Anecdote Updates & YAWA
I think it's time to update you on some of the local action (or lack thereof) that I've been keeping my eye on. I'll take these in the order that they were originally posted.
First up, we've got the park-backing property down the street from me. The last time I mentioned it (way back in mid-June), it had been languishing on the market for two and a half months, at a price comparable to recent nearby sales. Well it finally sold, closing about a month after I made that post. The sale price was $50,000 less than the asking price, and the poor deprived seller only made $72,500 (assuming 6% agent fees and no buyer closing costs rolled into the sale price) for doing nothing more than sitting on a property for two years.
Next up, the million-dollar new construction on my drive home. Apparently I wasn't the only one that thought $1,625,000 was a ridiculous price, because so far the fancy house on three primly-manicured acres (with a waterfall!) has taken two price drops (for a total of $130,000—8%), and is pushing four months on the market. Will the seller end up slowly chasing the market down? We'll see...
Of course we can't forget my California-bound coworker. She and her husband moved down to their new home town about a month ago, but unfortunately for them, their house still has not sold. Oddly enough, although their house has been on the market now for 73 days, they are holding firm on the asking price at $490,000. Also worth mentioning is that at around the 1 month mark, their home was de-listed and re-listed, with no change to the listing whatsoever, in what (if I'm not mistaken) is a blatant violation of NWMLS rules.
Lastly, I may as well mention yet another workplace anecdote. This coworker requested a transfer to the greener pastures of Moses Lake, and therefore is selling his home in rural Snohomish County. Purchased in 2000 for $165,000, the original asking price for his "custom built 3 bedroom 2 bath rambler" on 1/2 acre across the street from a lake was $350,000. Three price drops (down to $305,000) and 51 days later, still no takers, and I recently overheard the increasingly distressed owner talking about the possibility of taking on two mortgages at once. I guess he'll have to if he's serious about the latest price reduction being the "*FINAL PRICE REDUCTION*" he is claiming it to be. On the one hand, I feel bad that a good person like that is having trouble selling with an impending move. On the other hand, he's still asking for 85% more than he paid just six years ago. Is he just being greedy, or has he cashed out $120,000 in equity and honestly can't afford to reduce the price further?
In case anyone would accuse me of it, I'm not cherry-picking the anecdotes that fit my view on housing. These are just the housing stories that I know from the circles I run in.
As you can see, the Seattle-area housing market is still hot, hot, hot!
21 comments:
I have only one thing to add.
There were neighbors down the street from me who were selling their house (that they bought back in 2000 for $300) for $575. I also thought they were being greedy, but they explained that if they didn't sell their house on Bainbridge at that price, they wouldn't be able to afford a similar house to move to in Port Townsend.
They sold for $570 and were able to buy a comparable home and are in a similar amount of debt. They were not "cashing in" and taking off to where they could live like kings.
Not everyone has taken home equity out to play. I know when we sell our home, if we didn't ask the current asking price, there is no way that we could afford a home.
(Of course there is no way in H___ we would buy a home right now, as it would be throwing money down the drain...)
Balanced-
Don't think I have ever heard anyone on this blog or anywhere else claim that EVERYONE has taken equity out of their homes. That is just plain ridiculous.
The problem is, if enough people have (and they seem to), it will hurt everyone when/if they go bankrupt and lower the comps, etc.
There has been a sea change in the way people view their homes in the past several years.
From mortgage burning parties to take the equity out and buy a new car, pay other bills, etc.
And yes, I know both kinds: equity burners and mortgage payer-downers.
This one hss been sitting for almost a year now. I'm sure it will sell soon priced at $1.58m, up from $1.4m originally. HA!
I must add that the other 2 homes ('60s era) nearby that sold in the past month sold at asking price (in the $600K range) and both buyers put more than 40% down, fixed rate. Hooray!
How is anyone purchasing this apartment going to make any money?
Tax deductions?
When I lived in Boston, I saw a number of 4-plexes converted to condos. It was bascially the same thing as buying a flat in an apartment building -- not really a bad prospect, if you can tolerate sharing major financial responsibilities with your neighbors -- who are probably not people that you would even trust to feed your cat. Yeah, Condo ownership rocks!
Plus, most of the units are <600 sq feet. You won't get more than $175K
I don't know where you live, but in my hood (98109), 600 sq ft will cost you $275K. I am not making a case for that Ballard Brick Vomit. However, in the right place, people will sell their own oxygen supply for a chance at ownership. Case in point: Water's Edge
60% sold in first two weeks! And you thought the Pet Rock was a stroke of genius!
