If you thought last month’s reporting was fun, just wait till you get a load of the goomy tone of the latest wave of articles.
I find it interesting that the NWMLS chose to release the statistics so late in the day yesterday, on the fourth business day of the month (rather than the fifth, which has been the recent standard). It’s probably just a coincidence, but I can’t help wonder whether it might have something to do with the fact that the election results are sure to grab all the headlines today, pushing the nasty real estate news out of the spotlight…
Kirsten Grind, Seattle Times:
Local home prices slide
The median price of homes sold in King County declined last month compared with a year ago — the first year-over-year decline since the nationwide recession in the early 1990s.
As supply outpaced demand, the median price of all homes — single-family houses and condos — dropped 1 percent to $387,500 from $391,300 a year ago, according to the Northwest Multiple Listing Service report for October, released Tuesday.
…
Joe Spencer, president of John L. Scott and director of the Northwest MLS, said the housing market is in the adjustment period of a typical real-estate cycle, which usually means a six- to seven-year boom followed by a two- to three-year downturn.
…
“I really believe based on historical numbers that 2008 will be the low point in the market here, depending on what area you’re looking at, and then we’ll start that slow climb back up,” Spencer said.
…
Until now, the Puget Sound real-estate market has been strong, especially compared with the rest of the country.
I know, right? I mean, who could have possibly seen this coming?
Aubrey Cohen, Seattle P-I:
Home prices down again — is it time to buy?
Many prospective Seattle home buyers welcome signs that prices are declining.
“I think (prices) are way out of sight, and I’m glad to see they’re finally coming down,” said Steve Noah, while outside a Capitol Hill open house in October.
The latest evidence came Tuesday, when the Northwest Multiple Listing Service reported that the typical home in Seattle and King County sold for less in October than it did during the same month in 2006. It was the second consecutive year-to-year decline in median price for Seattle and the first for the county after more than five years of monthly price increases, year over year.
Meanwhile, the city and county continued to have fewer sales and many more homes languishing on the market than a year earlier.
The signs of a slowing market locally, combined with news of more serious declines in other parts of the country, clearly have made some local buyers cautious.
“I wouldn’t want to overpay for a house right now,” said Jessica Bora, who has been looking at homes with her husband, Gaurav, for about a year.
Noah, who has been looking at homes for about two years, thinks prices are still too high.
“I think in the next year that we’ll see some serious readjustments,” he said. “I probably wouldn’t buy right now.”
I couldn’t agree more.
Many agents note that the market always cools in the fall. But they also say things really slowed in August, because many buyers had a hard time getting financing.
“I think what happened in August moved us into fall early,” said Jim Paddleford of Windermere Real Estate. “A lot of loan programs disappeared overnight.”
Some agents complain that buyers have unrealistic expectations for bargains in Seattle based on stories about the national housing downturn. But Gene Seguin of Windermere Real Estate sees another problem.
“Sellers don’t want to let go of controlling the market,” he said.
Many sellers think about listing their home for six months before actually doing it, meaning the price they can get now is 3 percent to 5 percent lower than what they could have when they first considered selling, Seguin said. “That’s a very tough pill to swallow.”
But, he said, sellers are catching on and starting to set their prices for the current market.
It’s pretty obvious from even a cursory look at the data that what we’re seeing is not the typical seasonal fall/winter slowdown. The sooner home sellers get a clue, the better.
Devona Wells, Tacoma News Tribune:
Pierce home prices drop again
Pierce County home prices dipped again in October, marking the second consecutive month of year-over-year decreases as sales remained down.
The county’s median price for a home, including houses and condos, in October was $266,157 – a 1.4 percent drop from the same month in 2006, according to numbers released Tuesday by the Northwest Multiple Listing Service.
At the same time, 33 percent more homes were for sale than in October 2006, though the number has been on the decline since August.
The county’s downturn in prices comes as many markets around the country are depreciating at far steeper rates and with tens of thousands more homes for sale.
