Seattle Bubble has moved! Redirecting...

You should be automatically redirected. If not, visit http://seattlebubble.com/blog/and update your bookmarks.

Off-topic comment? Interesting link?
Head over to the forums, or click here for open threads.

Saturday, October 07, 2006

Seattle PI's Take on Sept. NWMLS Numbers

Signs of housing slowdown

Seattle's median home price in September was up just 4.4 percent from a year ago and down from both July and August, according to new statistics. It's the lowest year-to-year increase and the first time prices have dipped two months in a row since January 2004.

The median home sold for $400,000, down from $405,000 in August and $420,000 in July, and up from $383,000 in September 2005, according to numbers the Northwest Multiple Listing Service released Friday. The number of homes on the market shot up 30 percent from a year ago, while sales were down by nearly 16 percent.

One caveat is that condominiums made up slightly more of September's home sales than a month ago and significantly more than a year ago. The typical condo sold in September cost 32.4 percent less than the typical house, pulling down the median for all homes combined.
Are they suggesting that the median price went down because more condos were sold? Seems plausible if you don't believe in bubbles...
The slowing market means buyers can take more time to find just what they want, Crellin said. "A year ago, the environment was such that if you could afford a property you almost had to make a bid on it, no matter how much you liked it."

Crellin's message for sellers? "Don't panic."

"Yeah, it's going to take a while to sell a home," he said. "The mere fact that it hasn't sold in the first couple of weeks is not an unusual situation."
The slowing market means buyers watch television, read articles online and listen to radio broadcasts. The slowing market means buyers may decide not to buy at all. If someone is telling you not to panic, that generally means it is time to panic.
During peak times in the market, buyers might have set aside qualms about the floor plan and jumped at the place, she said. "Maybe that sense of total urgency has lessened a little bit."

Realtors also say stories about the slowing market, particularly nationally, have some holding off.
Now we're getting somewhere.
Realtor Marty Grasa, also of Windermere, said he had two clients who held off on buying through the summer and now can't afford what they want.

"They waited themselves out (of the market)," he said.

One is Cat Cabalo, a lawyer who said she originally started her condo search in 2004, then suspended it later that year because she "was convinced the bubble was going to burst."

One condo with everything that Cabalo wanted sold for $188,500 in 2004, she said. "Now if I were to find something comparable I would have to spend, I would say, at least $250,000."
She missed the equity train by sheer dumb luck.
After watching her friends buy homes and gain equity, Cabalo looked again this spring. By August, news of the slowing national home market, evidence of Seattle condos taking longer to sell and her busy schedule led her to suspend her search again, despite regrets about her previous decision.

"I just told myself I'd rather wait," she said, adding that she planned to do more research on the local market.

Crellin expects the region's home market to settle into year-over-year price increases near the rate of inflation, which tends to be about 3 percent. He also cautioned against applying national stories to the region.
I like this Crellin person. Really tells it like it is. I used to have a computer integration business and sold quite a few PC's. I had a few customers that would hem and haw over buying a new computer and then wouldn't go through with it because they knew the price was going to come down soon after they purchased.

In the world of the computer PC, it's always been like that. Prices always go down, so to some it never seems like the right time to buy. Those people forgo the productivity gains of a faster system to try to save a little, then end up wanting the newer, more expensive model with more bells and whistles - then the process starts all over again.

Realtors love to create the fear in buyers that if they don't commit quickly, they'll never be able to get in the game. Or, as we see above, to insinuate that she not only missed the boat but prices are going to continue to increase - although at the slightly moderate rate of inflation.
"We have to be very careful not to assume that trends that are taking place in Florida and California are going to be replicated locally," he said. "I think our market is more resilient."
I would think that Crellin needs to be more careful in the words he uses and in the direction he is taking the reader.

(Aubrey Cohen, Seattle PI, 10.07.2006)

23 comments:

Matthew said...

I often wonder how the downtown condos figure into the situation. Seattle is planning on adding 5,000 new units to the downtown area in the next 5 years. If houses have become so out of reach that people are merely buying condos downtown, who is going to buy houses from the boomers when they want to move to some sunny retirement area?

