March Reporting Roundup
Back from my busy week of travel and recharged over the Easter weekend, it's time to post the March roundup.
As usual, let's kick things off with Seattle's #1 real estate cheerleader, Ms. Rhodes, with her fawning article about all about how great and wonderful it is that median prices increased last month.
After stalling for two months, home prices in King and Snohomish counties perked up last month, disappointing potential buyers who thought slowing price appreciation had presented an opportunity.Wait, what? Am I the only one that sounds like utter nonsense to? Less affordable = strong market? Hmm.
Brian and Jennifer Rutherford are experiencing King County's strengthening real-estate market firsthand as they shop for a Bellevue home in the $500,000 range.
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"We were just hoping things would cool off. It might have cooled off from its highest point, but not too far," he said. "Now we're making more of an effort to step up our looking."
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Thursday's news that Microsoft is leasing 1.3 million square feet of Bellevue office space, enough to house 4,000 employees, is a near guarantee that Brian Rutherford is correct about home-buying prospects.
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Lennox Scott, chairman of John L. Scott Real Estate, said a shortage of affordably priced homes will keep the local market strong.
Surprisingly, Mr. Cohen of the P-I chose to focus primarily on Seattle proper, where the picture is somewhat more grim.
There are more homes on the market in Seattle these days -- and their prices slowly are creeping up.Of course, a Cohen article wouldn't be complete if it didn't end on an upbeat with the same-old "strong market" arguments repeated yet again:
The number of homes increased by nearly half in March from March 2006, according to data the Northwest Multiple Listing Service released Thursday. The median home price was $418,000 — up 2.7 percent from a year earlier and 3.2 percent from February 2007.
The median price for a Seattle single-family house went up 4.5 percent from a year earlier, to $460,000, while the median condo price was up 5.8 percent, to $316,950.
In a statement accompanying the Northwest MLS numbers, Mike Skahen, owner of Lake & Co. Real Estate, called the market for close-in Seattle neighborhoods "hotter right now than it was at this time last year," with homes in virtually every price range attracting multiple offers.Ahh, that's better.
Dick Beeson, owner of Windermere Real Estate/Commencement Associates in Tacoma, said, "It just feels like a normal market with well-priced homes seeing offers in 30 days or less and sellers of overpriced properties having a gut check and a motivation check to see if they really are serious about selling."
Recent revelations about failing loans in the subprime market, which serves those with poorer credit, have caused trepidation about the national housing market.
But the Puget Sound region is fairly well protected from this because of its healthy economy, continued home price appreciation and fewer subprime loans compared with other parts of the country, said Erik Hand, president of John L. Scott Real Estate subsidiary Response Mortgage Service, in the MLS statement.
Down in Tacoma, it's getting harder to ignore the picture that the numbers are painting:
The median price was $274,950, up 5.8 percent over the same month a year ago, though down from February, according to figures released today by the Northwest Multiple Listing Service.The Everett Herald appears to be doing somewhat of a victory dance, proudly proclaiming Snohomish County as immune to supply and demand.
Sales, however, continued to fall as the number of listings skyrocketed to 6,554 – up 48.6 percent from March 2006.
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Bob Niehl, an agent for Crescent Realty, said Thursday that it’s not uncommon for the kind of house that once would draw multiple offers to sit for more than 100 days.
Prices for homes and condominiums in Snohomish County continue to soar, even as sales of both in March continued to be down compared with a year ago.Finally, down in Olympia, slowing sales are all too obvious.
The median price for single-family homes hit $382,550 countywide last month, according to the Northwest Multiple Listing Service report issued Thursday. That's nearly 16 percent higher than the median of $330,000 in March 2006.
Prices rose despite a 44 percent increase in the number of homes listed for sale from year to year and a nearly 18 percent drop in pending sales.
Thurston County single- family home and condominium sales dropped 7.5 percent in March, though last month’s results were softened by a surge in the condo market, the Northwest Multiple Listing Service reported Thursday.Sounds like a stellar spring bounce all around the Sound, wouldn't you say?
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Other year-to-year March home sales data for Thurston County:
• Total active listings for single-family homes increased 38 percent to 1,802, up from 1,303.
• The median price of a single-family home rose 4 percent to $254,950, up from $244,900.
• Total active listings for condos increased 133 percent to 49 units, up from 21.
