Our current working assumption is a 5%-10% drop in home prices through the middle of 2010.
Note that these forecasts are all nationwide. In most parts of the country home prices began falling a good year before Seattle, and had fallen further than Seattle before the inefficient, expensive, and economically stupid tax credit put the brakes on the full return to affordable housing.
If nationwide average home prices do indeed drop another 5-10% in the coming year, I suspect that Seattle area home prices will probably be down 10-15%.
Oh and by the way, in case you didn’t see the news; as expected, a couple weeks ago Congress passed an extension and expansion of the idiotic tax credit. The move was tacked onto a completely unrelated extension of unemployment benefits to assure that no congressman could vote against it (crap like that should be illegal), and is estimated to cost another $10 billion that we don’t have (so you can expect it to cost at least $20 billion). Oh, and just for kicks they threw $33 billion in tax refunds to homebuilders into the bill, too. Because the national debt just wasn’t big enough already. Super!
I’ve been hearing a few familiar clichés on the radio recently…
“Tired of setting your money on fire every month?”
“Stop throwing away your money renting!”
Maybe you thought that the dramatic and decisive collapse of the housing bubble would have rid us of this type of nonsense marketing. Well, you thought wrong. The twist this time though, is that the advertiser in question isn’t pushing residential real estate, but 800-1,500 sqft garage bays in a sort of garage condo type building.
Setting Your Money on Fire
Tired of setting your money on fire every month, renting storage?
…
Lots of you… have stuff you love or hobbies you love with no good place to put it or do it! GarageTown solves that problem forever, while you make a smart investment in commercial real estate.
…
Stop paying rent!
You Don’t Even Have to do the Math
If… you’re renting commercial space, your cash flow is taking an unnecessary beating.
…
Stop throwing away your money renting, and start saving by owning.
…
Check out the five-year financing plans available. You don’t even have to do the math! We did it for you!
I thought you all might get a good afternoon laugh out of those ads.
October unemployment info was released by the Washington State Employment Security Department this week, so here’s a shot of the Seattle area (King/Snohomish) unemployment rate (NSA) compared to the national U3 rate:
According to their data, the Seattle area has shed 66,600 jobs in the last year, while adding 42,320 people to the labor force.
…in the hardest-hit region of the country, the Western states, homeowners continued to be overly optimistic when evaluating the value of their own homes.
Nationwide, when asked about their own home’s value over the past year:
25% think their home’s value has increased
26% think their home’s value has stayed the same
49% think their home’s value has decreased
In reality, 72 percent of U.S. homes lost value over the past year, and 22 percent of homes increased in value.
Drilling down into the more detailed release (pdf), you can see that out here in the west, homeowners still seem to be the most overly optimistic bunch in the country.
53% of homeowners in the west believe their home has declined in value in the last year, while 28% believe their homes have increased in value. In reality (according to Zillow), 78% of homes have declined in value, and only 17% have increased.
Meanwhile, only 15% of homeowners in the west expect their home’s value to decrease during the next six months, which is not too surprising given that nearly half the people surveyed base their belief in a housing market bottom on “general good news about the economy.”
With the stock market continuing to surge (quite likely due to a growing dollar carry trade) and the mainstream press giddily pumping an alleged recovery while all but completely ignoring the fact that none of the underlying poisons in the economy have been addressed (and in fact many of the problems have been amplified), of course most people would believe that housing has bottomed.
Let’s check in on our October monthly neighborhood update to Seasonally-Adjusted Active Supply (SAAS). For an explanation of what seasonally-adjusted active supply is, please refer to this post. Also, you may view a map of the areas discussed in this post.
As usual, the sweet interactive data visualizations (new and improved!) in today’s post come to you courtesy Tableau Software.
In the charts below I have taken the calculated value for SAAS and subtracted 2, in order to better visualize the difference between a buyer’s market and a seller’s market. Using this method, negative SAAS values indicate a seller’s market, while positive values indicate a buyer’s market.
Summary
King County’s overall SAAS continued to drop below the “balanced” level, coming in at 1.59 for October (September was 1.80). 18 of 30 areas came in below 1.75 as seller’s markets (over half for the first time in recent years), Only 1 of 30 came in above 2.25 as a buyer’s market, and the remaining 11 were more or less balanced between 1.75 and 2.25.
Hit the jump for the rest of this month’s interactive charts and commentary.
Well, today’s the last day of my trip to New York City, and since I didn’t quite plan far enough ahead to have a substantive post today, I thought we could try something new.
It’s called a “directed thread,” and it goes like this:
I’ll pose a question for discussion.
Everyone hashes it out in the comments.
Later this week I’ll parse the discussion.
The most useful or interesting posts will be mixed into a post of their own sometime next week, hopefully harnessing the collective knowledge of the community for the betterment of the whole.
So, here’s today’s discussion topic: How do you find properties that are the best value in today’s market?
Do you mostly look at specific neighborhoods? Are there certain property characteristics that often signal good value? What tools do you use, etc… Anything and everything related to finding the best value is fair game. Let’s hear it.
As something of a consolation prize for the lack of a more meaty post (and because I just think it’s cool and I want to share it), here’s a picture I shot last night of Times Square from the Empire State Building. See you all tomorrow.