Pat Maddock, a real estate agent and president of the Tacoma-Pierce County Association of Realtors, emphasized the advantage buyers hold today, particularly with the county’s inventory levels.
“I hate to quote Donald Trump, but Donald said the other day, ‘If I were you, I’d buy everything I can get my hands on.’ Nobody knows when it’s going to kick back up or level off,” Maddock said.
Uh-huh… riiight… You know they’re getting desperate when the best argument they can come up with is to quote Donald Trump.
Mike Benbow, Everett Herald:
Home prices start falling in region
Home sales continued to fall in the Puget Sound area in October, and for the first time in many communities, prices went with them, according to statistics released Tuesday by the Northwest Multiple Listing Service.
That wasn’t the case in Snohomish County, which recorded a combined median price for single-family homes and condominiums of $352,874 in October, a nearly 6 percent increase from October 2006.
…
Listing service director Joe Spencer, president of John L. Scott, said the numbers are following the typical pattern of home prices in the region: a two-year slump followed by a period of six to seven years of strong sales and rising prices.
“Combine this with low interest rates and a healthy supply of homes to choose from and you have yourself the perfect buyer’s market,” he said.
It’s always the perfect time to buy! As far as the Snohomish median, sales were down 36% from a year ago, with fewer than 700 single-family homes being sold in October compared to nearly 1,100 last year. When the number of sales is off by that much, the median can’t really be trusted to tell us anything useful, as I’ve been saying in King County for the last few months.
Rolf Boone, The Olympian:
Fewer houses sold
October home sales in Thurston County fell 13 percent from a year ago, but demand for homes was strong enough that the median price rose four percent in the same period, according to the Northwest Multiple Listing Service.
Northwest MLS area services manager Jerry Wilkins said the South Sound housing market consistently has bucked national trends.
“I still see good home price appreciation,” he said. The South Sound market is stronger than others around the nation, Wilkins said.
It seems like a bit of a stretch to me to call the local market activity “bucking” the national trend. In fact, the local market is exactly following the trends of increasing inventory and decreasing sales, and is only slightly behind the curve on the decreasing sales prices.
Methinks that some of the local real estate professionals have confused these two:
(Kirsten Grind, Seattle Times, 11.06.2007)
(Kirsten Grind, Seattle Times, 11.07.2007)
(Aubrey Cohen, Seattle P-I, 11.06.2007)
(Devona Wells, Tacoma News Tribune, 11.07.2007)
(Mike Benbow, Everett Herald, 11.07.2007)
(Rolf Boone, Olympian, 11.07.2007)
This is excellent. What makes it even funnier is that perusing RedFin, it seems like the fall/winter “value” buyers are out again in the close in neighborhoods picking off the low priced homes to flip in the spring. Same thing I saw the last 2 fall/winters, just less of it. Can’t wait to see the spring bounce…
A la Bruce Springsteen: “I’m goin’ down, down, down….”
I love the smell of falling stocks, earnings, and housing in the morning—-smells like—- recession !!!!
All we need is layoffs now–first up–WaMu
HI TIM, I STUMBLED ON THIS NEWS OF WASHINGTON MUTUAL BEING SUBPEAONED BY NY AG
This mortgage mess adding to Seattle’s price plunges seems to have no end to its horrification.
biz.yahoo.com/rb/071107/cuomo_mortgage.html?.v=8&.pf=personal-finance
Fortune magazine has rapidlly changed their tune regarding the Seattle housing market. It’s now among their “25 housing markets poised to fall”. They predict a 19.5% fall in the next 5 years.