But then I look at some of the condos, and it really throws me off. Most of them seem to be going for 300,000 and up. At 300,000 you aren't getting much, you really need to have about 400,000-500,000 to get into something really liveable. So my question, who the hell is buying these things???? They seem to still be going like hotcakes.

Once housing starts to become more affordable, do people start moving out of their condos and into houses? Does this mean the condo market is going to implode as well? I would think yes.

Dukes said...

Excellent post! I have been in financial services (sales basically) most of my adult life and I can unequivocally say that creating a "sense of urgency" is one of the most powerful tools that a sales person has. Also, creating a problem that you have a solution to is another uber successful tool.

Having said that, the "sense of urgency" is quickly leaving the building. And people will soon figure out that buying a house is NOT a solution to or an alternative of true SAVINGS for retirement.

The housing mania has been called out on this board many times for what it was/is: essentially a credit bubble with money flowing into a specific asset. That is now unwinding, it is slow, but it is devastating as well.

PepeDaniels said...

Check out today's Seattle Times headline article if you haven't already run across it.

http://tinyurl.com/l53gz

Even though they can barely resist muddying the waters with the appraiser's comments, it looks like the argument made by most of the bears on this board.

With the interaction between info, news and blogging these days, it's surprising they never bothered to interview Tim here or at least mention the blog as a sournce of local opinion

Peckhammer said...

With the interaction between info, news and blogging these days, it's surprising they never bothered to interview Tim here or at least mention the blog as a source of local opinion

I agree. However, it is easy for the local media to ignore local alternative sources -- especially when what is being reported strikes a blow to those who supply your revenue stream. How often does the Seattle Times reference articles in "The Stranger?"

In the past, I had approached Tim about doing a monthly podcast in addition to the blog. Tim seemed open to the idea, and I ran out of available time to actually take that idea to fruition. The value of *that* kind of media is that the content ends up in every corner of the globe. Everyone has time to listen to pseudo radio, but there's a much smaller audience that has the time commitment it takes to read and follow a blog.

john_law_the_II said...

the seattle bubble is over folks.

PepeDaniels said...

Peckhammer said:I agree. However, it is easy for the local media to ignore local alternative sources -- especially when what is being reported strikes a blow to those who supply your revenue stream......


Yeah, I know what you mean. It's not surprising to see a lack of interest in alternative sources in less "connected" places like south Florida.

In places like Seattle, it would be nice to see better interaction. How hard would it be to link to this blog for example?

I think you make a good point though. Why turn people on to better sources and insight outside of their own paper?

I think there's plenty of news coverage but there's very little good anaylsis of what it means. I think this cuts across all stories or issues though not just RE.

This looks like such a replay of south Florida it's not even funny.

Well, ok, it is a bit funny :-)

Look for the next big "expose'" in the Seattle Times on how they've discovered the poop has hit the fan. End of the year reports or just after people have reloaded their credit cards from xmas shopping?

You can certainly expect the manipulated pricing of gas to be another painful factor after the elections is over.

Grivetti said...

"We have to be very careful not to assume that trends that are taking place in Florida and California are going to be replicated locally,"

pffft, do we? I mean really? Again, this denies the asset inflation bubble due to exotic mortgage products created via the Greenspan intrest rate crash... Until those in the local Real Estate industry fess up to this Gazillion pound gorilla in the 350 sq/ft NoMa Ballard condo, we'll continue to hear nonesense excuses, like...

"Buyers stayed home and watched the Seahawks/ Buyers were too busy enjoying the warm summer /Buyers were turned off by all the rain/ Buyers were too busy playing World of Warcraft... blah! blah! blah!"

Well, there's half-truths. Replicated? You mean exact carbon copies? Of course not, but a crash-like slowing due to the great 2007 credit crash? Now we're getting somewhere.

At some point it'd be interesting to collect all the PI/Times RE speculations over the past 10 years and soundbyte them. I'm sure the progression of denial would be stupifying

Grivetti said...

