Monday Open Thread
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16 comments:
Issue: Inventory
jcricket, Meshugy & others in the previous thread debated inventory, sales and my favorite to debate: ethics in real estate (which I'll save for it's own post).
I would encourage debate about why it is that NWMLS inventory , while rising, is argued "tight." One of the bloggers suggested that currently it's about 100% less than sometime in the 1990's (which is, incidently, as different a market as you can have, not to mention years ago).
Why are we not seeing more inventory? We just came through peak Spring buying and selling season that didn't meet expectations for many in the business.
So why are sellers sitting on their hands, when the real estate community says there are buyers waiting? And for those who think it important such as myself, don't forget the inventory we don't track at NWMLS--for sale by owners.
And for those who think it important such as myself, don't forget the inventory we don't track at NWMLS--for sale by owners.
Indeed. I would argue that with the growing popularity of online resources such as Craigslist that simply did not exist in the mid 1990's, the percentage of the total inventory that FSBO accounts for is probably a fair bit higher than it was 10 years ago, and rising. Of course there's not really an easy way to know, one way or the other, is there?
Seriously, is there any way to accumulate that sort of data?
I would encourage debate about why it is that NWMLS inventory , while rising, is argued "tight."
If you look back at the records Seattle normally has much more inventory the we have now. Back in the 90s, when there was less population and twice as many houses for sale, prices still went up. Why would prices go down when we now have MORE population and far LESS houses for sale?
The last time there was a slow down in this market was in the early 90s. At that time there were over 25,000 houses for sale in Snohomish and King County. And that only resulted in a slight short term dip in median price. Only one year really.
Now we have only 11,500 houses for sale in Snohomish and King (and more population/buyers). I think the #s speak for themselves.
The Tim-
It is an important segment, because we close a good handful of these transactions that don't get counted in NWMLS statistics.
Russ Cafano over at Rain City Guide brings this point home in this mornings lead post.
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Mesh-
The numbers do speak for themselves, but again, why is inventory at that level? That's what I want to see people debate.
The numbers do speak for themselves, but again, why is inventory at that level? That's what I want to see people debate.
I'd say it's the combination of low interest rates, increasing population, and strong local economy. That all equals up to more buyers which is keeping inventory low.
There are FSBOs listed at foreclosure.com, but I have no idea if that's a good source. There are 146 listed for King County.
(Reposting this from the last open thread, since it doesn't seem to be getting much traction)
So I was driving back from the North Cascades Highway last night, via the scenic route of SR-530, and had forgotten the huge new development at French Creek Road west of Darrington, where they cut down a huge swatch of perfectly nice forest and are replacing it with McMansions. This will accompany a similar development a little farther west from a few years ago.
My question is, who is living in these houses? Surely they aren't communting from Darrington to the metro. Even communiting to Everett would be a very long drive. I find it hard to believe there's enough work in Darrington or surrounding areas to support the salary for these houses.
That leaves rich retirees then? If so, why on earth would someone want to move out of the city or burbs into a country version of the same thing -- a McMansion development? If you want to move to the country, get a house in the country. Don't just replicate what you moved away from.
I'm curious to see how many of these houses in the French Creek area actually sell. They went up very fast, so I can't imagine the quality is that good. The view of the clearcut land can't be very appealing either.
To me, and this is just a gut feeling, I think that people with existing homes can't afford to sell and move within King County any more than first time home buyers.
Sure they can....it's called equity. They bought in years ago at say, 200K. Sell their house today for 500K and maybe trade up to a 600K house. So, if they had paid down some of that original mortgage, they might still only owe the bank 200K or less for a 600K house. While a new buyer pays the 600K right out of their pocket.
Part of the problem may be too many people with exisitng homes trading up (many from CA, but also here). They have so much equity that they over bid everything which in turns creates more equity.
LHR & billiruben - I totally agree with you. I can't understand people who buy a Quadrant-built McMansion in a new clear-cut out past Redmond with a 1+ hour commute (and that's now, imagine 15 years from now).
I live in an older house in the city. Sure I'm only 10 feet from my neighbors on either side, but I get all the (to me) benefits of living in the city: short commute, diversity, charm of the older homes, walkability of the neighborhood, etc.
And in all the new suburbs you're no farther from your neighbors.
If I'm moving somewhere I'd have to commute a lot, or to retire "away from it all" it would be somewhere with some actual piece and quiet. It sure wouldn't be Redmond Ridge, or the Highlands.
Mesh-
I am a consumer. I lived in Edmonds. Had equity after living there for 8 yrs. I couldn't afford to buy in my own neighborhood. Knew that with my income I couldn't qualify for much unless I moved significantly north. And, we bought the fixer as I mentioned in the previous post.
