shown the available listings for the 98008 zip code drop from 45 to 34 in just the last 3 weeks!

When are these buyers who keep snapping up these homes at OUTRAGEOUS prices going to wake up and realize the game is over?

I find myself just speachless....

The Tim said...

Actually Mikhail, the story originated at Bankrate.com, and I posted on it early last month.

S Crow said...

The Latest- (visualize hearing typewriters humming here for special effects)

Merit Financial & Platinum Escrow of Kirkland summoned over 300 staff this morning and announced it was closing and ramping down operations, while pondering bankruptcy. I knew about this earlier but wanted to wait until it hit the paper, to avoid being coined "alarmist."

Just a couple years ago, CEO Scott Greenlaw, former UW Husky football player, was named one the brightest "under 40" CEO's. The magazine, Washington CEO, name Merit Financial one of the 100 Best Companies to work for in Washington State.

Poof. Gone. Makes you wonder who's next.

IMHO, it's interesting how the market can humble people quickly.

See the article in today's Seattle TImes Business/Technology section.

seattle price drop said...

So do you think that in 2004 the median was going down anywhere in the county?

We'll see how long it takes for that "3" to turn into "5" then to "12", then the whole county.

It's just a matter of time. RE is not like stocks, it doesn't plummet everywhere, all at once, overnight.

It begins as a nice gradual decline in certain areas. Which is a good thing because it rewards those who are astute enough to bail if they need to.

Also gives those who are wanting to buy a chance to say "wait a minute, this may be the top, think I'll wait and see what happens".

MUCH more forgiving than stocks in that way.

seattle price drop said...

Thanks Crow.

I had a conversation a few months back with an elderly friend who lives in one of the desirable Seattle neighborhoods.

Over the years, we've always had a back and forth about the house prices in her 'hood.

I was always trying to convince her that her house was worth a TON of money. And she never believed it.

Finally, last Fall, I said "well X, you're finally right. Your house is going back down in value. This time next year, it won't be worth nearly as much."

She said, "Oh! no!!! My son works at Merit and he says business has never been better!!"

I said, "X, these mortgage companies are going to be biting the dust soon."

I've been waiting to here about Merit going under ever since.

This swing up in RE has been surreal to observe.

The downward swing will be just as surreal.

Nerve-wracking on the way up, and nerve-wracking on the way down.

Anonymous said...

Is WAMU next?

S Crow said...

No comment.

Anonymous said...

Thanks Crow.

meshugy said...

Thanks Crow....can you give any details on what exactly is causing these mortgage/escrow companies to go under?

Obviously a cooling housing market it part of it....but did Merit and other troubled companies take too many risks?

'm

S Crow said...

Correction- Platinum Escrow is an in-house escrow firm owned by Merit Financial, and was not named in the Seattle Times article. Although one has to presume that everyone under the umbrella is affected.

Why? I would guess a variety of things. The market primarily, explosive growth, mismanagement, massive debt..you know, all the things under the radar that are behind the pearly white smiles of CEO's.

It's sad, because there are probably some very good people that just lost their jobs who have families etc. to support.

Anonymous said...

Here is the latest home price forecast from Fortune magazine: http://money.cnn.com/2006/02/03/real_estate/house_price_predictions_for_2006/index.htm

It expects home price to appreciate a whopping 1.9% for the Seattle-Bellevue-Everett are.
Take into account the mortage payment, tax, fee, etc. All the recent and new buyers are losing money for the quite some time to come.

Anonymous said...

Dukes,

Thanks for the data - there is a lot of interesting information there. I am a little uncertain on how to interpret the data, however. In particular, how do the sales data relate to the pending and contingent data, and which best represents the daily indicator of “sales transactions” occurring that day. For monthly numbers, the closed sales represent sales agreements executed one or two months earlier, while pending sales better reflect the current month’s activity. Can we interpret your “sales” and “contingent”+“pending” data in the same way?

Dukes said...

anon 1:28 - I am not sure how to analyze the data in its entirety.

I am not an agent, just a lucky dude who has access to the NWMLS.

Maybe someone more astute in what it all means can read the tea leaves.

In my laymen's approach, I look at New Listings, Solds, Price Reductions and the trend doesn't look too solid, although there are many bag holders who are willingly slitting their collective financial throats right now as evidenced by the # of solds. This too will change.

Word hasn't gotten out in Seattle yet, you would think that with all the brainiacs up here we would be on the leading edge.

I have a theory about this: People are very book smart up here, but they lack a lot of survival, and common sense skills. It is obvious what is happening all over the country and to think it won't happen here is the height of folly.

seattle price drop said...

Yup. Just like my grandmother always said: "Going to college makes people stupid".

Seriously though, if you read the other blogs, Seattleites do not seem to be that far behind the awareness curve.

Even in places like AZ, with it's exploding 40K + inventory, there are still a lot of people who think RE is !!!!HOT!!!!

And scratch their heads when the house doesn't sell quickly.

By the time reality sinks in, people all over the country will be shocked.

Americans have their collective head in the sand.

Dukes said...

spd - I agree with you 120% about Americans with their collective head in the sand, it is astonishing.

People right now are going through the ostrich phase, this last occurred when the tech boom died and people didn't want to open up their brokerage statements. So, like an ostrich, they buried their head rather than see the devastation.

With housing it is worse, because people live in the albatross around their neck. It will be painful when they finally wake up to the fact that THE PARTY IS OVER!

Anonymous said...

General question for everyone: where can someone find mortgage statistics for a given area (county, city, zip code)? I'm looking for % of paid off homes, % of ARMs, median mortgage, etc that can eventually provide an estimate on the amount of equity in that area.

My theory is that "desirable" areas will see a bigger increase in equity than "undesirable" areas because people build equity and move to more desirable areas. As we see people move for affordability reasons, we should see the equity #s reflect desirability.

house serf said...

"Harpers" magazine came out the the other day with a front cover picture of a man lumbering under the weight of a house on his back.

The title of the article: "Home Serfs"

Summed up the situation very succintly. A lot of people who bought in the past few years will be absolute slaves to a humungous mortgage for the rest of their lives.

That 400K house will cost you 1 million by the time you're through paying it off- and that's REAL money- not credit.

Anyone who buys now is so clueless that I have a hard time mustering up sympathy when all's said and done.

Anonymous said...

Does anyone know where to find data that shows historical house prices in King county? I am very interested in learning how the prices behaved in the past market downturns, how much the prices dropped and how long the drop/stagnation lasted. Thank you so much for posting links if anybody found any. Do you think this data is reliable?
http://www.economagic.com/cenc25.htm

zed said...

People from Seattle might find Olympia affordable. Many of the state workers that live there might disagree. I guess we can let the people who work in Seattle live in Olympia and the people who work in Olympia live in Shelton or Centralia. Sounds like a great idea with $3+ gas!

Anonymous said...

And no public transport to boot Zed!

Something's got to give- and soon.