http://money.cnn.com/galleries/2007/fortune/0711/gallery.real_estate.fortune/index.html
WAMU’s stock fell to $20/share today. Just a few months ago it was over $40/share. Hope you all bought puts back the..anyway, their management team held a conference call today and it must have been horrendous as the price fell 17% in one day…layoffs, tighter credit, lower home prices…and a recession. I am actually a bit worried that the economy will really tank. Gold is going crazy and the dollar is collapsing. In real terms housing prices are falling fast when measured against gold or Euros..but Seattle folks are a bit sheltered in terms of how international central bankers are viewing our debt laden consumer and economy..oh well
I wouldn’t cheer too loudly for lay-offs at any particular company if I were someone on this board. No one is immune in a major downturn. Is a recession around the corner? Most likely, but it’s nothing to cheer about. Microsoft, Amazon, and Starbucks will all have issues selling X-Boxes, books, or foofoo coffee drinks if the market is in recession, which would probably mean lay-offs there as well. Will home prices come down? Yep, but be careful what you wish for since what you wish for can hurt you too.
“I find it interesting that the NWMLS chose to release the statistics so late in the day yesterday, on the fourth business day of the month (rather than the fifth, which has been the recent standard). It’s probably just a coincidence, but I can’t help wonder whether it might have something to do with the fact that the election results are sure to grab all the headlines today, pushing the nasty real estate news out of the spotlight…”
For what it’s worth, Miss Grind’s “Local Home Prices Slide” article is listing as the 2nd most read on the Times website. Seems that enough people are seeing it through the Prop-1 moping/gloating.
“Uh-huh… riiight… You know they’re getting desperate when the best argument they can come up with is to quote Donald Trump.”
I don’t think it holds much weigh in Seattle, but in the markets that have already seen huge declines, Trump has a (marginally) valid point – if you have huge amounts of capital, buying a bunch of real estate isn’t a terrible investment right now. In places where there are hundreds or thousands of properties languishing, a low-ball cash offer will probably get the property. Rent it for a few years and sell it in five for a nice profit. Of course, most people don’t have Trump’s capital, and you can probably make more money quicker in other markets, but he’s not entirely wrong… IMO.
But I thought Seattle has a force shield and an abundant supply of pink ponies…..
Point taken though, I’ll try to be more sensitive and not let my short positions get over my head….
I agree with Brian. The Seattle economy and it’s above average salaries depends mostly on discretionary spending items. In a recession, you can kiss goodbye sales of x-box, computers (windows-office), books, REI’s mountaineering equipment, $4 cups of coffee, and all the small technology suppliers will go out first.
I guess Costco will do better…
what about Boeing?
will they improve international sales with a falling dollar or have order cancellations as cash-strapped families travel less?
as for buying anywhere today, i’d give it at least another 6 months. i don’t think there is a single market that is below its historic values. not unless your capital is in euros or loonies.
Personally, I know I have really had to cut back on my jet buying plans. ;^)
There is a Housing Bubble Blog post all about Washington and Oregon today
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I was standing outside Zoka coffee house today in Green Lake and had the following very telling experience: I’m looking at the Seattle Times headlines in the paper vending box by the door and this guy was standing there in a $2000 pinstripe suit literally yelling in to his phone at someone: “What?! Are you kidding me!? $550,000 is a perfectly reasonable price to pay for a house in a neighborhood where houses are selling for $900,000″ I could say more, but I don’t need to. The Seattle Bubble is officially bursting. RIGHT NOW.
Very good points Buceri. We have a strong economy among during strong economic times. But the shift to a basic-needs economy where people are saving and actually building things again is going to put Seattle at a severe disadvantage versus other economies. But this is not new stuff here. If you’ve lived here long enough, you know that Seattle has been through several horrible busts that were far worse than anyone at the time could imagine. I would not be even the slightest bit surprised if Seattle wound up getting hit the hardest in the nation before this is all over. Okay, maybe not harder than Detroit. But then again, maybe Detroit will be building things again. We’ve become a nation of Mississippi-stock-holding middle managers who feel entitled to goof off while the Chinese sweat. I find it VERY interesting that the largest company in the world and the first $1T company on the planet is Chinese. Things are about to get very, very, very upsetting for Americans who expect business as usual.
