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Monday, August 14, 2006

Olympia Inventory "Substantially Higher"

Here's another report out of Olympia, on the significant cool-down that housing is experiencing there.

As the South Sound real estate market cools from overheated to warm, sellers are increasingly offering price reductions in order to speed up sales.

Real estate agents say the recent appearance of homes marked as "Price Reduced" indicates that this summer's housing market is cooler compared with a year ago.

Last summer, the Thurston County housing market was so active that it was common for homes to sell before they were listed.

But this summer, inventory levels and interest rates are higher, and newly constructed homes continue to come onto the market, contributing to longer selling times.

In July, there were 1,633 active listings, compared with 1,031 for the same period last year, according to the Olympic Multiple Listing Service.

Some agents, though, speculate that because builders don't always list all of their new homes, inventory levels could be much higher, in the range of 2,200 to 2,500 homes.
Obviously they're not to the "meltdown" point yet, as the median price is still going up (although quite a bit more slowly than in King County—just 5% from January to July). But with the number of listings increasing this fast, and more new construction coming on the market every month, will Thurston be the first Puget Sound county to turn?

(Rolf Boone, The Olympian, 08.13.2006)
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18 comments:

Anonymous said...

Can anyone provide the link to the analysis of reduced prices in Seattle King County. I remember seeing it on this blog in the comment section.

Is anyone following the price reductions in Olympia, WA and Thurston Co.? If so can you post them.

Thanks

Mikhail said...

I find it very difficult to tell if the Puget Sound real-estate market is in danger of a significant crash since there seems to be a dearth of data.

There were some interesting stats about the percentage of exotic loans in our region a couple weeks ago, but this was only referring to the "sub-prime" market which just left more questions than answers (i.e. what percentage of Puget Sound sales are sub-prime?).

The other statistics that would really make it easier discern the bubbliness of our market are: the percent of sales to investors vs actual live-in owners. The historical trends of housing starts (including today's stats) for our region. If we are indeed seeing far less construction than places like California, then we might not ever experience the same depth of price depreciation.

Anyway, there just doesn't seem to be a lot of good data for the Puget Sound area, so we will just have to watch the lagging indicators of listing inventory, median prices, and pending sales. In short, we won't really have any warning of a crash until it hits us in the nose.

Anonymous said...

There will be a crash all right.
I have been tracking some of the new communities on the south end. What I am seeing is a lot of ARMS. Also, lots of HELOCs. Does anyone require a down payment anymore?
It is amazing how many people are flipping homes or purchasing 2nd, 3rd, 4th homes in the new subdivision as investments.

It will take a good 3 to 5 years until these investors find that they are under water, and have been from this point on.

Crashcadia

meshugy said...

They also mention that:

Year-to-date home price appreciation is 16 percent this year, according to Olympic MLS data.

I'd be more worried once appreciation grinds to a halt. But with double digit appreciation still occurring, the situation doesn't look to dire.

Anonymous said...

You actually think that if Californis takes a 50% bath that we wouldn't experience the same?

Having lived in both places.. its been awful sunny lately.. however if given the choice "If given the Option of living in a part-time mud puddle or having California weather for roughly the same price... Guess what, I think I would be packing pretty Quickly for Sunny Skys.

biliruben said...

mikhail -

All those statistics are available in one form or another.

I don't have time to look up all the links, but dig around a bit and you'll find them.

Try the census bureau and Washington State Center of Real Estate Research (or something like that) for 90% of what you desire.

Anonymous said...

In fact a heck of lot of people would also be packing. Especially given the Average Wage Scale in Seattle.

This area on average doesn't support the current prices, by any means. There is a reason why California has always sold a premium to this area. Part of the reason is higher wage base another is much nicer weather. Seattle has probably about the highest suicide rate in the country.

RECENTLY: I have a room renter that Works in Industy large building construction. He works for a building Union and hes been living at my place for 2 years.
He has been working none stop for 2 years. Now just recently he has been lurking around the house about 2 days a week. This has occuring more frequently the last 2-3 months.

Report from my friend down in Kirkland that rents apartment. The large apartment building he lives in across the street from 24 fitness had a lot of empty apartments.
They just raised the rents. He just signed a new rental agreement for a 10% increase. Then he noticed within the same time frame for a couple of months the place had massive people moving out. We were laughing at all the empty garage spaces and empty elevator going up.

Not the case this last month Elevator is packed..
In just the last 30 days or so the place went gangbuster and people from other areas of the country came like a wave. We couldnt figure it out.
I notice just the last month that freeway traffic on the s-curves went crazy.
Anyone else notice this? Im not sure whats happening. About 3 weeks ago while traveling 405 freeway through renton area about 2:15 there was a massive building convoy. I was cruising the Car-pool lane while they were in the slow lane impeding traffic. I could of swore I passed truck after truck they seemed to never end all appearing headed for some building spot.

Maybe theres a building spree going on here in seattle to catch the last housing train before it all derails?
Maybe people hearing all the stories of our economy is indeed different, are rushing in take advantage of what they might think as being the place of job security. I cant think of any other reason?

The Tim said...

meshugy said...

They also mention that:

Year-to-date home price appreciation is 16 percent this year, according to Olympic MLS data.


