Here’s S-Crow’s Avatar/mug. Yep, sweater season.
Regarding Inventory
Although I have noticed homes dropping off the market in my neck of the woods in Snohomish Co, generally speaking, for semi-serious sellers, early and mid-October is a bit soon to pull the property off the market. I can understand if it was during the full holiday season from a few days prior to Thanksgiving through New Years. But, if you pull out this soon, the potential for back-firing increases if the thought process is “I’ll try again after the Holidays.” Many others will do the same. Maybe a Realtor can chime in on the efficacy of this reasoning.
I have a sense though that some of these homes going off the market today, either by expiring, Realtors giving back the listing, or mutually taking the home off the market, are being replaced by others. No hard Data, but maybe a Realtor can confirm this.
That being said, one of the things I’ll be curious to follow is if inventory as a whole (system wide) drops without replenishment. If we maintain the current inventory levels going forward, then I would guess the region will be in for quite an increase after Jan. 1, 2008. If that happens, then we will see further downward pressure on prices. It is also important to not forget about the underground market of FSBO’s. I read somewhere that this market is roughly 10% of the inventory/sales that are not accounted for by regional MLS statistics across the country. So in theory, there are a lot more homes on the market than reported.
Remember, many agents suggest to their clients that they can try again after the New Year. All these homes that expired or were mutally taken off-market will come back on the market with the same agent or another real estate company. And, all those reading about market struggles across the country who are holding off until after the first of the year are going to be competing with like-minded-soon-to-be sellers. On balance, my sense is that we are going to see a lot more inventory come on the market after the year.
The list price reductions appears to be on cruise control right now, along with incentives for closing cost contributions, rate buy downs, etc..
Over at Rain City Guide, Rhonda Porter mentioned that 30 yr fixed rates are now under 6% again. That is probably going to move some folks to write earnest money checks for a purchase or refinance.
Musings
- I went to the Everett Silvertips game last week with Steve Hatloe of very long time Everett business institution Hatloe’s Interiors/Carpet One. Naturally his business is also dependant upon housing and household improving. Prior to the game he asked me about if he was the only one ‘out there’ who thought to himself, “how are people doing it?” I looked back and said, “gosh, that makes two of us. But, since you asked………”
- Someone asked me a while ago what it’s like to be in escrow? I said, “like a referee.” We try to make sure everyones obligations are met, but sometimes the referee get’s the ire of one’s temper.
Here’s a good example:
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27 responses so far ↓
1
Jillayne Schlicke
// Oct 20, 2007 at 12:18 am
Do you play soccer, Tim?
2
JK
// Oct 20, 2007 at 7:20 am
Thanks S-Crow,
Just out of curiosity, what kind of incentives or price cuts are you seeing with new construction up there? Are you seeing a lot of offers being accepted that are significantly below asking price? Are incentives more common than price cuts or are buyers able to get both? TIA.
3
rose-colored-goolaid
// Oct 20, 2007 at 9:01 am
S-Crow,
Another unsubstantiated data point is that I know people who are planning on pulling some of that ‘hard earned’ equity out of their homes. But since they missed early summer, they decided to just sit and relist later.
How many people are in this boat county wide? 5? 50? 500? I have no idea, but they will be another small bump early next year.
4
S-Crow
// Oct 20, 2007 at 9:20 am
yes, and coaching. I laughed so hard when I saw that video, because when things get dicey and tempers flare by the parties in a transaction, the referee (escrow) seems to be the recipient of that ire.
5
Lake Hills Renter
// Oct 20, 2007 at 9:21 am
Love your insider posts, S-Crow.
6
melonleftcoast
// Oct 20, 2007 at 9:55 am
About a month or so ago, I posted in the forums about how there seems to be a pretty large selection of larger (4bd) homes for rent in Bellevue for under $2000. A month ago, there were 20 homes. After reading S-crows post this morning, I checked craigslist and there are now 25 homes listed for $2000 or less with 4 or more bedrooms in Bellevue.
A possible explanation for people pulling their houses off the real estate market in October, which I agree is early, is that they have rented them out. This seems prudent from a sellers point of view for an already vacant house. Especially when your agent is telling you to wait until the SUPER SPECTACULAR SELLING SEASON OF 2008!
Ha! We’ll see.
