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Friday, September 29, 2006

A Glimmer Of Hope?

Do you think demand for commercial space will result in a continued rise in property values in King County?

Evidently, Susan Ryan at the P-I Real Estate Blog thinks so...

An article in today's PI on the institutional investor interest in Seattle, highlights one of the reasons the local residential real estate remains strong.

Low office vacancy rates and investor/retailer interest in commercial property means more people working dowtown and wanting to live near where they work. If you're not one of them — as in you can't afford a home or condo close in — it seems hard to believe that there are enough folks who can afford to live in town to sustain the prices. But there are.

The problem is that there aren't enough houses to buy. It's kind of a weird point in the market cycle. There are both more buyers actively seeking homes that are still in short supply with other buyers afraid to buy right now, scared by what's happened in other parts of the country and the unrelenting news coverage of the real estate downturn in those places. They don't want to get stuck with a property bought at the top of the cycle.

But with the strong Seattle economy, in order for there to be a downturn, there has to be a flurry of homes coming on the market — like when sellers trying to cash out before prices drop. It is that glut of homes for sale that that makes them get cheaper. So far there's no flurry, no glut.

It's like a collective holding of breath with buyers and sellers both waiting to see who will blink first.
Blink. Blink.

(Susan Ryan, Seattle Real Estate Professionals, 09.29.2006)
(Andrea James, Seattle P-I, 09.29.2006)

17 comments:

plymster said...

The problem is that there aren't enough houses to buy.

Don't worry about that, Susan. Inventory is soaring (about 32% YoY), and shows no signs of abating.

Everyone keeps pointing to the mythical "strength of the economy". Am I the only one who looks beyond headlines trumpeting one measley sales increase to note that YoY sales are dropping like a rock, as are national median RE prices? Leading economic indicators are down. RE Sales are down. Companies are whispering about missing Q3 profit goals. Inventory is building. Paul Volcker (the only decent Fed chief in the last 40 years) is concerned about inflation creep. The dollar has dropped (no doubt as a result of recent oil fixes thanks to the GSCI scam).

What about this sounds good for the economy?

synthetik said...

oh, nice avatar!

People see what they want to see. I think it's been an ongoing theme for hundreds of years for people and economists to simply look at the immediate impact of an event, rather than to study the WHOLE; the history, future implications, and all other possible factors surrouding the event.

Nolaguy said...

But with the strong Seattle economy

I hear people say this all the time, but it's never quantified.

Does anyone have data that proves or disproves the "strong seattle economy"?

deeplennon said...

Sno&King inventory...

6/30: 11,415
7/31: 12,172
8/31: 12,933
9/28: 14,196

has picked up substantially in September over the previous 2 months.

And no one in the media is looking at Septemeber numbers yet.. and won't until the MLS releases their September data in Oct.

uptown said...

What starts the fall off in prices, is some people have to sell no matter what and there are no takers around. So prices start going down to attract buyers.

Buyers can hold off for years, some sellers can't.
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OT: If we have to login, can't you get rid of the "word verification"?

MisterBubble said...

"If you're not one of them-- as in you can't afford a home or condo close in -- it seems hard to believe that there are enough folks who can afford to live in town to sustain the prices. But there are."

Sure there are! After all, it's a class war...the rich are eating the city! Soon there will be nothing for a poor suburban serf to do but move to Wenatchee (or farm turnips for a Microsoft millionaire in some Belltown p-patch).

Here's an idea, Sooz: instead of assuming that the people who buy Belltown economy studios for $500 per square foot are smart and rich, consider that they're probably scared, poor and in debt up to their eyelids -- you might have a better idea of what's actually going on.

Comrade Chairman Greenspan said...

'Does anyone have data that proves or disproves the "strong seattle economy"?'

Last I heard we were still ~ 6,000 jobs short of the dot com peak. (If anyone has updated figures, please post.) Even if we've caught up in job numbers, I doubt we've replaced all those $100K+ incomes for 21yo e-business consultants and other new economy gurus.

But, as Goebbels knew, repeat something often enough and the herd will eventually accept it as fact.

Comrade Chairman Greenspan said...

Thanks for that link, plymster. Good reading. You may enjoy reading www.xanga.com/russwinter, who pointed to that a few days ago also.

I also heard that prices were suppressed at the height of driving season by Congress borrowing around $19B and giving it to the oil companies. No link I'm afraid, so maybe it's a conspiracy theory. If anyone else knows about it I'd certainly appreciate the information.

seattle_slow said...

Susan is at the start of the capitulation phase... I'm looking forward to her quotes 6-12 months from now.

seattle long term owner said...

it's amazing how many people actually believe this crap...

I talked to an aunt who is upside down on a loan convincing her to find a way out and she chimes... well the seattle PI just put out an article that seattle prices will keep going up this year... I'll just wait...

It was at that point I just kept my mouth shut...

marin_explorer said...

well the seattle PI just put out an article that seattle prices will keep going up this year

Down here in "prime" coastal CA the press was saying basically the same thing--but now the market's tanked, with prices clearly heading south. You hear far fewer people quoting the papers now.

pike pine said...

Don't worry about that, Susan. Inventory is soaring (about 32% YoY), and shows no signs of abating.

Folks, at least read carefully enough to respond to what she's actually saying -- she is talking about housing close to downtown, not the whole county or region!

seattle long term owner said...

and downtown is special?

so next year, downtown will see a 30% yoy appreciation while the rest of seattle stays flat...

interesting... maybe I should buy one of those unfinished condos and flip it then...

I don't care if it's next to Pikes Market... the RE boom is over

pike pine said...

so next year, downtown will see a 30% yoy appreciation while the rest of seattle stays flat...

I don't care if it's next to Pikes Market... the RE boom is over


i don't believe the article is saying anything about a boom downtown, and where did you get the 30% yoy figure? it is strange how so many commenters on this blog put words in the mouths of journalists -- -- and then scoff at those claims as if somebody had actually made them! like i said before, respond to what she actually writes. if what she says is wrong, say why. but you look ridiculous when you says she is making claims that she never makes! i believe the article is simply saying that there is no sign of a bust in the neighborhoods close-in to downtown, even though these are among the most expensive properties. if you have some data that disproves it, i'd be very open to that, but i haven't seen this data yet.

MisterBubble said...

"Folks, at least read carefully enough to respond to what she's actually saying -- she is talking about housing close to downtown, not the whole county or region!"

No she isn't. She mentions people wanting to "live near where they work," and then talks about "folks who can afford to live in town." There is no mention of location beyond these vague terms, so discussion of rising inventory in King County is certainly relevant to the discussion.

"it is strange how so many commenters on this blog put words in the mouths of journalists"

Indeed.

"i believe the article is simply saying that there is no sign of a bust in the neighborhoods close-in to downtown, even though these are among the most expensive properties."

You believe wrong. Her blog post simply asserts that low office vacancy translates to high residential demand downtown. She also repeats the specious argument that there "has" to be a rise in inventory to see a drop in prices -- an argument that has been debunked on this very blog several times before.

pike pine said...

Mister Bubble = Mister Delusional

The article is clearly about in-close real estate. Look at the end of first paragraph:

"If you're not one of them — as in you can't afford a home or condo close in — it seems hard to believe that there are enough folks who can afford to live in town to sustain the prices. But there are."

Vague? That is hardly vague. The rest of the piece goes on to discuss these in-close properties and why the prices remain high.

Sorry Mister Bubble, but you either don't want to understand this simple article, or aren't capable of it. Or maybe both. Sad.

MisterBubble said...

I'm done feeding the troll. Sorry, everyone.