Home prices go negative for first time in 11 yearsOf course, since you already know how special Seattle is, you obviously know it was one of the three cities in which prices are not presently falling. But the picture isn't quite as rosy as you might think...
Case-Shiller price index shows prices falling in 17 of 20 cities in January
WASHINGTON (MarketWatch) — U.S. home prices continued to fall in January, with prices in 10 major cities now down 0.7% year-over-year, according to Standard & Poor's and MacroMarkets LLC, which released the January Case-Shiller price indexes on Tuesday.
The 10-city index is down 0.7% in the past year, the first year-over-year negative reading since 1996. The 20-city index is down 0.2% year-over-year. A year ago, prices were rising 15%.
"The annual declines in the composites are a good indicator of the dire state of the U.S. residential real estate market," said Robert J. Shiller, chief economist at MacroMarkets, in a statement.
Home prices fell from December to January in 17 of the 20 cities; only Miami showed any price gains. Prices were flat in Charlotte, N.C., and Seattle. Prices were falling fastest in January in San Diego, down 1.7%, or a 22.4% annual rate. Prices dropped 1.1% in Los Angeles, or a 14% annual rate.I am reminded of an image that was circulating a while back. It was a photograph of a roller coaster just as the cars crested the peak and began the ride down. The various cars were labeled as different cities around the country, with San Diego in front (beginning to head down quickly), Phoenix in the middle (just starting a downward trend), and Seattle in the back (just "leveling off").
The 10-city index was down 0.8% in January, or an annual rate of 10%. The 20-city index was down 0.7% in January, or an 8.7% annual rate.
Eleven of the 20 cities had negative price appreciation in the past year, led by Detroit (down 6.9%) and Boston (down 5.6%). The biggest increases were in Seattle (up 11.1%) and Portland, Ore. (up 8.7%).
Prices have now retreated year-over-year in some of the regions that had the biggest price gains in 2004 and 2005. Phoenix is down 0.7% year-over-year. San Francisco is down 1.4%. Washington is down 3.9%.
To me, it only makes sense that the cities that began the ridiculous run-up first (San Diego, Phoenix, etc.) will be the first to head down. Conversely, cities that were late to the wild appreciation party (Seattle, Portland, etc.) will be the last to experience price declines. But why bother with "logic" and "reason" when you can put your blind faith in the mystic power of "job growth" and undefined "fundamentals." 11.1% forever!
(Rex Nutting, MarketWatch, 03.27.2007)
Home prices fell from December to January in 17 of the 20 cities; only Miami showed any price gains. Prices were flat in Charlotte, N.C., and Seattle.
ReplyDeletePrices being flat in Seattle from Dec to Jan isn't really all that alarming. Actually, its better then normal! Often prices decline over the holidays...even during the hottest years:
Dec 2004 KC Res Median: 304K
Jan 2005 KC Res Median: 293K
Dec 2004 KC Res Median: 335K
Jan 2005 KC Res Median: 329K
Dec 2005 KC Res Median: 393K
Jan 2006 KC Res Median: 390K
So during the last three of the hottest years on record, we had price declines from dec-jan. Pretty normal....
This quote give a more accurate assessment of the situation:
Eleven of the 20 cities had negative price appreciation in the past year, led by Detroit (down 6.9%) and Boston (down 5.6%). The biggest increases were in Seattle (up 11.1%) and Portland, Ore. (up 8.7%).
1) The report shows that Seattle was flat not just December to January, but from November to January.
ReplyDelete2) The Case-Shiller index is a far more accurate gauge of the market than MLS median data. From the story: "The Case-Shiller index is considered to be a superior gauge of home prices compared with the median sales-price data released by the Commerce Department or National Association of Realtors, because it tracks multiple sales on the same property and is therefore not influenced by a different mix of homes sold in a period."
3) The Case-Shiller index for Seattle was practically a solid upward curve from 2003 to 2006, even through the winters. The current flatening of the graph has lasted far longer than any flat line since about 2002.
I'm afraid you have succeeded yet again in proving nothing more than your own poor reading comprehension skills.
Nice try Shug, keep trolling!
ReplyDeleteBless you Tim
ReplyDeleteThe report shows that Seattle was flat not just December to January, but from November to January.
ReplyDeleteSame difference....prices usually go flat or drop from Nov. THIS IS COMPLETELY NORMAL. You're going to have to come up with something better then that to convince me that a crash is looming.
KC Res Median Nov. 2003: 300K
KC Res Median Jan. 2004: 293K
KC Res Median Nov. 2003: 300K
KC Res Median Jan. 2004: 293K
KC Res Median Nov. 2004: 335K
KC Res Median Jan. 2005: 329K
KC Res Median Nov. 2005: 389K
KC Res Median Jan. 2006: 390K
etc, etc....