Jonathan- Your comments are spot on. I’m amazed at how insulated many are from what’s really going on in the world, especially in terms of credit markets, etc.
My money’s on a fairly major recession starting this coming Spring. I hope I’m wrong, but we’ll see.
Wow, WM got hammered. They are under 20 after hours.
It’s interesting, because WaMu is basically the bank behind the Seattle Is Special nonsense. And in more wasy than one, not just the 1-year ARMs and inflated appraisals, but also in terms of the very jobs the Special Seattlites go to in order to pay their inflated mortgages. Expect layoffs, bleeding, and major fallout from the on-going WaMu saga.
Down 17% in one day and 50% for the year — the first hole in the dyke…
SunTzu, I’m with you on the short side. Puts on BZH, HOV, GS, WMT, TSO, XOM, CFC just to name a few.
We’ve become a nation of Mississippi-stock-holding middle managers who feel entitled to goof off while the Chinese sweat. I find it VERY interesting that the largest company in the world and the first $1T company on the planet is Chinese. Things are about to get very, very, very upsetting for Americans who expect business as usual.
…
I’m amazed at how insulated many are from what’s really going on in the world, especially in terms of credit markets, etc.
..
Hey Jonathan & Scotsman -
You two are raining on the delusional entitlement parade! Knock it off! :)
I wouldn’t bet the farm too much on the Chinese. They are creating their own real estate and stock market bubbles. Plus, 10% growth is not sustainable for too long. In addition, their growth is going to be tempered by a variety of issues: political, economic, environmental, etc. It’s not going to happen overnight, but all bubbles eventually burst.
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The Chinese are starting out so much lower on the economic ladder that I can easily see them maintaining 10% growth for years. They have so much infrastructure to build, so many resources, so many in the rest of the world that are eager to help and invest. China will be the new frontier economically for the rest of the world for decades.
Politically, communism is already dead, they’re just waiting for the body to cool so they can bury it. Sure there will be bumps and disruptions on the way, but anyone who thinks the communist party will be able to control/contain the expansion of both individual economic power and exposure to the rest of the world’s wealth and freedom is delusional. The best the current party can hope for is a smooth transition without excessive bloodshed.
Congrats biodiselchris !
Mine are WM, LEH, C with UDN(long), IEO(long). GS is a good one they can’t hide thaose bad books for too long. Morgan Stanley just came partially clean….
That pin-striped asshat was either:
1. Desperate Realtor yelling at client
2. Desperate husband yelling at wife.
3. Desperate homeowner yelling at Realtor
Whatever you pick, the common theme is desperation. . Fear is finally replacing greed as the driver of our real estate market.
Scotsman, I agree with you that they are the new frontier, but that has more to do with super cheap labor and their population size more than anything. A trillion dollar company? Seriously? That’s a joke. Their infrastructure, political, and income disparity issues are great enough to cause them major problems in the future. Their biggest natural resource is all those people. When they start to realize their time and effort is worth more than a couple dollars a day, their labor cost advantage will diminish. When that happens, they will feel a lot of pain in their markets. I’m not saying it’s going to happen overnight (it may take another decade), but it will happen and when it does, their bubble will burst.
SunTzu – you might like philstockworld.com
I get a lot of picks from there. I had C as well but sold it earlier (missed a few points on that one).
I had NFI, NEW and LEND back in the day – man what a ride that was! Pretty much since then I’ve seen the writing on the wall for mortgage and HB’s. Every month I buy far out of the money puts on HOV and BZH for 5 or 10 cents and just wait until BK hits…
> Sctsmn:
>
> Pltclly, cmmnsm s lrdy dd
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Boeing is supporting the local housing boom. hahaha
“Polygon’s Boeing Day at Crosswater New home community in Lake Stevens ~ November 15th from 4pm-6pm. Learn more about Polygon’s special Boeing employee incentives to purchase a new home. Refreshments will be served!