Yes, and the reason I did not include that quote is because it is clearly false. As I state in the post (and back up with links), the median home price (closed sales Res+Condo) has increased 5% so far this year. 5.7% if you count since December '05.

I have no idea where the 16 percent number comes from, because even year-over-year, the median has only increased 11.26% in Thurston. As far as I can tell, 16% is wishful thinking. In fact, take a look at the year-over-year appreciation since December:

Dec '05: 28.06%
Jan '06: 22.48%
Feb '06: 27.40%
Mar '06: 24.87%
Apr '06: 22.45%
May '06: 15.21%
Jun '06: 13.93%
Jul '06: 11.87%

I can spot the trend... can you?

meshugy said...

MLS shows

RES/CONDO YTD Median for July Thurston 2005: $250K

RES/CONDO YTD Median for July Thurston 2006: $283K

So that's about 13.5% increase. Seems like they're in the ball park. Just depends what #s they are using....they don't say if it's just Res or what.

Anonymous said...

biliruben,

Thanks for the tip. I will check it out.

Anonymous said...

Tim where do you find those monthly rolling YOY numbers?

Anonymous said...

Declassified: "Eyes Only"

1) Thurston County new construction – detached plats actively selling (8/14/06):

75 plats (5,472 recorded lots) w/ 2,534 house sales reported (closed & pending). Balance = 2,938 potential homes (unsold specs and vacant lot inventory held by builders)

Average asking = $335,000+/-
Median asking = $284,000+/-
Median $/SF = $144/SF

Monthly sales = 208+/- (4.2/plat)
2,938/208 = 14-month supply (at current velocity)

2) Proposed Thurston County detached plats:

Preliminary plat approval: 75 plats/4,669 lots
Review stage (application): 99 plats/12,699 lots

Total pipeline inventory = 174 plats/17,368 lots

Regards,
REALEST8ANALYST

Anonymous said...

"I'd be more worried once appreciation grinds to a halt." But with double digit appreciation still occurring, the situation doesn't look to dire.

Mon Aug 14, 09:45:33 AM PDT

Shug, here is the q for you:

A half-decent (well, stretching, but OK) shack at your Bullard comes to about what, $500,000?
10% down, and mortgage payment on $450,000 mortgage at 5.875%, 5 year ARM, comes to $2,663.36. Before taxes and insurance. Let's add on about $500 for that.

$3,163.36 cash monthly payment.

How many people do you personally know that make that kind of coin, dude? You, the Bullard's wizard?

bill said...

Interesting that when Olympia realtors see an increase in price reductions over last summer they conclude that their market is cooling-

And when Seattle realtors see the same thing, our market here is still hot.

Do realtors in Olympia take a different qualifying test than Seattle realtors?

Or are they just loathe to lie as much?

Anonymous said...

Anon 7:31-

www.ziprealty.com gives price reduction and DOM info.

Mikhail-

median price is a horrible way to judge home prices.

for instance, Vashon's median went down by almost 250K from May '06 to July '06. (700K- 450K or thereabouts).Do you really think the normal home price on Vashon fell that much in 2 months?

Just as median is not an indicator going up, it's not an indicator going down.

Look at price reductions and DOM's. That will tell you when a market switches from hot to cool.

Also, re the bad loans. If one person in a neighborhood has to sell under comps, it brings the value of everyone's home down.

It doesn't matter whether the borrower was subprime or paid in cash full amount.

Same thing going up. One good sale floated all boats. Going down, one "bad" sale drowns everyone.

With the amount of risky loans out there, I'd quit wondering about the details. It's clear Seattle is full of risky loans and I seriously doubt they are all in one neighborhood.

As discussed many times before, there are just as many "wealthy" people out there who spent foolishly this time around as non wealthy.

KAP said...

"Having lived in both places.. its been awful sunny lately.. however if given the choice "If given the Option of living in a part-time mud puddle or having California weather for roughly the same price... Guess what, I think I would be packing pretty Quickly for Sunny Skys"

Ohhhh I so agree. My husband was selected as one of 6 of an elite team within his corporation to head up a project that is estimated to last about 2 -3 years in the Tacoma area. We currently live in Sacramento California. We THOUGHT we would move to Washington, giving up the sunny skys for a less expensive life expecting home prices in Washington to be significantly lower. However, after spending many days internet shopping and two weeks actually house shopping in Washington, we have found that we could not live as well even if we traded house value here for the exact same house in Washington. If we take a less expensive home to compensate for the higher prop tax we would pay and increased interest rate (we currently have a 5.5% rate), we would not be able to afford the same quality of home with similar features, lot and home size. So, after many discussions and also taking into account that he will still be traveling regardless of what state we lived in, we have decided that all things being equal, we will keep our sunny skys and deal with the 2-3 year state commute.

biliruben said...

kap - you are in a dream situation.

Just as we are heading into the teeth of a housing downturn, you have an excuse to sell, rent and sit on the sidelines.

Take this as a gift from the real estate gods, find a desperate speculator in Port Orchard or whatnot who will be pleased to have you cover half his mortgage, and watch the upcoming collision with your horse out of the race.

Anonymous said...

I wonder how many of these flippers and equity locusts like the property tax info that they just got in the mail last week in Washington? Will that stress them even more?