This happens every year....Spring is when the magic happens. If prices remain flat over the Spring then I would agree there is a stronger chance of a correction. But flat from Nov-Jan really says nothing at all.
Did you bother reading beyond point 1 in my comment above?
ReplyDeleteCan you honestly look at this graph and say with a straight face "it's just normal winter price behavior"?
Again, we're not talking about MLS median values here. Quoting more MLS numbers at me will get you nowhere.
Again, we're not talking about MLS median values here. Quoting more MLS numbers at me will get you nowhere.
ReplyDeleteSpeaking of reading comprehension...I think you failed to notice their methodology. That graph considers Seattle ALL of King, Snohomish, and Pierce counties. So we've got Tacoma #s in their....yuck.
Anyway, that's way too general for me. This is the Seattle Bubble Blog, right? So let's look at Seattle data which clearly shows normal sales patterns right now.
Speaking of reading comprehension...I think you failed to notice their methodology.
ReplyDeleteNo, I did not fail to notice it. But thanks for the feeble attempt at misdirection. You're always good for a laugh.
"How Come Meshugy are you the first one here posting?"
ReplyDeleteI can't believe how stupid I've been.
Meshugy = Tim :)
Meshugy = Tim :)
ReplyDeleteDamn...busted!
No, I did not fail to notice it. But thanks for the feeble attempt at misdirection. You're always good for a laugh.
ReplyDeleteWell Tim, if you don't think there's a difference between looking at just Seattle data vs. ALL of King, Peirce, and Snohomish, then the integrity of all your research is in question.
Every piece of data helps to complete the puzzle picture.
ReplyDeleteMedian price changes do seem to reveal seasonal trends. What does it mean if Dec 2006 to Jan 2007 followed the same trends as 2004-2006? Who knows? Meshugy is only posting data during a huge bull cycle. We need to know how the market behaves in a bear cycle, or right before a bear cycle, to be able to make an inference. And even then the inference is not perfect and we need to look at other pieces of data to add or remove evidence to our conclusion.
But Meshugy did not even post the 2006-2007 median data. I don't even know what he is arguing about the present.
(Actually I know he is trying to argue the bull market will continue, but his argument is so weak that if I did not know his stance it would sound like random spouting of statistics).
I am sure there are condition under which Case-Shiller statistics paint an inaccurate picture. I would not depend solely on those numbers either.
(although reading about how Case-Shiller is calculated makes me think it is pretty solid)
Meshugy is also under the mistaken impression that we want to convince him of a bear market. In truth, I (and probably most of the people here) could not care less if Meshugy makes or loses money in the housing market. I think most of the people here are looking for convincing evidence that their theories about the housing bubble are wrong. I know I am.
If I am somehow missing something and prices are sustainable and are going to keep going up then I do want to get into the market before they go up any further. So far I have not been able to find evidence that convinces me of this and so I will wait patiently as a renter until reality behaves as I expect or I discover the facts that I may be missing.
This is why in theory I welcome Meshugy to this board. Unfortunately, empirical evidence suggests that Meshugy is incapable of providing value in this conversation.
Isn't one valid way of looking at this data is that Seattle really is different right now than other markets? I know the prevailing opinion here is that Seattle is in a bubble, but in fairness there is another side to this data. One thing Seattle and Charlotte have in common (the two cities that did not decline) is that they both have very strong job growth. Buyers don't care what the state of the market is, they care that they need a place to live reasonably close to their job.
ReplyDeleteI can see the argument that we may just be seeing a delay in declines from these other markets, but there is this other reasonable side, too. We did miss the slowdown that hit the rest of the country around 2005, so it is possible that we won't be hit as strongly with real estate declines, if at all.
We did miss the slowdown that hit the rest of the country around 2005, so it is possible that we won't be hit as strongly with real estate declines, if at all.
ReplyDeleteYes, I'd agree with that assessment.
I have to call BS on the "we have great job growth" argument. Last year Seattle/Tacoma/B'vue was #86 MSA on job growth, yet we are still #1 on housing price increases. Bellingham was #22, Everett was not on the list.
ReplyDeleteLink
Seems like we should be #1 with a bullet if the "specialness" theory is true.
However, I woudl LOVE to see someone make a compelling argument why the fundamentals in Seattle are so much better that we can justify a belief we will remain a bubble w/in the bubble. Fundamentals - not just extrapolating today's trends into eternity.
Anyone want to take me up on it?
"this has got to be really frustrating to all the peak renters who for the last 5 years have called the top."
ReplyDeleteWho would this be?
Seriously....name one person who has been "calling the top" for the last 5 years. I'm waiting....
