You know that the local housing slowdown is essentially undeniable when even the local TV news starts to pick up the story…
It’s not exactly a slump, but some of the wind has left the sails of the local real estate market. What used to sell in two weeks is now taking as long as 45 days. That’s leading some sellers to employ new strategies.
The multiple listing service reports that in King County, there are about 3,000 more homes on the market this year than last year and they’re staying there longer.
“It’s a buyer’s market. They have so much to choose from,” said Tavis Gaudet. When put up his ‘for sale’ sign, he wasn’t alone.
“There were two signs, one across the street and one up the block,” said Gaudet.
There’s direct competition in his West Seattle neighborhood. Just go a couple of blocks away and you’ll find three houses in a row for sale.
Sadly, what could have been an opportunity for an actual interesting piece that looks at recent statistical trends and actual evidence of where the market is headed turned into nothing more than yet another cheerleading, realtor-advertising puff piece. The article wraps up with encouragement not to worry, and advice that sellers “consult a realtor.”
Update: I just noticed that you guys already started a thread about the King5 report over in the forums. You beat me to the punch.
In other news, here’s an excerpt from an email I just got from a friend that (no joke) became a loan originator about a year ago:
Many of you have watched and wondered about the changes in the housing and home financing market in recent months. There is definitely a shift. Hundreds of lenders have gone out of business and loans are much harder to obtain than in the past. Only agencies that are diversified are able to stay afloat. Many loan originators are walking away from the field because of the financial hardship they are in right now. Here in Washington, the new regulation that calls for the Loan Originator to take a test has caused some to walk away. In fact the swelled number of 15,000 loan originators in Washington is estimated to shrink to 7,000 or less.
In talking with him over the weekend, he expressed confidence that the market would turn around next spring. His reasoning included the usual spring bounce as well as today’s predicted Fed rate cut. While I admire his optimism, I found myself less than convinced.
(Kim Holcomb, King5 News, 09.17.2007)
TJ_98370 » Sep 18, 2007 at 8:21 am
Given the recent media coverage, the “Fed rate cut” seems to be very anticipated. Is it really that much of a sure thing?
FredE » Sep 18, 2007 at 8:51 am
The fed cut won’t make it easier to get a mortgage, just make new ones more affordable over their duration.
As for selling strategies, my favorite one is called “lowering your unreasonably inflated price”.
PB » Sep 18, 2007 at 10:19 am
With the weakening dollar the value of real estate in US Dollars should continue to increase keeping the naive content, while in terms of Euros or Gold or most any standard of value US and Seattle home values are and have been shrinking fast.
AndyMiami » Sep 18, 2007 at 11:12 am
A rate cut will have little effect since most people facing foreclosure ignored income to debt ratios and simply cannot afford to pay 60% plus of their incomes to mortgage payments.
MisterBubble » Sep 18, 2007 at 11:23 am
The only way that a funds rate cut will affect the real-estate market as by affecting the psychology of the people who buy mortgage-backed securities (maybe).
Otherwise, it’s a non-event. Mortgage interest rates don’t track the funds rate, and there’s good reason: the funds rate is for ultra short-term loans, and mortgages are as non-short-term as you can get.
Garth » Sep 18, 2007 at 11:26 am
The august foreclosure data is out, once again not many people at risk in washington.
http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=3222&accnt=64847
patient » Sep 18, 2007 at 11:51 am
The foreclosures in Washington seems at a glance relatively low but when I searched for my little hood (Kirkland 98033) a got a minor chock. I had expected a handful but the search came back with this:
King County Foreclosure Search Results
Location: Home > WA > King County
Search Results: Foreclosures in 98033
509 listings match your search criteria.
———–
509! Wow, that’s nasty.
Plymster » Sep 18, 2007 at 12:03 pm
But 98033 is protected by Microsoft. It can’t have foreclosures because Software Weenies paid in the high 5-figures can clearly afford million dollar 3-bedroom crackerboxes.
I think you must’ve misread that number. Maybe it’s supposed to be 5 or 9…
softwarengineer » Sep 18, 2007 at 12:07 pm
DO YOU WORK FOR A SMALL BUSINESS OR OWN ONE?
Not only are the Baby Boomers that keep working past retirement ages and don’t deluge the Seattle housing market with more for sale signs of expensive homes [$300K+] a clear positive to our local economy, we don’t want them to close the doors of their small businesses here too. There’s no one [qualified?] to buy them.
See the proof:
http://www.prweb.com/releases/2006/2/prweb345133.htm
This Baby Boomer retirement dam is building up like the Hoover dam and the cement is cracking for the imminent deluge and flood. Our best bet, they don’t retire or get sick.
Grvetti » Sep 18, 2007 at 12:44 pm
Fed rate cut by 50 basis points!!! Wee-hoo!!
When’re they going to re-open the subprime window at the bank? Come on, I’m good for it… honest I have a W2 somewhere…. 1% teaser rate? I’m down!!!
In all seriousness, I think the difference between some ones sub-prime ARM doubling in a month to 1.875′ing in a month is still going to end up in foreclosure. And the fact that most of those sub-prime alt-A mortgage pimps are gone, the credit crunch is still on with respect to the consumer.
K » Sep 18, 2007 at 1:26 pm
And the fact that most of those sub-prime alt-A mortgage pimps are gone, the credit crunch is still on with respect to the consumer.
Oh, and did anyone mention that it’s condos and condo conversions and subdivisions *everywhere* these days? There’s a mixed-use development in the south end where some people in city hall were actually *against* rental units. If no one can get a mortgage and there’s no rental units, where are people going to live? (Elsewhere.)