.
7
AndyMiami
// Oct 20, 2007 at 10:16 am
I believe that we will not see the decrease in inventories because people are starting to panic and will sell now before prices really drop. Also, lots of ARMs are resetting forcing people to sell.
8
S-Crow
// Oct 20, 2007 at 10:23 am
melonleftcoast,
Absolutely, I have seen the red For Rent signs popping up in earnest. Very good point. On the way to drop my kids at school, I drive by a house that was listed for over a year, then went FSBO for about 2 months, and now is for Rent.
My feeling is that the concentric outer circles (the burbs and smaller cities/town), around the Puget Sound area with Seattle/Bellvue as the center,are adjusting to market changes at a higher rate. It’s like throwing a rock in a pond except, in this example, the outer wave/rings are moving inwards towards the center.
9
S-Crow
// Oct 20, 2007 at 10:36 am
Jk,
Typical buyer closing costs allocated towards paying for mortgage/rate related stuff. But, in months past, these were offset by the seller increasing the sales price. That is now gone.
New construction list price reductions are all over the board. Some modest and some more substantial. On the substantial side I’ve noticed 50,75 and even 100K off list prices. But that is no real news, as you can pick up the paper today in the New Homes edition of the Sea. TImes and see the incentives.
Some builders I’ve spoken to either out in the field or through working with our office are understanding the wind is blowing in the other direction now. My conversations used to be a bit tame, but now are more direct. I really don’t want to see some of these hard working small builders get hammered. It is not a good thing.
There are still very large residential projects underway in Snohomish Co. and I just wonder as I drive around if the market can absorb the housing as they come to market in the months to come. Time will tell I suppose.
10
B&W Nikes
// Oct 20, 2007 at 11:57 am
This is a little left-of-topic, but seemed to fall within the general theme. Any thoughts on the HOME Act being introduced by Senator Norm Coleman (R-MN) as more tea leaves showing the housing market is brewing something more acidic than a temporary drop? Using tax breaks to encourage folks to tap up to 100k from their retirement so they can pay delinquent mortgages seems really out there. Or does it? Either way, if it passes and troubled owners scramble to spread the pain across their investments, it could have some impact on how things play out here.
11
jon
// Oct 20, 2007 at 12:23 pm
“But since they missed early summer, they decided to just sit and relist later. How many people are in this boat county wide?”
I’m one of those people. As long prices are falling elsewhere faster than here, it doesn’t make sense to drop the asking price that much. After a recent move into the area, my roots here aren’t very deep. But after watching the fires and sandstorms in the southwest, the drought in the southeast, and floods in the deep south, just staying here is becoming more attractive all the time.
12
softwarengineer
// Oct 20, 2007 at 12:32 pm
SIGNS THINGS ARE GETTING WORSE FOR HOUSING
Your neighbors aren’t putting up Christmas lights this year.
The restaurants sit you right away with no wait on weekend night.
The movie theaters are empty.
Stores like Winco has all the customers, while stores like Safeway looks empty.
13
melonleftcoast
// Oct 20, 2007 at 1:03 pm
S-Crow,
Your concentric circle idea happened in Boston (i lived there until summer 2006). The exurbs got hammered, then the suburbs stalled, then Boston slowed.
One of the blogs I read, I think it is Boston Bubble, had posted a depiction and theory of the reverse ripple. Unfortunately, I have not been able to find that depiction or post! If I do, I’ll definitely post it here.
Another anectdotal observation of mine in Boston is that the excellent school districts in suburban towns with good access to transportation are having less of a price drop. We’ll see if Seattle follows that path as well.
14
disbelief
// Oct 20, 2007 at 6:33 pm
“Using tax breaks to encourage folks to tap up to 100k from their retirement so they can pay delinquent mortgages seems really out there. Or does it?”
Hey, that’s just how they do it in DC when it comes to the countries budget! Great plan!
Maintain that “lifestyle” at all costs-worry about the future when it gets here. Man, that’s got to be the most cynical “solution” I’ve ever heard of: Screw your retirement. Save my economy!
15
disbelief
// Oct 20, 2007 at 6:49 pm
“As long prices are falling elsewhere faster than here, it doesn’t make sense to drop the asking price that much”
Might want to elaborate on that one a bit. One could just as easily argue the exact opposite…all depends on what you think the future holds for Seattle. I think the consensus here is to sell now if you bought in the last 5 years or so and aren’t committed to the long term- especially if you can still make a good profit.
