February Reporting Roundup
I'm going to do the monthly reporting roundup a little differently today. I'm going to keep it simple. What you see below is a list of my favorite line from each of the local writeups.
- It's too early to say if this spring's home sales will be a repeat of last spring's frenetic activity, but February's home sales point to it...
- Northwest MLS officials said the increase in pending sales and sales prices were "signs of a rejuvenating market."
- This sets the stage for a hot spring market throughout Western Washington.
- NWMLS officials said that low interest rates, coupled with the area's job growth, will "sustain a healthy housing economy throughout the Puget Sound region."
- The newest numbers, released Wednesday, put the median cost of a single-family home within Seattle proper at $440,250 — out of the reach of most workers...
- [Northwest MLS officials] blamed February's lower number of closed sales on bad weather in preceding months and dismissed concerns about the increasing number of homes on the market
- [J. Lennox Scott] expects activity [near job centers] to cause a "chain reaction of sales up the price points in the coming months."
22 comments:
Whew! So glad all that unpleasant housing business is over with...
Looks like there is such a thing as 'utopia' after all!
Now we can focus on the important stuff like identifying the real father of Anna Nicole Smith's baby.
Tim,
Do you remember? Is it me, or was there not as much media coverage the past few years in response to the MLS #'s? It was the front page headline yesterday! I don't remember this much real estate hype in the past. Do you?
FlipFlop
As much as I fear a nation-wide housing crash (what with all the suprime lenders collapsing, etc), I have to say that the real-estate market in my area remains astoundingly bubbly.
I see that ZipRealty is only reporting 44 listings for East Bellevue (98008), keeping with the extremely low inventory it's been showing since October. So much for the huge spring pick-up in listings... Moreover, I see lots of "sold" signs on the houses I bike past on my regular jaunts around Lake Samammish. I get the distinct impression that things are hotter around here right now than they were at this time in 2006.
Maybe it will take MUCH longer for the malaise in the rest of the country to come home to roost in Bellevue. I notice that we don't have very many suprime mortgages right in this area (the Puget Sound is well below national averages for subprime lending), so maybe we won't start seeing big impacts until the Alt-A mortgage lenders start blowing up too.
When CFC stops issuing any new loans we might finally see an impact in the Puget Sound.
Mikhail...
how do you "notice" that there aren't any subprime mortgages in your area?
Is there a link that I can go to to see the breakdown? Or did you do a door to door sample survey?
With regards to inventory...I don't trust any realtors websites. Call me suspicious...but when different sites give me different numbers the validity of the numbers falls through the floor.
Also...with regards to loans. Although there *may* in fact be a low number of subprime loans written in Bellevue...I can only imagine how many Alt-A and Prime funny money ARM HELOC etc were written over the last few years. Bellevue in general...at least when I was there in the 90's was quite a "keep up with the Jones" kind of area.
I'm sure that it still is...and makes me wonder even that much more how many Bellevueites used their homes as ATM machines.
"we don't have very many suprime mortgages right in this area (the Puget Sound is well below national averages for subprime lending), so maybe we won't start seeing big impacts until the Alt-A mortgage lenders start blowing up too."
But we have a ton of high-risk, payment option loans.
Remember the episode of South Park where everyone moves to San Francisco and falls in love with the smell of their own farts? That's present-day Seattle. There aren't very many obviously poor people here, but there are a heck of a lot of middle-class people living well beyond their means, and being snotty and arrogant about their "success".
I don't know what it will take for the local market to correct. My gut says that it's already happening (closed sales are down, year-over-year). It may take a nationwide recession to kick local industry in the balls (just like 2000 -- funny how people have already forgotten), or it may just take a few months to reach full steam. But either way, I know that it's going to happen, and it's going to hurt....
It's beginning to remind me of the Japanese soldiers who were discovered years after WWII and thought the war was still going on.
Stories abound of tightening lending standards, the #3 and #5 subprime lenders imploding within a week of one another, the finger-pointing and lawsuits and federal investigations starting...and yet these people would have you believe it's still 2005.
Mikhail -
I'm not as catastrophic as some on this blog who (rather gleefully it seems) post about how the impending collapse of the world economy is nigh.