Deborah Arends was having a hard time understanding why the three-bedroom cottage was still on the market after six weeks and a price cut from $379,000 to $365,000.

"It should be gone because it's too cheap," she said.


I'll clue you in, for starters 365K for the median income of Seattle IS NOT CHEAP!!! Maybe in the heady days of the no-doc/neg-am/io's but everybody that's in is IN! You're left with the f'd borrower scraps and they're tapped. When you've been living in wonderland too long, its difficult to recognize reality when it lands on the doorstep of your psuedo "starter home."

"I have one guy I've been working with for two years, said Jill Allen, a Windermere Real Estate Realtor.

"They're just nervous," she said. "They want to feel like they're getting some sort of a deal."


Shocking I tell you! Want to feel like they're getting a deal? Good Lawd those entitled buyers, how dare they! Ohh, you might have to work for the 6%? God, how it must burn you all up!

"They waited themselves out (of the market)," he said.

This statement is an exercise in logical fallacy. How does one necessarily 'wait themselves out of a market'?

"Oh geez, yeah, let's see, uhm, I know it looks like we have all this product on the market, but I'm here to tell you, I'd rather cut-off the nose to spite the face than sell you what I'm selling, yeah. Sorry, yep, its for-sale, not for-sale. I know you're a potential buyer, but this glut of unsold houses are just going to have to remain out of reach of 99% buyers, forever! Too bad, not making anymore land, Microsoft, interest rates, blah! blah! blah!

Gimme a break.

synthetik said...

Yes, there is so much wrong with this article as well as the article that appeared in the Times today.

Either way, we got a front page story out of the PI so I supposed we should be grateful for that.

Comrade Chairman Greenspan said...

'Realtor Marty Grasa, also of Windermere, said he had two clients who held off on buying through the summer and now can't afford what they want.

"They waited themselves out (of the market)," he said.'

Hilarious. No matter what, they just can't stop screeching "Buy now or be priced out forever", even as the word "CRASH" is already being heard in the national media.

Just like tulip bulbs, gold, Iowa farmland, and tech stocks. People are priced out of all those things to this very day. What a pity that they didn't listen to some shill like this and get in while they could.

stephen said...

It is hard to know how to play it though if you want to live close in and definitely want to own a house. Two years ago I thought the market was insane an opted to wait for prices to come down. The market proceeded to tack on 30% so now if they come down 30% I'm right back where I started after 2 years of living where I don't want to (actually more like three because they haven't come down yet). I gotta say it makes me wonder if I want to spend another year or two waiting for the correction that may never really happen.

I've got a friend (an accountant) that has literally been saying prices are insane and waiting since 1995. He started looking in Kirkland and we were both blown away by the 200k houses a couple of blocks from downtown :-)

The Tim said...

The market proceeded to tack on 30% so now if they come down 30% I'm right back where I started...

Actually not quite. A decrease of ~23% eliminates 30% gains.

$100,000 + 30% ($30,000) = $130,000
$130,000 - 30% ($39,000) = $ 91,000
$130,000 - 23% ($29,900) = $100,100

I'm not trying to invalidate your point, I just thought I should point out that 30% on the way up is less than 30% on the way down.

Grivetti said...

The market proceeded to tack on 30% so now if they come down 30% I'm right back where I started after 2 years of living where I don't want to (actually more like three because they haven't come down yet).

I gotta say, I disagree. You're not where you were 2 years ago, why? Because even if prices do not come down to 2004 leves, you'll have piece of mind and the time to make decisions with regard to purchasing. No multi-offer escalator clauses, no waving building inspection, Realtors that don't treat you like a member of the unwashed masses, it'll be much more comfortable and having sellers work to make the deal with you is what you want.

stephen said...

You are of course right, but (as you also acknowledged) the point is the same. If I buy a house next summer for 300k that was 300k two years ago, 345k last year, 396k this summer then the wait for the pop turns out to be pretty pointless for me and a bust if interest rates move up...

