Secondly, it’s not Steve T’s job to tell people when to buy a home, he’s a mortgage lender. People come to him to finance their homes, and he does so by assisting them to find loans appropriate to their situation. If you know anything about him or his company, they provide extensive information about how to see through misleading mortgage ads, and he encourages responsible borrowing in those materials. Being a former mortgage underwriter, I can attest to the fact that his materials are accurate and useful for the average consumer (explaining how YSP works, etc).

Finally, nowhere in his comments did I notice anything that indicated he thought his comments on this blog would increase sales. Good lord.

You are the starting pitcher on a team with the bases loaded in the bottom of the first inning with no one out and you are already down 8-0.

Good luck.

Are you trying to argue that it’s a good time to buy now because of low interest rates?

Do you not realize that increased inflation + higher interest rates = greater downward pressure on prices?

Sure interest rates may be low now, but as they move higher it will only exacerbate problems in the housing market. Keep in mind that many ARMs will still be resetting past 2010.

Buying now could be one of the worst decisions a person could ever make. This situation has YEARS ahead of itself before the magnitude of the fallout is truly realized.

You could buy a 500k house now at 6 percent on a 30 Y fixed. Or you could wait 3 years and buy the same house for 300k at 8 percent. Tough choice.

I’m sure if you put a little effort into it you could find a lender who’d be happy to fund your mortgage at an interest rate of 10%. It’s true that, sometimes in the next 30 years, the rate of inflation may even exceed that rate. Much greater likelihood of that if you have the 6% mortgage.

Fifteen year mortgage rates have been mostly even below six percent for the past several years, and for a while there even got below 5.

Now here are the facts. The current interest rates are *nominally* low, but NOT low in real terms. When inflation is at a paltry 2.5%, a 6% interest rate is HIGH because you are paying 3.5% interest in real terms. When inflation is at 10%, a 11% interest rate is LOW because you are paying only 1% in real terms. So please stop the non-sense about interest rates being low.

Never mind, I’m calm now. Thanks for letting me respond. I’m calm now. It really, really worked. I’m calm now.

Speaking of supply–did you all notice the KC SFH numbers flirting with the 11K mark again, on the way back down? Sometime yesterday I saw it had fallen beneath that threshhold. Earlier today it was ~11,200, as of when I’m typing it’s 11,065. Maybe end of month listings expiring, maybe over the hump? Time will tell.

Angie –
October inventory is almost always lower than september, so some drop is typical (usually more than we have seen). Also, YoY inventory levels are still 40% higher than last year’s so I don’t think we are “over the hump” yet. I expect we’ll see inventory levels remain elevated, and even increase again next year.

The only reason I have been posting here is that I am trying to calm down some of the alarmists who are predicting a major collapse of home prices in this area along the lines of what is happening in Vegas and Phoenix, which may see prices drop 40-50%.

You’re assuming that Vegas/Phoenix will only fall 40-50% and that Seattle will only fall half as much. Since you constantly imply that anyone without decades of RE experience in a market is incabapable of making a reasonable prediction, you have precluded youself from making a prediction about markets other than the Seattle market. And since your prediction of the Seattle market is predicated on your unsupported prediction of a 40-50% drop in Vegas/Phoenix we can conclude that your Seattle prediction is also unsupported.

Also, I have yet to see anyone comment here that they think we will see price reductions on the same scale as Vegas/Phoenix so there really isn’t anybody to calm down.

I just don’t see that happening here and past performance bears that out.

Past performance is not a guarantee of future results.

Also, regarding lower prices–maybe Zillow’s reading here, but on the 25th or thereabouts they finally updated results for Seattle. I don’t know whether the timeframe they draw upon is the same as CS or more recent, but there was a tick downward down here in SE Seattle. Dang, 8K of my home equity just went “Poof! Gone.” Guess it’s time to hitch up my pink pony and point the wagon train to the wild west…Indy, that is.

To answer Alan above, I own a mortgage company and people have no problem qualifying to buy homes at today’s prices. Interest rates are still low and if you have good credit you can still buy a home with little or no down payment. The reason that home prices are dropping is that there are too many houses for sale relative to the number of prospective buyers, and the inventory is going to continue to increase.

To deejayoh, yes I realize that a 10 to 20% price drop hurts people who have to sell next yewar, but you should never buy a house unless you plan to live in it for at least 7 to 10 years. I know that stuff happens and sometimes you don’t have a choice, but you should NEVER buy a house and expect to sell it without taking a loss within the first 5 or 6 years of ownership.

To Joel, my predictions are based on past history in the local real estate market and my feelings about the future. It is just an educated guess. Nobody KNOWS what will happen in the future.

The only reason I have been posting here is that I am trying to calm down some of the alarmists who are predicting a major collapse of home prices in this area along the lines of what is happening in Vegas and Phoenix, which may see prices drop 40-50%.

I just don’t see that happening here and past performance bears that out.

Increased supply with stable or lower demand means lower prices.

Seattle never goes up as fast as the “boom and bust” RE markets and consequently we never go down as as fast those markets.

Alright already, you (and countless others) have already established that we will not go down as much as those markets. However, since you don’t know how far those markets will eventually go down, how does that put a floor on how far the Seattle market will go down? In other words, all you’ve said is x%

Home prices will drop about 10-20% over the next year or so, but keep in mind that is an overall average. Some neighborhoods will be hit worse than others. Some may see little price depreciation. There are a lot of factors involved.