However, I do think that the sub-prime collapse is going to affect the seattle market very shortly now. While people often say that real estate is a local market, that isn't entirely true anymore. From the finance perspective, real estate is a global market; mortgages are sold to investors world-wide, and seattle is as much affected by this as any other market.
Global demand for mortgage-backed-securities is starting to disapear, and credit standards for mortgages are tightening. The net result here in Seattle, and across America, will be less dollars available for mortgages. Less dollars results in less demand which results in lower prices.
You can imagine how this could begin an ugly spiral, with lower prices and less available credit restricting sales & refinancing, thus causing more defaults, resulting in further restriction of available credit, causing more defaults...
A comment for the The Tim - *great* blog. You should be a financial analyst or something. If you're bored, it would really be interesting to see data on % of loans in seattle area that are sub-prime, from whom they originated, and what would happen to demand locally as sub-prime financing started to disapear. The reality is Fremont & New Century are not making any more loans, and they accounted for 13% of sub-prime loans.
It would also be interesting to see data on how many area loans are going to reset going forward. (perhaps a correlation could be made between resets & demand?)
You really have to give the local bubble-boosting press their due. Quite a phalanx of propoganda with neary a hole... not one of those articles mentions the national housing slump, not one...
And with 20% to %40 percent of buyers in the local market set to no longer qualify for a mortgage due to restrictions of the sub-primes and tighter lending standards, the local presses hubris and bizarre optimism is almost like listening to a heroine junkie explain socio-economic paradym theory.
The more I think about it, the more I convince myself. March: good numbers. April: cliff.
The funny money is drying up faster than even most pessimists predicted.
Heres something I heard of when I worked at WaMu. Alt-B, thats right, a mortgage product for people that couldnt qualify for subprime,lol.
reuters.com article regarding Countrywide's decision to stop offering 100% financing.
A conservative estimate, I'd say. Standards are probably going to get tighter before year's end.
"Stop giving risky mortgages to people who won't be able to afford the payments in two or three years, federal regulators are telling lenders."
What's the old saying, "too little, too late"?
I couldn't care less if sales and prices were the highest ever this spring. Typically, at the tail end of a bubble, that is precisely what happens. It doesn't change the fact that prices, as well as sales, are going to implode. And, the greater effects of the subprime meltdown have yet to be felt. What is never discussed, are the number of pendings which are no longer being funded, and, therefore, falling out of escrow. I talked with my mortgage broker earlier in the week, and she said that the money is drying up daily. Gone are the days of the zero down, stated income nonsense. Eventually, this will kill the Seattle market, as well as all others. More than 60% of the subprime loans over the past several years would have never been funded in the first place had the current guidelines been adhered to. And this also goes for the Alt A stuff. DTI ratios were completely ignored when funding folks with stellar FICO scores. Even the most credit worthy stretched themselves too thin in this market. I find it humorous to read all of the rah rah blather coming out of Seattle. It's about as reliable as the information gleaned from the local crack dealer who was just hauled in by the cops.
I agree with BanteringBear. The tightening going on in the mortgage market will not be felt for some time. While the meltdown is painfully obvious for those who understand what the tightening means in the longterm, many in the MSM and within the RE business will view this meltdown with blinders on.
We will still be hearing "This market is HOT HOT HOT" probably until Aug 2007. Aug 2007 is when I feel that the tightening going on will truly be evident in our market, and across the country.n But I wouldn't expect any of this to change anyone's mind overnight.
The timing of the tightening of lending standards is going to hurt those whos ARMs start resetting this year. Many may not be able to refinance out now. This could increase the impact of The Great ARM Reset dramatically, but I don't expect to see any effects until later this year at the earliest. People will try to hold on as long as possible, even if their reset payments are killing them, IMO.
Mikhail
You said the Puget Sound is well below national averages for subprime lending),
Not true
I don't quite understand. Are 0 down products going away for subprime lenders? If you have excellent credit and full doc, etc..etc... can you still do a 80/20? Is it going to be that even if you can qualify legitimately the rate will be very high on an 80/20? I realize that 0 down will vanish for subprime, but what about those who can afford it?
at this point pretty much no more zero down. That was
CFCs position. Am going to look next week and check things out looks like FHA will be the only low down program availabe and max limits in king are like 370 ish.... should get interesting quickly in my opinion
Countrywide is requiring at least 5 percent down. I expect the rest of the lenders to follow suit.
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