On the other hand there is a possibility that the price may only drop to 350-360 and rates go up a point or so ...

Now that the bubbles over, it seems the new question is how to correctly time yourself back into the market, assuming of course one has made the decision that they absolutely want to own a house.

stephen said...

Good point, a buyers market moves the shoe over to my foot as far as the flavor of the deal.

Last year I placed a bid for a property that popped up well below the prevailing market. I offered full price and simply declined the inevitable phone request to adjust my bid when the owner received multiple offers higher than the asking price (complete with escalator clauses).

It wasn't a crappy experience but I didn't get the house either :-)

mister bubbly said...

Stephen - do not listen to the bulls and all the shills for the RE industry that post on here. The market will drop 80% within a few months. You WILL have your $350K house, but it will cost you $70K by December. How's that sound? And you'll have so many to choose from it'll make your head spin. Of course once you buy you'll just be another stupid homeowner -- everyone knows only idiots own homes, smart people rent.

synthetik said...

Sniff... sniff... I smell a troll.

Eleua said...

The market will drop 80% within a few months. You WILL have your $350K house, but it will cost you $70K by December. How's that sound?

I think the reality of a declining market is starting to get under peoples' skins.

When your entire livlihood is wrapped up in a speculative bubble, you tend to be low on humor as the bubble breaks.

I hope this blog is open next spring. There will be vitriol like you can not believe.

BTW, Synthetik... You have been a one man wrecking ball in the past 10 days. Keep it up. I'm not worthy....

Eleua said...

Now that the bubbles over, it seems the new question is how to correctly time yourself back into the market,

True. I think the backside of this bubble will be littered with the financial gravestones of those that tried to catch the falling knife.

This will be no ordinary bust.

20 cents on the dollar by 2010.

Eleua said...

At the beginning of the year, local housing experts predicted the Puget Sound area's super-heated real-estate market would slow. What they couldn't predict was exactly when or how much.

OK, just who were these "local housing experts" that were predicting the RE market would slow? Honestly, Seattle Bubble was the ONLY place that you could have read anything like that back in Jan-Mar. The REIC has been preaching UP-UP-UP all year long. It has only been the last few weeks that there has been any cross-current in the MSM about Seattle pricing.

Tim? Synthetik? S-Crow? Seattle Price Drop? Were any of you interviewed?

Who was the "expert" that predicted the drop?

Lizzie Rhodes, what "expert" did you interview back in the Winter that predicted that we would roll over?

This is a CYA article - plain and simple.

Where is my Thorozine?

stephen said...

70k huh, I think I'll wait...

Darren Meade said...

The greatest opportunity to control your money can and should begin with your mortgage.

The rate of interest you pay on your mortgage is typically the lowest interest rate you can obtain. The tax deductibility of your mortgage interest can drive the effective interest rate you are paying to below 4.00% depending upon your tax bracket at current interest rates.

Consolidating non-tax preferred interest accounts, including charge cards and automobile loans, can free up cash flow to devote to savings and provide a cash cushion for emergencies.

Three out of five people do not have an IRA account. Nearly one in three people do not participate in their company's 401K program. There is no better time to start investing in your future than today.

In many cases, homeowners who restructured their debt have saved over $700 a month in cash flow. By investing these savings into an investment vehicle yielding 8.00%, your money will grow to over $1 million in 30 years. Stocks have earned 12% on average annually in the post-war era. Obtaining a similar return on a $700 a month investment would result in your money growing to nearly $2.5 million.

Best Regards,
Darren Meade
Victory Mortgage Lenders

Darren Meade said...

May I ask what financial data or trends you follow to say that
Real Estate values will crash 80% in a few months?

Do you believe this to be a national occurence?

Then what of the hot markets currently in numerous states? If the markets crashing, that would cause a nationwide depression.

I'm willing to place a friendly wager. Let's have a local attorney hold in trust 10-20K what ever you have available.

Then if your prediction is correct, you will get the money and if the market does not crash 80% I win.

Unless you get abducted by black helicopters first!