Garth » Sep 18, 2007 at 1:27 pm
Not entirely sure how forclosure.com gets all their listings, but it looks like only a fraction of the 509 ~100 are actually foreclosures.
patient » Sep 18, 2007 at 1:39 pm
Since this messy bubble with all it’s implications has little to do with interrest rates a rate cut will mean little or nothing to change the course of events. Low interest rates do not create an unhealthy bubble. Prices can go up and often do when interrest rates are low but as long as the demand is healthy, i.e people buy what they can afford it’s not really a dangerous bubble. It’s the exotic loans and low lending standards raise and demise that were and are the main drivers of the current extremely unhealthy bubble situation.
TJ_98370 » Sep 18, 2007 at 1:39 pm
Jim Cramer should be ecstatic!
Stocks Jump on Big Fed Rate Cut
The FOMC shocked the markets with a super-sized half-point easing, hoping to keep disruptions in financial markets from hurting the broader economy.
Major U.S. stock indexes shot higher on Tuesday in immediate response to the Federal Reserve’s decision to cut the Fed funds target rate by a 50 basis points to 4.75%, when most observors were expecting only a quarter-point easing. The statement said that recent developments in financial markets had increased uncertainty about the housing market……
MisterBubble » Sep 18, 2007 at 1:46 pm
Thanks, Ben. I wasn’t using the full value of my dollars, anyway.
on topic » Sep 18, 2007 at 2:32 pm
the importance of a decreased interest rate is twofold:
1) it indicates the central bank thinks we are looking at a recession
2) it will lead to at least a small bump in busniess activity and possibly soften the impact of said recession by keeping some borderline companies from closing or laying people off
(sarcasm/) then again, all real estate is local so who cares about the national or international economy (/sarcasm)
MisterBubble » Sep 18, 2007 at 2:46 pm
Threefold:
3) It will lead to further deflationary pressure on the US peso.
Seriously: this is yet another example of the willingness of our government to sell out normal people in order to rescue the rich and irresponsible.
patient » Sep 18, 2007 at 2:48 pm
Garth, so we should pay attention to the foreclosure data when it points to relative low state-wide foreclosures but dismiss the data as inaccurate when it points to very high local activity?
Formernoreasta » Sep 18, 2007 at 3:03 pm
“What used to sell in two weeks is now taking as long as 45 days”
Wow – that’s just horrible. 45 days!
Try visiting Boston if you want to see what a “buyers market” is.
Garth » Sep 18, 2007 at 3:48 pm
The forclosure.com site shows normal real estate listings that are not foreclosures in their list. The 509 number is not the number of foreclosures for Kirkland.
Garth » Sep 18, 2007 at 4:04 pm
I meant realtytrac
Here is a search for Kirkland for foreclosures which does not include regular listings.
http://www.foreclosure.com/search.html?st=WA&cno=033&z=98033&tab=a
124 total accross a number of different classifications.
Redfin shows a total of 471 listings for Kirkland, so 509 foreclosures seemed rediculous and it was.
B&W NIkes » Sep 18, 2007 at 4:06 pm
I’m sure I’m a little slow on the uptake, but if a significant percentage of potential customers have obligations, or have had to dump their obligations gracefully or ungracefully… then they aren’t going to be in the buying market again very soon. We can see that the products are accounted for in a very detailed manner, especially when they are scarce. Are changes in the number of potential customers accounted for in any similar detailed way by the industry? Or do they only factor potential increases like jobs and immigration?
patient » Sep 18, 2007 at 4:08 pm
Garth, I hope you are right but I think the numbers might be right. As for example I can’t see why the +200 objects listed as being on auction would be normal listings.
Garth » Sep 18, 2007 at 4:24 pm
509 is impossible for one zip code when there are 0 NSF properties in washington for august and 137 Real Estate Owned properties for the whole state.
deejayoh » Sep 18, 2007 at 4:35 pm
Foreclosure.com has 28 foreclosures in Kirkland and only about 20 of them are active; 947 for all of KingCo
You need to click on the right tab at the top to restrict the data to just foreclosures
patient » Sep 18, 2007 at 8:44 pm
Gents, the foreclosure numbers seems to be allover the place depending on where you look. Hopefully DJs number is the correct one.
Jillayne Schlicke » Sep 18, 2007 at 8:50 pm
I’ve always wondered about the foreclosure.com stats. For example, do they count a foreclosure as a home that has already been foreclosed and is now being re-sold by the lender?
If so, then we need to look at the “preforeclosure” tab to see the homeowners currently in default.
The other tabs on foreclosure.com that provide some interesting insight are data are the bankruptcy and tax lien tabs.
What I’d like to see: A graph showing the movement of these four sets of data over all of 2007 thus far, broken down by King, Sno, and Pierce Counties. I wonder if the foreclosure.com guys would give it to us.
WildcatTofu » Sep 18, 2007 at 10:43 pm
The only way government can protect sub-prime borrowers from bankruptcy is to keep RE price at current level.
To keep RE at current level, an unnecessary inflation is a must.
An unnecessary inflation would make the real value of U$D down. And make whoever own most his asset in cash(usually those are more financially responsible) lost money.
"golly" you FED…..
deejayoh » Sep 18, 2007 at 11:04 pm
Jillayne -
I have the chart for King and Sno counties for the PreFC and FC tabs for much of the last year. PM me in the forums an I can send to you. I think there are real issues with the PFC data, but I have most of the weekly ticks – at least enough to get the trend.
topdog » Sep 19, 2007 at 10:08 am
Check the table at the bottom – finally some reasonable predictions:
http://money.cnn.com/2007/09/19/real_estate/steep_home_price_drops_coming/index.htm?postversion=2007091912
patient » Sep 19, 2007 at 10:20 am
topdog, and from the table top it looks like the California equity locust will get their wings chopped.