Incidentally, I love how you guys get ever more trollish as the market continues to deteriorate. So long as Meshugy doesn't completely snap (and start hunting people down at home), this could be a fun ride to the bottom!
This may be true for some, but when you need a place to live and you can rent for less than half of what it would cost to own
ReplyDeleteI do think that in mosts cases it now costs a little more to own then to rent. But you'd have to provide some data to convince me that it would cost half to rent.
But over the longer term, owning still works out better because of tax deductions, appreciation, and fixed housing costs (rents are rising pretty rapidly now.)
I can't believe how badly you guys have been taking Shug's bait in the last couple of weeks. These threads used to be A LOT more civil. Yeah, he's trolling and you guys just can't resist biting the wigglewort.
ReplyDeleteHis last post is so blatent, yet he knows somebody will take the bait. As much as I hate to admit it, I've been getting some great laughs recently.
I wonder when the "triple dog dare" will come out.
Kaleetan, Shug, FinanceGuru, and Seattlehotty (which by the way nice name for a dude!) should all start their own anti-bubble site!
ReplyDeletewww.thereISnoSeattlebubble.com!
ReplyDelete"rents are rising pretty rapidly now"
ReplyDeleteSource?
Best I could find is 2.9% "asking" increase. From $813 to $846. This was characterized in the article as "Rents Soaring"
Rents out of whack with cost of ownership is definitely a sign of one of the two being mispriced - but I'd love to see how you think we are closign the gap.
Link
Chris -
ReplyDeleteoops, I guess I took the bait!
If gone unchallenged, some poor first timer might actually believe the propaganda that the Shugster is spewing.
ReplyDeleteThe prices increases in recent years provide evidence that we are in a bull market. They do not provide any evidence that the market will continue.
ReplyDeleteSeattle was late to the appreciation party. If you had predicted that Seattle was "special" and was not going to see much appreciation based on the fact that prices were going up everywhere else but not here then you would have been wrong. Still, the fact that prices here have held while the rest of the country has dropped is evidence that something different is going on here. It creates enough doubt in me that I want to keep looking for new theories and data to confirm or debunk the theories.
I think it is also a fallacy to think that Seattle is just time shifted from the rest of the market. The fact that we started appreciating later does not imply that our crash will be later by itself. I think you need to understand why we were late to the party. Maybe that cause will also explain why the crash will be late. I do not think anyone has proposed an explaination for that (although it could be that our prices are heavily influenced by prices in CA with a delay of several months between cause and effect -- but we would need data to support that claim -- like the percent of housing sales that go to CA transplants).
Source?
ReplyDeleteApartments were relatively affordable in recent years, as rents fell with vacancy rates after 2001. But vacancy declined from a recent high of 7.7 percent in 2002 to 6 percent in 2005, according to the report, and Dupre + Scott Apartment Advisors reported the rate at 4.7 percent in December. Dupre + Scott forecast rents would rise about 8 percent this year.
Vacancy is plummeting...all the people in the business know this and that's why there's so much investing go on in apartment buildings right now. Rents are expected to rise quickly.
Not science, but ...
ReplyDeletehttp://www.ezloanapply.com/rentvsbuy.php
NET COST OF RENTING: $52,265.92 NET COST OF BUYING: $108,983.02
Summary: You will save $56,717.10 if you rent instead of buy. That looks to be about double the cost to buy versus rent, hmmm.
Numbers fed to calc:
Monthly rent ($): 1100
Monthly rental insurance ($): 15
Expected annual inflation rate (%): 4
Purchase price of home ($): 450000
Down payment amount ($): 40000
Length of mortgage term (# of years): 30
Mortgage's annual interest rate (%): 7
Discount points on purchase of home (%): 1
Origination fees (%): 1
Other loan costs ($): 0
Mortgage Insurance (PMI %): .4
Homeowner's insurance rate (%): .5
Monthly association dues ($): 0
Average monthly maintenance ($): 100
Annual property tax ($): 2000
State plus Federal income tax rate (%): 28
Interest rate you expect to earn on savings (%): 7
Expected percentage your home will appreciate by each year (%): 3
Number of years you will stay at this property: 5
Realtor commission rate (%): 7
Shug -
ReplyDeletethanks for posting that. Dupre & Scott are a firm that make their living advising people to buy apartment buildings. Take what you may from that
History has been a bit different
Average Change in Rent for Kingco
2000 3.9%
2001 5.3
2002 1.5
2003 -2.0
2004 -2.3
2005 0.9
So it looks like the best years of home appreciation have coincided with declining or flat rents. on second thought, maybe the reverse is true and you are right...
well see increasing rents and dropping home prices
I was watching the E! True Hollywood Story on "Who's The Boss" last night, and the creators of the show brought up that part of the idea for the show was what was happening to real estate in San Francisco at the time (must have been the 70's?). During that time the median home cost was above the median income, and a popular thing to do was for two people to go in on buying a home together as partners.