16
Peckhammer
// Oct 20, 2007 at 8:11 pm
“after watching the fires and sandstorms in the southwest, the drought in the southeast, and floods in the deep south, just staying here is becoming more attractive all the time.”
Just wait till a magnitude 9 earthquake turns the city into dust after 3 minutes of sustained activity. Fires, sandstorms and floods will seem like Disney-like attractions.
17
rose-colored-goolaid
// Oct 20, 2007 at 8:45 pm
melonleftcoast,
Good schools, we have some. Good public transportation!?!?!? Not here. Sometimes I wonder if even half the population knows what a subway is.
18
Tony
// Oct 21, 2007 at 12:25 am
Concentric circles are exactly what happened during the boom and now the bust. Kitsap county was cheaper than Seattle, so it boomed, then Mason county was cheaper than Kitsap county and it boom, heck even Aberdeen was/is booming.
Now it goes in the opposite direction, I’m seeing 2005 prices for housing in parts of South Kitsap now and that slow down will eventually recede back toward Seattle.
19
Markus
// Oct 21, 2007 at 1:42 am
Can’t sleep… Anyway, I have been checking homes in the area and a house around the corner from is selling now for less than the purchase price. I know the guy who is selling it, he is taking a beating. MLS 27167526, the purchase price was $750K and selling price is now $735… Ouch…!
20
Obsessed
// Oct 21, 2007 at 4:30 am
I looked on craigslist houses for sale for seattle and found 13 pp listed in one day, with 100 a day. I was impressed by the number.
21
S-Crow
// Oct 21, 2007 at 8:27 am
Markus,
Subprime lending on that property all the way. Appears that payment history stopped soon after purchasing.
22
melonleftcoast
// Oct 21, 2007 at 10:37 am
rose-colored-goolaid,
“Good schools, we have some. Good public transportation!?!?!? Not here. Sometimes I wonder if even half the population knows what a subway is.”
Lack of public transportation is one of the reasons why my husband and I are hesitant to move to Seattle. We have one car that we only use for errands/pleasure, not commuting, which means that the gas price increases of the last couple of years have barely dented our pocket book. If we move to Seattle, we have to figure in the cost (puchase price, insurance, maintenance and gas) of a regularly used vehicle.
We’ve been pretty spoiled living in the SF Bay and Boston for the past ten years. Both metros have excellent public transportation (commuter rails, subways & extensive bus systems).
Seattle is a decent sized city with many people now living there from outside the PNW. Is there much public support for a commuter rail/subway? Do you think people would use a train and/or subway?
23
Alan
// Oct 21, 2007 at 11:07 am
Wikipedia: Metro Transit (King County)
24
B&W Nikes
// Oct 21, 2007 at 11:42 am
Melonleftcoast - now is a pretty good time to make that determination. Follow the news and commentary up here related to Proposition 1, an initiative coming up in November to extend roads and rail regionally through the Sound Transit entity. It’s all over the place and will give you a pretty good snapshot of the zeitgeist around transit in the 21st Century Seattle area.
25
melonleftcoast
// Oct 21, 2007 at 10:40 pm
Thanks! I didn’t know that this was an ongoing debate and up for a vote this fall.
If residents have to vote for a tax increase, my guess is that it won’t pass. This may (or may not) have to do with homeowners starting to feel the pinch from increased property taxes.
It sure would help Seattle *achieve* that wold-class city status if it had trains for public transportation. But, hey, look at Atlanta, they had the Olympics! ;)
26
In Exile/Obsessed
// Oct 22, 2007 at 5:20 am
And Atlanta is now running out of water.
Seattle may also be dealing with this in the coming years.
Here’s another item to add to the mix:
http://www.guardian.co.uk/oil/story/0,,2196435,00.html
Interesting times.
27
SunTzu
// Oct 22, 2007 at 11:36 am
There is a foreclosure home near Newport next to the train tracks MLS 27161546. It’s listed on Redfin for sale at $599,950. Called the representing agent he said he has two bids on it with one bid above the asking price. Why would anyone offer at above asking price at this juncture?
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