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Monday, January 08, 2007

December Reporting Roundup

After just nine months of increasing YOY home inventory and fourteen months of declining YOY home sales, the local media has apparently taken notice. Even Elizabeth Rhodes at the Seattle Times can't ignore the slowing trend:

In fact, buyers weren't racing to make offers anywhere in the central Puget Sound area last month, according to home-sales numbers released Friday by the Northwest Multiple Listing Service.
But nowhere could the drops be attributed to a lack of homes to choose from.

Indeed, last month the number of houses and condos available increased 48 percent in Kitsap County, 42 percent in Pierce, 34 percent in Snohomish and 24 percent in King, compared with the previous December.
I can hardly believe I read such a thing with Ms. Rhodes' name on it, but there it is in black and white. I guess the inevitable slowdown has become impossible to ignore.

Aubrey Cohen chimes in at the P-I with what I think may be the first in-print prediction of actual YOY price declines for the Seattle market.
"It's more of the same," said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University. "My expectation is that we're moving into a period where sales are going to remain strong, but certainly not as strong as they had been, and where prices are going to be moderating and stabilizing."
Michael Simonsen, chief executive of Altos Research, in Palo Alto, Calif., has noticed cooling in the Seattle home market.

"Any comparison with last year is down in terms of demand and numbers of sales," he said. "Not great but certainly not falling through the floor."
Simonsen predicted that Seattle would start seeing slight year-over-year price declines this spring or summer, although he said the city had a strong economy, and its housing market would fare better than outlying areas.

"While we see some positive things to keep the bottom falling out, we don't see any big catalyst that will let prices jump upwards," he said.

Price cuts might not reassure already skittish buyers, Simonsen said. "I kind of think that people are attuned enough to the bubble headlines that if we see year-to-year price declines that might even scare people."
Of course, it just wouldn't be a news roundup without an article proudly proclaiming what a "healthy market" we have. This month's optimism comes to us courtesy of Mike Benbow at the Everett Herald:
December home sales dropped in Snohomish County, but prices continued to rise, according to information released Friday by the Northwest Multiple Listing Service.
December followed the trend for about the last six months where listings rose dramatically, sales slumped and prices continued to climb. Unlike many areas of the country, prices in the county continue to rise each month.

"The market is really healthy now," [Windermere broker Vern Holden] said. "I think everyone prefers the more balanced market we have today compared to a year ago."
And just to round out the experience, here's John Gillie at the Tacoma News Tribune with your monthly dose of lame excuses:
In a twist in the law of supply and demand, median December home prices in Pierce and 18 other Washington counties were substantially higher than in the same month in 2005 despite a larger supply of homes on the market and fewer sales.
December figures released by the Northwest Multiple Listing Service on Friday followed the pattern seen for several months, stubbornly refusing to join the price deflation that has happened in other markets as the supply of homes increases and sales slow.
...sales undoubtedly have been affected by the dose of miserable winter weather – record rains, devastating winds and heavy early season snow – Washington has had the past two months.
Things should get really interesting if we do actually see YOY price declines this year. I can't wait to hear the excuses for that.

(Elizabeth Rhodes, Seattle Times, 01.06.2007)
(Aubrey Cohen, Seattle P-I, 01.06.2007)
(Mike Benbow, Everett Herald, 01.06.2007)
(John Gillie, Tacoma News Tribune, 01.06.2007)


Terry said...

According to the Northwest Multiple Listing Service, Kitsap County actually had a 1.43% YOY median price decline for closed sales in December 2006.

JudayMyGuide said...

Simonsen’s comment that prices in the city will be more stable than outlying areas seems spot on. I work with a lot of developers and builders of subdivisions in outlying areas and they are saying the same thing. The developers who buy and subdivide the land have been oversupplying the market and are now selling building lots at lower prices than during the summer. To maintain prices, builders are adding more amenities and assistance with financing before they sell. I don’t think they can continue propping prices up forever, and I expect that prices in the bedroom communities will start to fall this year.

Regarding prices in the cities, I don’t expect them to fall much, if at all. Traffic and rising gas prices will keep demand strong in Seattle, Bellevue, Everett, Tacoma, and Redmond. People want to be close to their jobs and the places they need to go. It will be the North Bends, Enumclaws, and Stanwoods of Puget Sound that see price declines.

Even if there is a general price decline, some areas locations will continue to appreciate. For example, I wish I had the capital to buy up entire blocks around the future light rail stations. Anything within walking distance is going to do well and mid-rises will replace all the existing buildings within the next 15-years.

That’s my 2 cents anyway.

Lake Hills Renter said...

Don't forget, we have the Super Bowl coming up. That'll be good for a whole month of excuses. At least it was last year.

matthew said...

How easily people in Seattle forget the lean years of 1999-2001. It seems like yesterday I graduated college and couldn't find a job around here. A couple years of economic recovery and people seem to think that this place is going to be growing exponentially for the next 20 years.

Just wait for the next recession. We'll be hit just as hard as the rest of the U.S.

Grivetti said...

Just wait for the next recession. We'll be hit just as hard as the rest of the U.S

If not harder. For some reason, folks have delibrately forgot how much longer it took Seattle to dig itself out of the last 2001 recession, jobs took a lot longer to come back...

Since, the same bubble boosters are touting Microsoft and Boeing as the recession savior, I say, "How has their business models changed to the extent that they can now weather a recession?"

The answer, they haven't. What's more woeful is that Seattle's much much more reliant on construction and housing than it was in 2001, and with that the tent-pole in the economy... a recession will only amplify this economic dependancy.