ReplyDeleteI was surprised to learn about real estate history on E!, but it does point out that prices can go up even when individual buyers can't afford them. We may very well see more home sharing in Seattle if rents increase beyond where renting is attractive.
Alan, your post succinctly summarizes my position: It creates enough doubt in me that I want to keep looking for new theories and data to confirm or debunk the theories. I have been lumped in with meshugy for my optimism, but my mind is not made up and I appreciate this blog for presenting theories and data from both sides. Thanks to all!
My rent went up 11% I live a few blocks from REI downtown Seattle.
ReplyDeleteExpected percentage your home will appreciate by each year (%): 3
ReplyDeletetry at least 7%...more like 14% in recent years.
Purchase price of home ($): 450000
Good luck renting a $450k home for $1,100
If you put in more realistic numbers you'd see it's a lot closer then you think.
I have many friends renting in Ballard for less than $800 a month (myself included).
ReplyDeleteIf I were willing to spend over $1100 a month on rent, I would be able to live in new construction (granite countertops and all).
Tell me again how buying is cheaper than renting? I want to laugh.
(Incidentally....I can't help but notice that FOR SALE signs are sprouting like mushrooms in Fremont and Ballard. So much for "limited supply"....)
seattlehotty said:
ReplyDelete"Isn't one valid way of looking at this data is that Seattle really is different right now than other markets?"
No. That is not valid. Seattle experienced a hyperinflation in home prices due to the credit bubble (loose lending). It was totally unrelated to job growth, and salaries. Median incomes do not support median home prices, therefore your job growth argument is refuted.
Nation's Housing
ReplyDeleteYou need to get your own appraiser to value your property or pay too much property tax in King/Snohomish County:
Appraisers get pressure to fudge figures
By Kenneth R. Harney
Syndicated Columnist
WASHINGTON — With home prices softening and sales volumes sagging in many local markets, real-estate appraisers say that pressure on them to inflate values has reached pandemic proportions.
A new survey of the national appraisal industry found that 90 percent of appraisers reported that mortgage brokers, real-estate agents, lenders and even consumers have pressured them to raise property valuations to enable deals to go through.
That percentage is up sharply from a parallel survey conducted in 2003, when 55 percent of appraisers reported attempts to influence their findings.
Both surveys were conducted by October Research, a Richfield, Ohio-based firm that publishes Valuation Review, a popular industry newsletter.
The latest survey involved 1,200 appraisers representing a statistical cross-section of the industry in 50 states, the District of Columbia and Puerto Rico.
The results have a margin of error of plus or minus 2.8 percentage points.
"I call it a perfect-storm scenario," said Alan Hummel, senior vice president of Forsythe Appraisals of St. Paul, Minn., one of the largest property-valuation firms in the country with 40 offices and 190 licensed appraisers.
Forsythe co-sponsored the new research study.
"You've got a situation where sales are down so everybody in the deal needs it to go through" at the contract price — the mortgage broker, the real-estate agent, the lender and even individual sellers.
Loan brokers are now routinely "dialing for values," Hummel said. "They call up appraisers and say, we've got this sale at $335,000 at such-and-such an address. Can you get to that number?"
If an appraiser answers yes, he or she gets the assignment. If not, the appraiser is bypassed.
Worse yet, said Hummel, when an appraiser comes back with a market-value estimate that is lower than the sales-contract price, the appraiser may not get paid for the work and frequently is blackballed by the mortgage broker or real-estate agent.
The survey found that 75 percent of appraisers reported "negative ramifications" if they refused to cooperate and come in with a higher valuation.
Sixty-eight percent said they lost the client — typically a mortgage broker or lender — following their refusal to fudge the numbers, and 45 percent reported not receiving payment for their appraisal.
Hummel said real-estate agents may retaliate against noncooperative appraisers by telling local mortgage brokers or lenders, "Look, I'm not sending any more [home purchaser] clients to you if you continue to use that appraiser."
Mortgage brokers were ranked the most common source of pressure — 71 percent of appraisers said brokers had sought to interfere with their work. Real-estate agents came in second at 56 percent.
Both numbers were up significantly from the 2003 survey. Also identified as sources of pressure were consumers — typically home sellers (35 percent), mortgage lenders (33 percent) and appraisal-management companies (25 percent).
Mortgage brokers represent the biggest problem, Hummel said, because they are generally lightly regulated at the state level, often wield the power to bestow or withhold appraisal assignments at the application stage, and ultimately "if the deal goes south two years from now, they're long gone" from the transaction.