Re: Water's Edge
I figured this conversion would make the blog at some point. Have you seen it? I ride by it when I ride my bike around Lake Washington. I had seen the ad in The Times one Saturday and figured that it was near Leschi esp. with the prices. I was shocked to see the neighborhood where it is - hardly the vacation getaway that I'd be looking for in that price range. It is right on Ranier and the exterior of the building looks terrible. You better enjoy the view because you won't want to set foot outside the place.
Here is a link that follows the median listing prices in numerous markets including Seattle. By changing the last 2 digits of the link you can review trends as far back as 180 days.
By clicking on the market area listed you can find additional data and charts. Take a hard look at Seattle and you will see that as inventories go up the median listing price is flatlining.
Where we go from here is up for graps. But for a hint take a look at the other markets around the nation to see the median listing price falling.
http://housing-watch.com/home.aspx?d=60
"the poor deprived seller only made $72,500 "
what a sucker...this guy only made 72K..Since when does making 72k in 2 years a poor financial move? This guy is poor and deprived? thats like tims salary for 2 years for just living in a house.
synthetik said...
"There are tons of crappy 1bd condos avail. in Ballard and all around seattle for under $200K.
Sorry man, you are wrong. There are 6 one bedroom condos listed for area 2 on the Windermere Area Map (Greenwood, which includes Ballard). There is one listing in Area 3. So, from Downtown to Shoreline, on the west side of I-5, there are only 7 one-bedroom condos priced at $200K or less.
Oh, what the heck... There are 8 in area 6, 3 in area 7 and 1 downtown. In other words, in all the land mass bounded by I-90 to the south, Lake Washington to the east, the Puget Sound to the west and Shoreline/Lake Forest Park to the North, there are only 19 one-bedroom condos listed for $200K or less.
Most condos in any desireable location will run you somewhere near $500/square foot, with another fifty-cents per square foot per month for condo dues.
Since when does making 72k in 2 years a poor financial move?
There's this little-known device of language known as sarcasm. Perhaps you should read up on it.
thats like tims salary for 2 years....
FYI, while I'm not in the six-digit club like many of the readers here claim to be, I most certainly make considerably more than $36,000 per year.
"There are tons of crappy 1bd condos avail. in Ballard and all around seattle for under $200K.
Actually...I think synthetik maybe right:
296 square feet -- but it's home
The moda condos, set to break ground in October, promise "New York-style living," with units as small as 296 square feet that start at $149,950.
296 sq ft!!!
Not sure I totally buy this argument...but it does have some interesting stats about the increasing trend of home ownership.
Demand for housing not dependent on interest rates
The housing boom that followed the dot-com bust was not an artificial bubble created by low interest rates and speculation, but a product of increasing wealth, changing demographics, and new mortgage products that helped renters become homeowners.
The results suggest "the unusually high levels of residential investment in recent years may just be the direct result of the wealth accumulation from previously high rates of technological progress." Investment in real estate, the authors conclude, appears "to have been driven mostly by fundamentals and not unusually loose monetary policy or speculative building."
Another factor behind the high levels of residential investment is the rate of home ownership, which is at an all-time high. The rate of home ownership, which actually declined in the 1980s after four decades of growth, rebounded in the mid-1990s, reaching a record 69 percent by 2005.
About half of the increase in the home-ownership rate can be explained by changes in the demographic, income, educational and regional structure of the population, the study concluded.
In a reversal of a trend seen between 1978 and 1993 -- when home-ownership rates for households headed by those under 40 declined -- a growing percentage of young people are becoming homeowners. Between 1993 and 2003, the home-ownership rate for 25- to 29-year-olds grew at a faster rate than those aged 30 to 74.
Meshugy said: "Demand for housing not dependent on interest rates"
I will whole-heartedly agree that housing demand is not determined (for the most part) by interest rates. The fact that the majority of the US is facing a profound decline in real-estate sales DESPITE the fact that interest rates are still very low (historically speaking) just goes to show that low rates do not (in and of themselves) drive the real-estate market.
Of course, the amazingly swift real-estate slump that has gripped most of the the USA (super-special Seattle excluded) refutes the argument that there is simply an organic growth of demand (through new families, higher wages, etc) that will keep real-estate booming forever.
Job and population growth certainly haven't stopped places like Phoenix, Sacramento, and Florida to see real-estate sales tank and significant price reductions begin to kick in.
My take is that there is a psychological aspect to the housing market, that is not directly connected to jobs, interest rates, etc. The interest in owning homes goes up as people begin to think that this is a great way to make money (i.e. the houses will keep appreciating forever). At some point, however, these bullish sentiments reverse and people become afraid of buying real-estate because they don't want to own an asset that might decline in value.