• The median price of a condo dropped nearly 6 percent to $171,203, down from $182,000.
(Elizabeth Rhodes, Seattle Times, 04.06.2007)
(Aubrey Cohen, Seattle P-I, 04.06.2007)
(Devona Wells, Tacoma News Tribune, 04.05.2007)
(Eric Fetters, Everett Herald, 04.06.2007)
(Rolf Boone, The Olympian, 04.05.2007)
27 comments:
"It just feels like a normal market with well-priced homes seeing offers in 30 days or less and sellers of overpriced properties having a gut check and a motivation check to see if they really are serious about selling."
There are some key phrases in here that indicate we've hit a turning point: "normal market" and "serious about selling." Those terms were thrown around in most of the other big markets last year.
"We were just hoping things would cool off. It might have cooled off from its highest point, but not too far," he said. "Now we're making more of an effort to step up our looking."
I gave up looking, it was a complete waste of time. I don't care if I'm priced out forever, or whatever, but I am not dropping $500k on a 3 bedroom/2 bathroom house on the Eastside. I'm sure there are morons like this falling all over themselves to do it, so I will quite happily step aside and let them get to it.
"I gave up looking, it was a complete waste of time. I don't care if I'm priced out forever, or whatever, but I am not dropping $500k on a 3 bedroom/2 bathroom house on the Eastside. I'm sure there are morons like this falling all over themselves to do it, so I will quite happily step aside and let them get to it."
Good for you Peter. Your patience will pay off. Just a few short years ago, I was looking at homes in West Seattle with my sister. She was thinking of purchasing a vacation home, and likes that area. There were view homes in the area available for much less than $500k, though already overpriced. Nowadays, those same homes we looked at are $800k and up. The runup has been the result of rampant speculation due to the credit bubble, and is completely independant of wages and quite clearly unsustainable. But this thing cant turn on a dime, so it'll take a few years, but you'll find your house, and at your price.
Here is something very intersting,
The Gap Ratio of Pending Sales to Number of Listings, from 05 to 06 was on average, a 9.4% difference,with 2005 having a greater percentage of Sales vs listings.
March 2005 had 66% of Sales vs listings ,March 2006 had 65% and March 2007 had a mere 43% of pending sales to listings ratio. though this is not the lowest over the year, that is the largest drop from year to year that I can see in the MLS numbers.
I don't know exactly what that means, but I do know, it is not good for the housing market.
I've noticed that on lots that could, potentially be a tear down for a McMansion (a bit bigger, possibly subdividable lot, or one with a view), the owners are pricing in a developer's potential profit.
This could be, and often is, flippers, but sometimes it's just the owner who "has gotten wise to the game."
If this practice is as wide-spread as it seems, this probably narrows margins on flips to such a small amount that it will either increase the already absurd size of the McCraftmans getting jammed into these lots in order to secure a profit, or it will (hopefully) stop this sort of infill entirely.
The reality is that there are 100s of thousands of view lots in Seattle. Views have never been a significant premium in the past. Not all of them can have a million dollar house on them. There just aren't enough people that can afford a million dollar house.
I am not sure how often this has been stated, but one of the losers are all these people who are not buying or selling, they are previous owners who will be staying put for a while.
What have they gotten out of the bubble? Higher taxes due to a false appreciation.
"...the owners are pricing in a developer's potential profit."
This is nothing new. It's been happening since the bubble began. It's no different than somebody asking several hundred thousand more than their newly remodeled house is worth. People are trying to get top dollar for everything, no matter if it's a rehab, teardown, new home, building lot, farm, ranch, commercial property, etc. It's up to the buyer to decipher if there is any value. The smart developers won't pay those prices, although one does wonder considering the madness of the last few years. As with any sale, you've got to leave something on the table for the next guy.
Hey...does anyone have a way to get copies of past NWMLS reports?
Not the summaries -- I want the full reports, like the one that was posted last week. Is there some secret NWMLS archive that can be obtained via URL mangling?
Anyone? Bueller?
mr. bubble-
I have access and would be more than happy to send you the info for what you are looking for but cannot send you the link. Is there something in particular that you are looking for?
Mr B -
Much of the data from the MLS reports is in Tim's spreadsheet. not sure exactly what you are looking for but he has pretty good coverage.
According to the Seattle Condos & Lofts Blog....condo prices are down more than 10% MoM in Queen Anne and Cap Hill! Did anyone report on that?