Peter Taylor-
You are on the right track about why sellers have anchored down, thus assisting in keeping inventory down. There are other reasons too.
Regarding the lower inventory, I'm amazed at how many homes are just sitting vacant. There just isn't any incentive yet for most owners to sell.
On just one road I travel daily in North Seattle, I counted 7 vacant homes in a 20 block stretch. Most of these have been vacant for months, some over a year. This is in Bryant/Wedgewood 98105-98115.
jcricket wrote:
I can't understand people who buy a Quadrant-built McMansion in a new clear-cut out past Redmond with a 1+ hour commute (and that's now, imagine 15 years from now).
I live in an older house in the city. Sure I'm only 10 feet from my neighbors on either side, but I get all the (to me) benefits of living in the city: short commute, diversity, charm of the older homes, walkability of the neighborhood, etc.
Amen. I suppose there's some sort of benefit in having two mortgages on such a McMansion, otherwise people wouldn't do it, but I'm personally too dour and candyassed in nature to handle a $380K mortgage over thirty more years. There's a lot I don't understand, especially when people don't take the time and effort to plausibly and fully explain their economic actions.
lake hills renter asked "who is living in these houses?" AFAIK, at least one family who paid no money down for their starter home in Shoreline, had a kid, had another kid and thought "we need a bigger place" and doubled the size of the mortgage they had seven years ago buying a Quadrant home in Snoqualmie. The adult male of the household works in Seattle proper.
Snoqualmie to Seattle proper would be a bit much for my tastes. I could see living in the Preston or Fall City area if you worked on the Eastside, but downtown would be tough.
I still hope people aren't commuting from near Darrington to Seattle...
I still hope people aren't commuting from near Darrington to Seattle...
I know a couple of people who commute from past Poulsbo to downtown Seattle. They're always talking about the wonderful "quality of life" where they live. When do they get to enjoy that when their daily commute is 4+ hours round-trip?
And, as much as I knock the quality of Quadrant homes (and they do suck), they have some of the highest profits in the industry. They get those profits mainly by doing the bare minimum required by code to get occupancy and making everything else (including things like base-molding) an "add-on" where the profit really comes in. I admire their chutzpah, even if the homes will fall apart in 10 years!
I'm personally too dour and candyassed in nature to handle a $380K mortgage over thirty more years.
A $380k mortgage isn't really that bad, at least with the low interest rates of the last 5 years. I locked in at a point where my mortgage payment will stay definitely at or below what it would cost me to rent a similarly sized house (and not in as nice a neighborhood). Property taxes and insurance are higher, than renting, of course, but I'm pretty comfortable with that sized mortgage.
What shocks me is the people in my same income bracket (and I'm in the upper 1/4th) who have a $800k mortgage. How they afford that I'll never know.
A $380k mortgage isn't really that bad, at least with the low interest rates of the last 5 years. I locked in at a point where my mortgage payment will stay definitely at or below what it would cost me to rent a similarly sized house (and not in as nice a neighborhood). Property taxes and insurance are higher, than renting, of course, but I'm pretty comfortable with that sized mortgage.
I did too -- my mortgage is at 5% fixed. I'm in the top 25% for household incomes nationwide, but apparently somewhere in the middle third as far as Seattle goes.
Comfort varies. A $380K mortgage isn't bad compared to $800K, but is scary-high compared to a $160K mortgage. In some parts of the country a $160K mortgage means high living.
I wonder if a blog entry has been made about Location Efficient Mortgages (LEM). Location Efficient Mortgages allow people to buy more expensive homes than they normally would be able by factoring the money they'll save on transportation costs. Seattle, as well as two other bubble markets Los Angeles and San Francisco, has LEMs available.
Comfort varies. A $380K mortgage isn't bad compared to $800K, but is scary-high compared to a $160K mortgage. In some parts of the country a $160K mortgage means high living.
True. But given the standard 20% down formula, I'm not sure what I could live in near Seattle for $200k. That's less than the first house I bought back in 1998 (and that was a fairly small place). I'm willing to carry the larger mortgage for the trade-off in housing quality/quantity. We also bought a fixer, did a lot of work, and bought before the recent run-up, so our mortgage is considerably lower than the current "value" of houses in the neighborhood.
BTW, that LEM idea is awesome! I know that my wife and I drive, combined, the average number of miles most people drive on their own, because we live close in to the City. We also save on insurance because of that. I only have a very small commute, and almost everything else we do is no more than 5 miles away. We're almost capable of getting by on one vehicle, but with the kids we haven't figured out how it would be realistic. It's about time someone factored that into something besides insurance.
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