"The Market is Returning to Normal"

Now that the NWMLS numbers have been released, let's check in with our favorite bubble-fighting dynamic duo, Rhodes & Cohen. If you were expecting them to cheer on the inexplicable increase in prices, you will not be disappointed. This month's unified message: Prices are up, but now is the time to buy! From Ms. Rhodes' article; Home sales drop, not prices.

Prospective homebuyers who've been frustrated by too much competition for too few homes — your time is now.

But don't expect to find widespread price breaks, because home prices are up.

In fact, after four months of either steady or slightly declining prices, King County's median single-family house price rose in October to $440,000, up from $425,000 in September.

The number of houses and condominiums for sale in the central Puget Sound region — King, Snohomish, Pierce and Kitsap counties — was up from 27 to 59 percent last month, compared with a year earlier, according to statistics released Tuesday by the Northwest Multiple Listing Service.

Increasing inventory is giving buyers more clout, said Lennox Scott, chairman and chief executive of John L. Scott Real Estate.

"We're adjusting from a frenzied market back down to a strong market," Scott said. "Buyers have selection."

It's pretty much the kind of booster material we've come to expect out of the Times: a strong focus on price gains and little to no mention of statistics that point to a slowdown.

On the other hand, although Ms. Cohen's article has a similar focus, it comes out a lot more balanced. I don't know if it was intended this way, but the sarcastic tone of the headline pretty much says it all: It's a buyer's market, if buyer's loaded.

More and more home sellers are chasing fewer and fewer buyers, but those who did buy in October paid more than buyers did the month or year before that, according to housing statistics released Tuesday.

The Northwest Multiple Listing Service's October report continued a trend of increasing numbers of homes on the market and fewer sales month over month and year over year. The median home price in the city was $420,000, the same as July's price after two consecutive months of declines and represented the largest year-to-year increase since July.

King County as a whole showed a similar trend, with a slightly smaller increase in inventory, a decline in sales from October 2005 and a slightly higher rise in the median home price.

The price statistics reflect what home shoppers such as Dariush Zand are seeing.

"They keep saying it's a buyers market," he said while looking over a Montlake home last month. "Prices haven't changed. I don't see any reduction."

Zand, who is planning to move back to the area from San Jose, Calif., said prices have declined there.

"California's starting to look like a pretty good deal now," he said. "And it's sunny and 75 (degrees) every day."

Of course, she still managed to throw in a heaping helping of real estate booster talking points, including the recent favorite, "the market is returning to normal."

The statistics show the market is returning to normal, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.

"Yes, the inventory is going up," he said. "It's still sitting lower than it was three years ago."

Buyers now can take time to search out the house they really want, rather than jumping at something that will do, Crellin said.

"Because of the period of frenzied activity, we sort of lost sight of what a normal market looks like and feels like."

Is it possible that while the housing market collapses in the rest of the country, Seattle just "returns to normal"? Sure, anything is possible I suppose. However, with the inventory still increasing YOY at a faster rate every month, and sales still on the decline, I have to wonder what mysterious force is going to stop these trends once the market has become "normal"?

(Elizabeth Rhodes, Seattle Times, 11.08.2006)
(Aubrey Cohen, Seattle P-I, 11.08.2006)