On the other hand, lenders, including banks and mortgage banking companies, "have more skin in the game" — they are more intensely regulated and can be forced by bond-market investors to "buy back" defaulting mortgages that have inflated appraisals or other defects.
Hummel emphasized that responsibility for the problem of pressure rests not only with loan brokers, real-estate agents and lenders, but with the appraisal industry itself.
Large numbers of newcomers with inadequate training and little experience flocked into the appraisal field in recent years, drawn by high housing sales volumes and constantly escalating prices.
Now that sales are down, Hummel said, "you've got more appraisers out there who think, 'Gee, if I don't [cooperate], maybe I'm not going to get any more work.' "
The vast majority of appraisers resist the pressure they receive — from any source — and simply refuse to submit valuations they know to be inflated, he added.
Hummel said Congress needs to enact legislation making pressuring appraisers to distort their valuations, or interfering with appraisals in any way, a federal offense, subject to criminal penalties. And state regulators need to step up enforcement against fraudulent appraisals, pressure tactics and appraisers who give in.
Kenneth R. Harney: kenharney@earthlink.net
Copyright © The Seattle Times Company
Seattle experienced a hyperinflation in home prices due to the credit bubble (loose lending). It was totally unrelated to job growth, and salaries. Median incomes do not support median home prices, therefore your job growth argument is refuted.
ReplyDeleteIf that's the case then why have other markets slowed and not ours? Rates have been more or less the same over the last 6 months. Seattle has been fine, while other areas have had trouble. Same rates, different results?
Even Schiller says rates don't matter that much:
The Bubble Guru's Take On Housing
Are low long-term mortgage rates supporting the market?
Mortgage rates have been falling for 25 years and when I look at the whole history of mortgages and home prices, I don't see a strong relationship. The psychology is more important. In the late '70s, interest rates rose to double-digit levels, and there was still a housing boom.
I have wondered SF has been able to sustain such high prices for so long.
ReplyDeleteMy current theory is that prop 13 and rent control reduce the effective supply of housing.
Prop 13 makes people unlikely to sell even if they are leaving the area. If they return, their property tax on a repurchased home could easily triple. The property tax savings make them hold on to the property in case they want to return in ten years (the savings of paying propety tax on the value from 10 years ago can be tremendous in a quickly appreciating market).
Rent control operates the same way. If you have a rent control apartment, you do not let it go because the $300-600/month carrying costs are less than the lost opportunity cost of moving back into the city.
Lower effective supply means higher prices. If WA does something similar to prop 13 then I may jump into the market immediately.
Puget Sound does has growth managment acts that limit supply growth but, as Tim has shown, it has not prevented supply from falling behind the population demand. I believe it has allowed supply to fall behind population+speculation demand. But that is a good thing. It means that Seattle can not overbuild based on speculation demand. I think growth management acts as a damper so that we do not get into a boom/bust cycle.
Depends on how you run the numbers but roughly 1/2 rent to purchase.
ReplyDeleteBad example...that house is practically on 405. If you want to pay $1650, then be my guest. Just about every rental that's been posted has been like this...old, rickety, bad location, etc. All you're doing is reminding me why I don't rent.
Again, usually there's a big trade off of quality of life when renting:
1) Poor locations (busy streets)
2) Outdated houses
3) Difficult land lords
3) Bad neighborhoods
4) Unexpected rent increases
5) Unexpected evictions
etc...sure some or all of the problems can be remedied by the perfect rental. But you'll pay top dollar for that, and still won't earn equity or have the security of knowing you can't be evicted.
(Incidentally....I can't help but notice that FOR SALE signs are sprouting like mushrooms in Fremont and Ballard. So much for "limited supply"....)
ReplyDeleteand so are the sold signs....they're everywhere!
I have many friends renting in Ballard for less than $800 a month (myself included).
ReplyDeleteShow me what you can get for $800.
I don't think the driver is low interest rates, per se. more like availability of money at those low rates to people who'd not traditionally qualify for a mortgage. Owner occupied homes in King County rose 28% from 2000 to 2005 - vs. a 1.1% increase in population.
ReplyDeletehow did all those people get into homes? Lower mortgage requirements is a pretty good hypothesis - especially in light of recent sub-prime woes.
from the census, for king county
Rates have been more or less the same over the last 6 months. Seattle has been fine, while other areas have had trouble. Same rates, different results?
ReplyDelete-Shugmeisterflash.
Take a look at the median prices of houses for the last 6 months (actually check 9 months). A generous interpretation is they have been flat. I would say teetering, and starting to slide down the hill.