Well, I’d bet that scenario would feel a lot like a crash to anyone who bought in 2006 and needs to sell into that market. Showing up with your checkbook at closing isn’t fun when you’re the seller. I tend to agree with you in that you are realistic in your outlook, but personally I think 10-20% drops will be pretty devastating to a lot of people.

You also have to take a 100 day break after a year, after which you can come back. Really, these aren’t positions where one should necessarily be buying a home. It can be steady work but it can also be pretty tenuous. Essentially you are a well compensated temp.

http://search.har.com/engine/dispSearch.cfm?mlnum=9085148

http://www.redfin.com/stingray/do/printable-listing?listing-id=1096288

Why do you care what we think?

Past performance is not a guarantee of future results.

If you can explain how local incomes can support current prices then I am all ears.

If you look at the graph you can plainly see that we are not as volatile as many other large RE markets.

In the past, I have specifically referenced Las Vegas and Phoenix and “boom and bust” RE markets where home values go up very fast and then fall just as fast.

Seattle never goes up as fast as the “boom and bust” RE markets and consequently we never go down as as fast those markets.

There are going to be SERIOUS price drops in Vegas and Phoenix, and to a lesser extent in San Diego and even L.A.

But Seattle prices will drop about 10-20% max, which is what I have been predicting for more than a year.

Glad to find these charts that support my thesis.

You can keep hoping for a home price crash in Seattle, but wishing won’t make it so.

Frankly, I have been waiting for home prices to crash in this area since 1986 so that I could buy some cheap rental houses — but it never has.

And I don’t think it will this time either.

Home prices will drop about 10-20% over the next year or so, but keep in mind that is an overall average. Some neighborhoods will be hit worse than others. Some may see little price depreciation. There are a lot of factors involved.

Just as Seattle is not Vegas or Phoenix, Bellevue is not the same as Renton, Auburn is not the same as Redmond, and so on …

There will be wide home price variations from city to city, and from neighborhood to neighborhood within each city.

Real estate values are always determined by the principle of “location, location, location.”

General, region-wide home price statistics can be very misleading because some neighborhoods do much better than others in terms of home price appreciation/depreciation.

that’s why 25 year olds shouldn’t be buying condo’s… they should be socking away $25K /year for 4-5 years and then looking around for something.

MS makes their money from Office, but how many employees does that really take? OpenOffice is just as capable, and produced in people’s spare time.

Again, why does MS need to hire?

My theory is it’s sort of a desperation move. They have loads of cash and a solid income, but little growth and their monopolies are slowly being chipped away at. They are trying to spend their way back into the game while they still can.

Housing Busts and Sticky Prices

A question from Vancouver, BC, if you will. Considering that Shiller’s index included more than just King county, I’m wondering what all of you are seeing in the core Seattle area? Are there any price drops in cental areas like Capitol Hill, Pike Place, Queen Anne, Fremont etc., Are there still bidding wars on properties in great locations? Do the condo developments downtown have line ups on opening day? You may be 12-18 months behind LA and we may be 6-12 months behind you. Anecdotal evidence much appreciated…

Seattle’s home prices slip in August

but the byline is “Seattle Times Business Staff”, not “E. Rhodes”.

Seattle’s home prices have begun to decline, although on an annual basis they’re still outperforming major metropolitan areas, according to the monthly S&P/Case-Shiller home price indexes released today.

Based on the prices through August of single-family homes in 20 of the nation’s major metro areas, the overall index shows the eighth consecutive month of negative year-over-year returns and the 21st consecutive month of decelerating returns from the previous month.

Seattle showed an August-July price decline of 0.1 percent coming off a July-June gain of 0.2 percent. Year-over-year, Seattle’s prices grew 5.7 percent, the highest among the metro areas. San Diego’s values, by comparison, dropped 8.3 percent for the year ending in August

You do realize that you are negatively impacting real estate sales by publicizing such information. I hope each of you can live with your conscience after this.”

Yeah – Shut Up, Stop Whining, And Move To West Indianapolis!

Seattle-area home-price appreciation leads nation again

http://seattlepi.nwsource.com/local/337376_housing31.html

yeah, jeez “The Tim” what’s your problem?

Why can’t you leave the distribution of information to “Professionals” whose incomes depend on sales?

Clearly, they would know better than anybody and would always report in a balanced manner even if it meant their financial detriment.

/sarcasm

oh wait.

Free speech hurts the economy! Down with free market capitalism! All hail Nazi style censorship to keep the economy afloat!

You do realize that by advocating withholding valuable from prospective buyers and sellers you are negatively impacting the reputation of the real estate sales profession. I hope you can live with your conscience after this.

I think that when the affordability threshold is reached it’s the current supply and demand that will determine the size and speed of the fall. Where demand is mainly driven by the ratio between home prices and available funds as savings, income and cost/availibility of loans and supply is the inventory.

So, I think it’s back to basics to predict how comparable the fall of the markest will be. I.e available funds among buyers, home prices and month of supply.

Not.

I agree with with Scotsman, if China and India are doing well its a good, but what’s that got to do with Seattle real estate? If Seattle was in a fish bowl from America, I’d agree, but it just isn’t so.

America’s real estate is going down the tube and so is Seattle’s.

Compare that to today, where we are not officially in a recession. When does the trend of accelerating depreciation end? I think it gets worse before it gets better.