It's true that citywide stats haven't shown a significant drop in prices (yet). I just think it's interesting that my 'hood has shown some softening.
I think I'd have to agree with the author of the condo blog when he says
Keep in mind, the one month change, in and of itself, is not as meaningful as trending.
small populations = greater volatility
The subprime market has begun to melt, just wait, give it time and watch it grow.
And smile, because watching greedy a$$holes getting their just desserts is quite joyous.
Confused/Deejayoh:
I want the historical sales breakdowns by price (if they exist -- there was a breakdown in this month's report, but I don't know how long they've been reporting this data).
Is there a way that I can contact you, confused?
These articles remind me alot of the commentary on the stock bubble when it neared it's peak 7-8 years ago.
Seattle is "special" ...just like we were in a "new economy" in the tech bubble. Sure, and I've got a bridge I want to sell ya too!
The bottom line is that appreciation has to stop at some point ...it is simply unsustainable because it would eventually price EVERYONE out of the market.
After houses stop appreciating, they will produce negative cash flow for landlords for decades unless rents triple or quadruple.
So when appreciation stops, the investors late to the party will have to sell (or face losses for a very long time).
As they sell, inventories will rise even further and prices will drop further.
I think it's going to unravel like nothing we've seen! I just hope the whole economy doesn't get sucked into the down-draft. :(
People are always the most bullish during a market top.
You mean real estate prices can go down?...bu bu but thats not what my Realtor® told me when I bought last summer!
As long as the economy is still strong (180K new jobs last month & 4.4% Unemployment rate) housing price in this region or as a whole will not crash. They might slightly decline or moderate, yet the economy of the NW is what will determine how severe any downturn may be.
In early 1990’s recession housing prices in Seattle only declined by 6.22% (based on Case-Shiller data) at the low point. It was a relatively moderate decline. Honestly, what makes people here think the decline will be much worse/less this time? Some on here predict that prices will decline by 10% (about a year of appreciation), 20% (two years appreciation) or 30%+... Can you please provide me examples of real life situations that can back up your assumptions.
For example, please use markets that have had similar appreciation over the past 5 years or examples on a percentage basis over time. San Diego & Vegas had double the appreciation of Seattle so it might decline more as well…however Dallas didn’t appreciate as much as Seattle so it might not be as volatile.
"180K new jobs last month & 4.4% Unemployment rate"
I just love the way you try to pass this information off as if it's specific to Seattle.
"Some on here predict that prices will decline by 10% (about a year of appreciation), 20% (two years appreciation) or 30%+... Can you please provide me examples of real life situations that can back up your assumptions."
Tokyo.
Perhaps you've heard of it in one of your MBA courses....
Mr. B - Yes, Tokyo is a good example. However, what was the appreciation over the prior 5 or 10 years? Did the market skyrocket 200%+ like some markets in the US in a short time period?
Seattle's 5 year appreciation was ~56% (based on MSN quarterly report), thus markets that went up 120% over the same time period might come down 20% and Seattle only decline by 10%...
FinanceGuru
I also have been trying to find out what happened in Tokyo and also Los Angeles in the late '80's early '90's.
The Seatle RE market feels ripe for a correction.
On homefair.com, I looked up mortgage companies to see if anyone in the state of Washington can still get a no down payment, low interest loan. The only company still offering it in this area isAmerican Home Mortgage. But look at their stock record for this week.
I don't think there will be as many buyers competing for the half million dollar homes this season.
"Seattle's 5 year appreciation was ~56% (based on MSN quarterly report)"
Right-o. Meshugy's having kittens about the double-digit appreciation from 2006 to 2007, and you want us to believe that the total appreciation over five years was only 56%.
You guys crack me up.
FYI: Zillow tells me that average five-year appreciation in Seattle is closer to seventy percent. This must be shocking information to a local real estate bear like yourself....
I don't know what's so special about 5 year change.
This bubble's been cranking along, with a small pause when the tech bubble burst, since the mid 90's.
10 year change would be more appropriate:
Median price for residential, KC:
Mar 1997: $176,950
Mar 2007: $454,950
%Change: 157.11%
Adjusted for inflation: Just about 100%.
A 40-50% haircut would make sense, if the housing market made sense. I'll stick by 10-30%, depending on what type of property it is. Maybe Condos get the full 50% or more.
Wow.
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