I still haven't gotten your agreement on our bet by the way - inflation adjusted YOY median price change in King County in July will be negative, remember? Pictures of flacid balloons on your Ballard Palace's eves? Should be entertaining.
Bliss...it's right close to 405:
ReplyDelete9625 NE 141st Pl.
You definitely hear lots of noise from the freeway....
I still haven't gotten your agreement on our bet by the way - inflation adjusted YOY median price change in King County in July will be negative, remember?
ReplyDeleteSure...what's the wager?
Shug said:
ReplyDeleteAgain, usually there's a big trade off of quality of life when renting:
1) Poor locations (busy streets)
2) Outdated houses
3) Difficult land lords
3) Bad neighborhoods
4) Unexpected rent increases
5) Unexpected evictions
etc...sure some or all of the problems can be remedied by the perfect rental. But you'll pay top dollar for that, and still won't earn equity or have the security of knowing you can't be evicted.
So I'm supposed to believe that renting in Ballard means living in a bad neighborhood while buying in Ballard means living in a good neighborhood? Or did you mean to suggest that living in a nice neighborhood costs renters more but not buyers? I'm confused: which ridiculous claim were you making?
Shug, I agree that paying less than $800 in rent won't get someone a house like you live in. On the other hand, it could get someone a perfectly comfortable Ballard apartment. Sound limiting? Well, one nice thing about renting is that you don't have to live in it forever. Which you can't say about a house when you're upside down in your mortgage. Rather live in a house? Well, this one's a bit further north, but it took me all of 30 seconds' worth of research to find it:
http://www.seattlerentals.com/6616
Not too pricey.
Which leaves us with:
...and still won't earn equity or have the security of knowing you can't be evicted.
Not sounding to secure about yourself, Shug. Something making you nervous? Maybe that's your over-dependence on real estate for your financial well-being and sense of self-worth. Don't feel bad. It's pretty common around here these days.
(And, no, I will not give you my address.)
Friends, family and self included have faced declining income. Small business and large look for ways to cut expenses and increase profits and lately have taken to asking for more $$ in the form of wages and benefits. Often times when workers are let go they are not replaced.
ReplyDeleteThe erosion of our standard of living is inevitable and the more efficient we become economically as individuals the better off this country will be.
Housing is falling in line with these changes but it seems to be adjusting slowly. I believe that Seattle prices have peaked, there may still be a rally left in this market, if so it will be short lived.
Below are the statistics for King and Snohomish county inventory and pending sales for March of each year (March of 2007 is estimated).
ReplyDeleteYou will see inventory is actually above the 10-year moving average and pending sales are approaching the 10-year moving average.
I don't buy the argument that inventory is low. These stats don't take into acount the countless condo projects that are not listed in the mls or that are in the works.
Year Inventory Pending Sales
1993 15428 3409
1994 11624 4097
1995 14213 2925
1996 14048 3714
1997 10937 4145
1998 9255 4378
1999 10211 4348
2000 11201 4324
2001 13405 4137
2002 13743 4074
2003 16426 4973
2004 13247 5984
2005 9854 6397
2006 9601 5982
2007 13417 5559
I've just arrived in Wellington, New Zealand. I just picked up the paper and here's the headline: Impossible Dream - Survey shows crisis in home affordability. It goes on to state that a Kiwi with a median income would reuire 73% of that income to buy an average home at present. In Auckland, one requires 93% of income. In Queensland, it requires over 105% of your income.
ReplyDeleteNope, no worldwide equity bubble.
seattlehotty said:
ReplyDelete"One thing Seattle and Charlotte have in common (the two cities that did not decline) is that they both have very strong job growth."
"Beazer Homes USA Inc. said in a statement late Tuesday that it "can not comment on or verify any investigation," following a report in the Charlotte Observer that federal authorities have launched a criminal inquiry into the company's business practices, including its role in arranging mortgage loans for buyers in its subdivisions. The Observer said its investigation into the home builder, published last week, found "the company's aggressive sales tactics were producing an unusually high rate of foreclosures in many of its Charlotte-area developments."
Here's the link:
http://tinyurl.com/2fdetr
So I'm supposed to believe that renting in Ballard means living in a bad neighborhood while buying in Ballard means living in a good neighborhood?
ReplyDeleteDepends...living in a GOOD part of ballard. Not on a busy street or in the rental ghettos S. of 65th.
http://www.seattlerentals.com/6616
Example A: Much smaller then my place (the basement is unfinished). On 80th which is a major arterial. And I highly doubt it's updated inside. Sorry, this only reminds me why I don't rent. Seems that no one can really find a good rental that is cheaper then buying an equivalent house.
Well, one nice thing about renting is that you don't have to live in it forever.
But you can get evicted any time. Sorry, I'd rather have the security of deciding when I move.
