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Friday, December 08, 2006

Wet November Weather FTW!

Now that November's numbers are out, let's see what the local dead tree press has to say about it.

First up, Ms. Rhodes at the Times delivers just what we've come to expect; a small dose of reality topped with a heaping helping of positive spin, lame excuses, and bubble denial:

More Western Washington homes were for sale last month, but fewer buyers signed deals, according to the Northwest Multiple Listing Service's November report, released Thursday.
...
Wet weather and attention given to the midterm election and the holidays may have affected sales, the MLS said.
...
Greg Hoff, owner and broker of Windermere's Edmond's office, said sales declines should be taken in context. A year ago, sales were at record highs, Hoff said, so last month's falloff is a return to normal — not the bottom falling out of the market.

"The question I get is, 'Where's the bubble?' " he said. "They think it's bursting because it's not going up the way it used to."

A true bubble burst would occur if prices fell, Hoff said. That's happening in some Sun Belt states, but not here.
Of course, the Times wasn't the only paper to mention the weather. Despite the complete lack of any evidence that even one potential home buyer was influenced by the weather, all five local newspapers attempted to relate the weather to the November home sales statistics.

At least Ms. Rhodes was the only one to blindly parrot the NWMLS press release. Other reporters, such as Aubrey Cohen at the P-I, were somewhat more skeptical. Of course she still made sure to end on a positive note:
November's total listings showed a typical seasonal decline from October, which was the only month in the past two years with more homes on the market than November. The year-to-year number of listings has increased in every month since April, while the number of closed sales has been down in every month since June.

In a news release Thursday, Northwest MLS director Dick Beeson said floods, snow and ice contributed to November's sales slowdown.

But wet weather only can soak up so much blame. It did not, for instance, seem to dampen the market in January 2006, whose 11.65 inches of precipitation was not far off the January record of 12.92 inches (set in 1953). That, of course, was in the midst of a frenzy of frequent bidding wars and rapidly rising prices.
...
Real estate agents have said for months that the market is back to normal from its recent frenzy, allowing buyers to take their time. They say buyers are taking even more time because of the changing market and news of a national slowdown.

"I still have a lot of people looking but not as many people making the move, pulling the trigger," said Susan Robinet, an associate with Windermere Real Estate. "I just think it's the uncertainty the national news has created."
...
Jean and David Sauvion, who recently moved to Seattle from London, offered a reminder that everything is relative when it comes to home prices.

"It's a lot better than in London from a buyer's point of view," Jean said after looking at a Greenwood home Sunday.

"We can actually afford houses here."
John Gillie at the Tacoma News Tribune makes only a dismissive passing mention of the weather.
Torrential rains, early season snowfalls and holiday distractions made only a small dent in the pace of Pierce County home sales last month.
...
The continuing price increases were good for home sellers, said Tacoma Realtor Dick Beeson, but an increasing supply is making sales a bit more difficult for sellers whose homes are overpriced.

The inventory of unsold homes in the 19 Washington counties covered by the Northwest MLS rose more than 35 percent from November of 2005, the report said.

That inventory increase, which could foreshadow price softening, was particularly dramatic in Pierce County, where the number of homes on the market in November grew from 4,124 last year to 6,012 in November this year – up 45.78 percent.
One reporter downright rejected the notion that the weather had any affect on the market. Mike Benbow at the Everett Herald seems to think that resistance to bad weather shows just how strong our housing market really is.
With torrential rains, serious floods and an early snowstorm that left thousands of Snohomish County residents without power, you'd think most people would have been too busy last month to think about much else.

But the disastrous weather in November didn't stop people from buying homes. And it didn't keep prices from continuing their climb, according to data released Thursday by the Northwest Multiple Listing Service.

County home sales last month followed the trend that began early this year: The number of homes on the market have increased significantly, sales that were pending or closed dropped significantly and prices rose in double digits in comparison to November 2005 sales.
Coming full circle, Clayton Park at the King County Journal claims that the rain did slow sales, and quotes some random Realtor to back up the assertion.
Last month's record rainfall and snowy weather conditions contributed to a decline in the number of homes sold on the Eastside and in south King County. The weather, though, didn't put a damper on prices, which continued to be significantly higher than a year ago.
...
Sam Pace, a Realtor with Executive Real Estate who specializes in helping clients buy and sell homes in south King County, said the heavy rains and snowstorms last month resulted in a noticeable drop off in business for him.