It's all just human nature.
My take is that there is a psychological aspect to the housing market, that is not directly connected to jobs, interest rates, etc. The interest in owning homes goes up as people begin to think that this is a great way to make money
Is this some sort of epiphany, or have you been reading about the "Wealth Effect."
Why during these "evidence of cooling/anecdote updates" is the other side of the spectrum not shown. Why not show a few examples of the recently resold Cristalla and One Lincoln Tower one bedrooms where the sellers made $200k+. Or the homes down the street that sold for $25k above asking price and were on the market for less than two weeks.....
Why during these "evidence of cooling/anecdote updates" is the other side of the spectrum not shown.
As I stated in the post, "these are just the housing stories that I know from the circles I run in." If a home caught my eye down the street, and I looked into it and found that it sold in a week for over asking, I would post that. Or if a coworker sold their house without difficulty and made some serious bank, I would mention that.
The thing is, I'm just not seeing those kinds of things happening around me. In fact, there's even another coworker anecdote I didn't mention in the post where they are selling their home in Marysville to move to Bothell, and the sale fell through at the last minute, leaving them with two mortgages until they can find another buyer.
Anon 9:17_
Why not show the homes that are selling well?
Here's your answer:
We have just been through a HUGE run-up in RE prices, nationwide, some would say worldwide.
That has been the never-ending trend for the past 10 years.
Now there is plenty of evidence that it has topped out.
Astute observers are looking at signs, previously NOT THERE, that the market is about to crumble, in an effort to avoid buying at the top.
Will there be "positive" signs in the market? OF COURSE!
Are they worth paying attention to when, for the first time in years there are negative signs? NO!!!
The positives are irrelevant because RE takes a while to turn.
When a market that has been on a 10 year upward trajectory suddenly exhibits increasing DOM's, increasing inventories and increasing price reductions, that is the time to sit back and watch and wait.
The fact that some people are still either unaware or don't care and are buying at the top is totally irrelevant to the big picture- if you value your money.
If you don't value your money, then none of this matters at all.
Didn't know where this should go, quite a gem:
http://windermere.com/index.cfm?fuseaction=Listing.ListingDetail&ListingID=8534973
Laurelhurst fixer listed last week for $1.25 million. Previously sold for $2.1 million (12/04) AND 5 MONTHS EARLIER AT $1.05 million (7/04). Looks like an LLC sold to wanna be flipper who didn't seal the deal (no updates evident), Countrywide now owns
http://www5.metrokc.gov/reports/property_report.asp?PIN=0723000040
One more for you - Buchan new construction on the Plateau - 2104 263rd Pl SE, Sammamish, WA 98075
I'm keeping anon for now, but will eventually come out when safe (after I exit the REIC and start my import/export beanie baby/cabbage patch business). Not saying outright fraud, BUT consider:
1) original list price $950,950 2) offers to pay $71K above asking and it sells (recorded price) for $1,022,000 3) now able to take out two loans for $995K, basically 107% LTV 4) Spec sale in 6/06, closed in 7/06 (IOW, higher price not due to appreciation during pre-con marketing)
Now the guy is getting "divorced" and its on CL 1) for lease @ $6,995/mo
http://seattle.craigslist.org/est/apa/200998720.html
"owner bought home just 4 months ago" - actually it was just under 30 days ago
OR
2) lease option $8,495/mo, a new concept made popular by some of the better known players including Carleton Sheets, Tom Vu, etc ("win-win" per Robert Kiyosaki)
http://seattle.craigslist.org/est/rfs/200623933.html
"play it smart and keep in my name" EAZY TERMS
Purchased with $27K down
Tax ID: 062942-0350
Recording Date: 07/20/2006
Sale Price: $1,022,000
Mortgage History:
Mortgage Date: 07/20/2006 07/20/2006 Mortgage Amt: $750,000 $245,000 Mortgage Lender: Opteum Fin'l Svcs Llc Opteum Fin'l Svcs Llc Mortgage Type: Conventional Conventional
Mikhail,
In your statement on how demand for housing is not determined by interest rates (for the most part), what do you mean by "demand?"
If demand is the desire to have something, irrespective of your ability to pay for it, then I would agree. My desire for a nice house is the same at 4% as it would be at 400%.
If demand is economic demand, then demand for housing would be reduced as interest rates rise. Money (demand) would be diverted from the house to the banker. Absent a righteous ascent in household income, the household would have to reduce the amount of money (demand) they divert to their house in an environment of rising interest rates.
To say that you can pay the banker more, while keeping steady the amount you pay for your house, while your income remains essentially flat is nonsensical. You run into some blood-from-turnip issues.
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