Which you can't say about a house when you're upside down in your mortgage.
This is a pretty weak argument right now since anyone who bought in the last few years is now sitting 100-200K in Equity.
Shug just won't stop. The man is on a mission.
ReplyDeleteAll I have to say is I can't wait to see some numbers for March. Of course, no matter what comes out, there will be no end to the twisted statistics trying to show how the PNW is still special; but there's gonna be some hurtin' in those numbers -- for the whole country. The whole country.
Here's the thing. For these people that believe that a house is primarily an investment, as opposed to being something you live in, then when is it a good time to invest in the housing market place?
ReplyDeleteRule of thumb: BUY LOW, SELL HIGH
If you want to throw away your money, the best thing you can do is jump in late to an overheated marketplace. If an investment looks like it's overpriced, and you have some reason to think prices may decrease, DO NOT BUY!!! Just ask the people that bought Amazon at +$100/share.
Right now prices in KC and nearby areas are at historical highs. Why anyone would invest in a market that is this historically overpriced and expect to make money in the short to medium term is beyond me.
But buying a home shouldn't be primarily an investment. You shouldn't plan on making money on the home you live in. Some people do, and that's great. The people that bought in prior to the run-up in prices and sold last year hit the market perfectly. But some people lose their shirts, as we will see across the country this year.
You live in your house. Owning a home has all the advantages that shug says, and he's right. But that's because you should be motivated to buy a home to live in it, not make money.
RentalBliss,
ReplyDeleteLook closer at the "map" Shug presented you - he used the following for the, ahem, "address":
[10800-10899] Ne 141st Pl
Kirkland, WA 98034, US
What a laugh! Here's the actual address from the CL ad:
9625 NE 141st Pl.
Bothell, WA 98011
I don't know if it's Mapquest or Meshugy that's way off base on this one, but here is a link to the address in question. As has been pointed out, it's nowhere near the freeway, and definitely not on a busy street.
ReplyDeleteSwing and a miss!
Meshugy is the master of disinformation! The voice of the damned gets louder as judgement day approaches!
ReplyDeleteSure...what's the wager?
ReplyDelete-Meshugy
As far as I recall it was something like if you lost you would take a picture of your house with a whole bunch of flacid balloons hanging from the eves, and send it into Tim to post.
If I lost... I can't remember. Something like putting "Housing only goes up up up!" on my roof and similarly posting a pic. I'm open to your suggestions, however, if you have a novel idea.
It's in an old thread someplace, though I wouldn't know how to find it.
Right from the mouth of the Standard & Poor's Index Committee.
ReplyDeleteSeattle housing prices up 11% from last year
Seattle, unlike most, if not all, of the other metropolitan areas, continues to see robust increases in home prices," said David Blitzer, chairman of Standard & Poor's Index Committee. "My sense and suspicion is this says an awful lot about the general economic climate in the Seattle area."
Seattle market observers have said the area's strong job growth has helped buoy housing prices. As for flattening prices in recent months, Blitzer said Seattle is not immune to national factors, such as higher energy prices and interest rates and slowing economic growth.
"I think (prices) will continue to slow somewhat," he said. "But are you going to look like Detroit in six months? No, I don't think so."
And are good friend Crellin says:
"You don't see much month-to-month change in prices in the dead of winter, even in a temperate climate like you have in Seattle," he said. "The March-though-May-June time period, I think, is really going to tell us a lot about the market."
Crellin said he expects year-to-year appreciation to be 5 to 7 percent in the next few months and 3 to 4 percent by the end of the year. That's still fairly strong, but down significantly from the booming market of the past couple of years.
As far as I recall it was something like if you lost you would take a picture of your house with a whole bunch of flacid balloons hanging from the eves, and send it into Tim to post.
ReplyDeleteOk
Cool, Meshugy.
ReplyDeleteI'd like to use inflation adjusted (CPI) Single Family, King County, because I think that's what we originally specified last summer, but I can't find it. All I can find is Res+Condo, which was 390K (now 393K - so with inflation, I think I would currently be good).
I suppose the MLS will show the breakout when it comes around, however. SFH cool?
Oh...sorry. adjusted for inflation...this all depends on what sources your using to do your calculations. What data will you be citing?
ReplyDeleteCPI
ReplyDeleteWe'll use the simple inflation calculator 2006 to 2007:
ReplyDeleteCPI inflation calculator
Does Beazer build around here? The fun is just starting. I said before that nothing brings out the fraud like a declining market. This is going to spread to everything now and everywhere, even here in Seattle. (((((PANIC)))))
ReplyDeleteAP
Beazer Homes Faces FBI Investigation
Tuesday March 27, 6:52 pm ET
Feds Looking Into Fraud Allegations Involving Homebuilder Beazer; Stock Plunges
ATLANTA (AP) -- Beazer Homes USA Inc., which has recently suffered hefty losses amid a downturn in the housing market, now faces a federal investigation of mortgage fraud and other allegations involving the homebuilder. Beazer shares plunged 15 percent in after-hours trading Tuesday.