"We didn't do much in the rain," Pace said.

But Pace, who also serves as the south King County housing specialist for the Seattle-King County Association of Realtors, said year-over-year prices for homes and condos are continuing to rise, despite the slowdown in sales activity, because demand for homes continues to outpace supply in this area.

Pace attributed the heavy demand for homes to the region's robust economy, which has been bolstered by continued hiring locally at both Microsoft and Boeing, two of the area's largest employers.
Never mind the fact that the slowdown in sales is consistent with a trend that's been going on for over three years. It was the rain and snow. That's it. Also, if we keep repeating the "Microsoft and Boeing will save us" argument enough times, maybe that will make it true!

Clearly it's too much to ask that a local reporter actually do some serious investigative work into the true health of our housing market. It's far easier to repeat real estate press releases, quote local Realtors, and interview random home buyers.

(Press Release, NWMLS, 12.08.2006)
(Elizabeth Rhodes, Seattle Times, 12.08.2006)
(Aubrey Cohen, Seattle P-I, 12.08.2006)
(John Gillie, Tacoma News Tribune, 12.08.2006)
(Mike Benbow, Everett Herald, 12.08.2006)
(Clayton Park, King County Journal, 12.08.2006)

14 comments:

meshugy said...

Never mind the fact that the slowdown in sales is consistent with a trend that's been going on for almost two years.

Thanks for the report Tim.

However, I think the "slowdown" you're seeing is a statical anomaly created by using the boom years of 2004-2005 as a benchmark. If you look at previous years: sales, inventory, and appreciation are on par or below what we're seeing now. I think if you took a more historical perspective you'd see that the market is still very strong right now. We need to double or triple the current inventory to see any real price declines. But with inventory plummeting I'd say that's highly unlikely anytime soon.

WaitinginMarysville said...

I actually think that the snow probably did have some effect on closings and pendings here in Snohomish county. Some areas had over a foot of snow. I don't see why the rain would have affected the YOY numbers, though, it pretty much always rains a lot in November.

In spite of the snow we have the highest YOY new listings this year except for May.

The Tim said...

Meshugy,

Take another look at the supply & demand graph, dude. The sales curve peaked in Q2 2003. The YOY change in home sales has been headed down at a pretty steady rate ever since then. Sure, it could be a three-year statistical anomaly. Or it could be a trend that we should be paying attention to.

Richard said...

Sometimes it's hard to know if Mesh is serious. But he seems too old to have the highly developed sense of sarcasm so prevalent in the younger generations.

Comrade Chairman Greenspan said...

For that matter, some useful investigative reporting back in the day could have given us some front-page screamer-type headlines like:

LENDING STANDARDS ANNIHILATED
FED FLOODS BANKS WITH FREE MONEY
FOREIGN CENTRAL BANKS LOAD UP ON MORTGAGE-BACKED SECURITIES
APPRAISAL FRAUD EXPLODES
ILLEGAL IMMIGRANTS RECRUITED TO PROP UP HOUSING BUBBLE
BUSH, GREENSPAN DECIDE TO CREATE REAL ESTATE JOBS, OFFSHORE EVERYTHING ELSE, RATHER THAN MAKING AMERICA COMPETITIVE AGAIN
THEREFORE, BUY A HOUSE

Only now, when it's time to point to all the easy money that's already been made and lure the last few greater fools in at the top, do we get this kind of coverage.

Grivetti said...

However, I think the "slowdown" you're seeing is a statical anomaly created by using the boom years of 2004-2005 as a benchmark.

You think wrong there Mesugy....

for starters a 'statiStical anomaly' is a data point that disobeys correlation/trend analysis (i.e. exceeds the curve-fit meadian/mean in excess of the calculated 3-sigma trend)...

In order to counter the arguement, you'd actually have to go to the effort of performing some simple right clicking on The Tim's spreadsheet and fit the trend curves with economic/empirical models of your own, which I know you do not have...

There's no Black Swans here dude, what you're seeing is the credit-crash, restricting credit to sub-primers which is throating the marginal 1st timers... no 1st timers? the markets done. Now you have some equity ladder sales, which is more like musical chairs on the higher end of the market as people swap up marginally, but the glut of ephemeral 1st timers is done... they're spiking the condo sales, but it won't last much longer...