The FBI and the U.S. attorney's office in Charlotte, N.C., along with the Internal Revenue Service and the U.S. Department of Housing and Urban Development, launched an investigation of Beazer Homes last week, FBI agent Ken Lucas said Tuesday.
Lucas, a spokesman for the FBI's Charlotte field office, said the inquiry involves "fraud in general" and more specifically is related to corporate, mortgage and investment issues.
http://tinyurl.com/3dfgmv
Ok...so the median Res for Seattle was 435 in July 2006. Adjusted for inflation that will be 439 in July 2007. So if the median in July 2007 is higher the 439, I win. If it's lower you win...OK?
ReplyDeleteSounds good! I think it's a pretty fair bet, actually.
ReplyDeleteDepends...living in a GOOD part of ballard. Not on a busy street or in the rental ghettos S. of 65th.
ReplyDeleteRental ghettos? Dude, you're too much. What an a elitist snot...
The GOOD part of Ballard? get real... You're such a joke. Good parts of Ballard you couldn't even afford...
blogger A:"Just found a great rental for under $1200/month, zillow's for 500K"
Shugster:"Yeah, but its in a ghetto, I would never live there because I'm an effeete intellectual who appreciates quiet, that and I think its healthy for my kids to play in the road"
Funny, a dude that cruthces on zillow for his self-worth, dismisses it when the properties aren't up to his bizarre immeasurable standard.
Start your own property website dude... or stop quoting zillow
Fact is, Ballard night life is driven by the rockabilly punks and artists that moved there because the rents were cheap.
ReplyDeleteHaha....that's me! I'm a musician and have been playing the clubs in Ballard for 10 years! That's why I like it here.
It's simply fascinating how I can make one comment and you guys will analyze it to death. It's like I'm a prophet or something....
"fraud in general" and more specifically is related to corporate, mortgage and investment issues.
ReplyDeleteGod, is there any company in the housing industry that was not turned into an instrument of wholesale looting?
Is there no end to the slime? We've just scratched the surface, and I already want to hurl. Part of me thinks prison is too good for these people; we should be wheeling out the f'ing guillotine.
Hey...I live in the Ballard ghetto! I'm a badass! I guess the old people and the yuppies in new luxury condos are all part of my posse now -- I think we'll call ourselves "the Nords".
ReplyDeleteStill...you wouldn't think that the Hebrew Hammer would be threatened by elderly swedes...Oy gevalt! What are we gonna do now? Is there ever gonna be a shemozzle if these nudniks get outta control!
That's a good point. It must be year to date instead of YOY, unless the inflation rate has been that low...?
ReplyDeleteI'll look more closely come August 7th to make sure we get the inflation adjustment right.
Apparently these 'observers' were run out of town, and have set up shop here in Puget Sound.
ReplyDeleteActually, Crelling has been around a long time. He runs the Washington Center for Real Estate Research
My guess is that he knows a hell of a lot more about the market then we do.
"Charlotte and Seattle were flat".
ReplyDeleteBased on this, some people have assumed that Charlotte, (and Seattle by association) are special. (strong job growth was stated).
I found this ABC news video at Housing Panic:
http://www.youtube.com/watch?v=NyaNpw4IKdU
If this is the same Charlotte mentioned in the Shiller article, then something is certainly wrong.
Could it be that there is a quantity of exotic mortgages in Charlotte still available that has allowed housing to remain relatively strong? Is there still plenty of mortgage medicine to keep housing activity (and prices) up?
I don't know - but when 20% of a new housing development loses their house due to foreclosure, that doesn't sound like a strong economy.
We should trust a professor at WAZZU 5 hours away in Pullman, WA??
ReplyDeleteI'm sure he has a great understanding of Seattle, WA, coming from a town that when school is out, has a population of 2k!
No thanks, I'd rather listen to Fleck!
Haha....that's me! I'm a musician and have been playing the clubs in Ballard for 10 years! That's why I like it here.
ReplyDeleteFunny thing is, Shug, that if you are actually correct in your grand vision of appreciation, Ballard's "punks and rockabillies" will be long-gone before too long. They can't afford a half-million dollar mortgage or your imagined skyrocketing rents. They'll all be in White Center, Rainier Beach, or (gasp) Tacoma.
nolaguy,
ReplyDeleteI think you are confused between Charlotte NC, and Charlotte SC.