Try correlating the sales,inventory, and appreciation with previous epochs of other 'downed markets' furhter along the equity slide (like Boston) and cross-correlate it with credit/interest-rates... that 'anamoly' will dissapear completely.

Grivetti said...

Sometimes it's hard to know if Mesh is serious.

No, because he's a post-and-leaver... if he acutally had any conviction, he'd stick around a thread or two and respond... but he doesn't...

S Crow said...

I don't think weather had much of any effect on closings.

What did have an impact was Ownit Mortgage closing its doors earlier this week and laying off 800 staff nationwide (with locals gone too) due to Merrill Lynch pulling the plug on them. That blew up a transaction in which we were waiting for funding and it never came. The purchase deal is gone and all revenue from that (agents commissions, escrow, title, etc. is lost including some third party fees that we had to pay out of pocket) is gone.

In addition, our office was waiting for funding on a transaction for OVER A WEEK from Argent and continued to get stupid delay tactic conditions.

So, don't be suprised over the next several weeks of more problems in lending that DIRECTLY impacts purchase and refinance transactions including down stream service providers who employ people like us.

uptown said...

Rain...that must be why a rental sign has appeared outside some very expensive "view" townhouses on W Olympic Pl; which they just don't seem able to sell. And did I mention someone is building 12 more million dollar townhouses next door to them?

Also found 9 brand spanking new condos for rent across from the ferry in Winslow listed on craigslist.

But don't worry...there's no bubble.

SeattleMoose said...

"It's all over now...Baby Blue."

Bob Dylan

"We gotta get outta this place...."

Eric Burdon

Baby Blue needs to get out his banjo and learn some of the songs that will soon be popular in Seattle bars/clubs....

meshugy said...

Real estate all over map on the 'house price index'

Yes, real estate is heating up. You have to be in the right markets, of course, but there are several dozen hot spots. Take Bend, Ore., where house values appreciated a stunning 30.7 percent during the 12 months ending Oct. 1, according to the survey. No dramatic bust or correction going on there. Or Myrtle Beach, S.C. (21.7 percent), Salt Lake City (20.4 percent) or El Paso, Texas (18.6 percent).

Overall, 37 metropolitan markets saw average home appreciation rates of 15 percent or more during the 12 months covered by the survey, and 16 states had average gains in excess of 10 percent. If that's not hot, it's at least warm — exceptionally for a post-boom correction cycle. All these local markets continue to defy the gloom and doom predictions of the real estate bears.

The fastest-appreciating states for home prices this past year? Would you believe Idaho (average 17.5 percent gain), Utah (17.4 percent), Oregon (16.9 percent) and Arizona (16.4percent).

Without question the most impressively documented scenario is that many large metropolitan markets — including some that experienced high gains during the boom years — are still hanging in there and registering net appreciation, albeit at lower rates.

Examples include Fort Lauderdale (10.3 percent annualized quarterly gain), Naples, Fla. (10.8 percent), Los Angeles (7.4 percent), metropolitan Washington, D.C. (3 percent), Seattle (14.8 percent) and San Antonio (9.9 percent).

Anonymous said...

No correction in Bend. LOL!

Figures Lie and Liars Figure!

wreckingbull said...

Bend is approaching the perfect storm for a bloodbath. No industry to support the hilarious prices.

It is also the type of place where median home price means almost nothing. The high-end will stay strong and keep the median price propped while the mid and lower end squeal in agony. (Pay a visit, the sqeualing has already started)

Comrade Chairman Greenspan said...

"But with inventory plummeting"

http://bubbletracking.blogspot.com/

High point: 10/20: 14,524
Latest: 11/30: 13,603

(14524 - 13603) / 14524 = 0.0634.

Does this mean that when prices drop 6% I can say they're plummeting?

Uptown, funny you mentioned the Vista Valencia place. I just walked by it today and the "For Lease" sign is new to me.

When they first appeared, the fliers said "$1MM and up". Now there's no price mentioned on them, but here's one for the bargain price of $835K at http://washington.briorealty.com/nwmls-mls/search/frameset/property.do?id=225841.

If I were in the "millionaire club" I'd sure be upset at that $165K haircut. Fortunately I can rent one for only $4500/month (http://seattle.craigslist.org/see/apa/245622186.html). But I guess I'll just keep paying $800/month for the same view and wait for further discounts.