Mention Boeing affiliation & receive $3000 buyer incentive when purchasing a new Polygon home. At specific communities, Boeing customers will earn $10,000 in additional purchasing power. Restrictions apply. See location list for directions.”
China both can and cannot sustain their growth. In the long term, the 10% they are seeing in recent years is realistically how fast their economy is expanding. Eventually, this should be great for the average Chinese citizen.
However, every economy which has ever modernized has seen booms and busts along the way. The USA had huge booms and busts in the 1800s. So in short, China will undoubtedly have a bust sometime reasonably soon (by 2012?). However, in the longer haul (next 20 years) they will still have far outgrown where they are today.
…don’t know if this serves more in the interest of brevity or levity, but note the comparative differences in the video of a soft landing and that of a hard landing…
In case you haven’t been paying attention, the US dollar has lost 8% of its value against the Canadian dollar in the past month.
http://www.exchange-rates.org/history/CAD/USD/G/30
Instead of free houses we are going to have free money.
By the way, that 8% inflationary loss in one month translates to a 270% annualized rate of inflation against the CAD.
Alan: Yep. We’re screwed down here. But I, for one, welcome our new Canadian overlords, eh.
I have a great high-efficiency wood stove which should burn the USD quite nicely. I’ll bet 1000 singles will keep me warm for a full half-hour.
Once again, I’m tuning-in late to my favorite blog.
“The dollar tumbled to new lows after a top Chinese official called for China to diversify parts of its vast foreign-currency holdings into other currencies like the euro, which hit a fresh high against the greenback — climbing as high as $1.4730. 11/07/2007 By Kate Gibson at Fidelity Market Watch.”
The dollars decline is due to the future repositioning of the $1Trillion USD that China currently has sitting on Wall Street. Basically, the market is fearing China will dump dollars onto already soft market. Not much more to be said…
Also, at dinner time my wife and I were discussing 1972-4… 1) In a war we didn’t want to be in. 2) Dollar came-off the gold standard, dollar declines while gold surges. 3) Oil surges on Mid-East turmoil. 4) Sharp decline in new housing starts. 5) Iran, Afghanistan, Pakistan all had revolutions 6) Start of inflation that lasted 6-8 years. 7) A Federal Reserve Bank paralyzed by the market. 8) A criminal for a president… 8) O. Bin Laden alive and well…
Dollar’s low means now we can export/sell arms, insurance, tourism, loans, property (WOW! That too?), and other products/services to the rest of the world, el cheapo! Which, methink, screws the EU royally…
Bernanke is da man … though I still think he should come to this blog and learn a lesson or two on the ‘truth’ about real estate…
I wonder what ever became of Baby Blue/Meshugy?
A year ago he was still blowing the Seattle/Ballard is special horn…….we tried to warn him.
Guess he is scared to eat crow.
What is the most disturbing about Seattle not turning out to be special is that even the Zune cannot stem the tide….
You are insane if you think devaluation is good. I am sure the Argentinians loved it when it happened to their country a few years ago.
You should do a feature on the house originally listed in the Redfin Sweet Digs blog as Future Retro Real Estate – in many ways this overpriced, overbuilt monstrosity – over two years on the market – is an ideal mascot / poster child for the Seattle bubble.
from earlier … my bad that’s hard landing….
John: Devaluation is a result of corrupt debasement. What was actually bad happened 10 years ago. More hubris and manipulation has slowed the "chocolate" down, but it moves inexorably towards fan. My opinion is that the fact that its moving slower is only going to make the mess bigger. 7 years ago, if we’d just let the whole mess implode, we might be emerging from a recession now. But now, we might get stagflation or hyperinflation followed by deflation. Conditions may be more like the 70’s or even the 30’s than the 90’s. High unemployment in Seattle (which happened during the 1970’s here) during a really serious recession might even drop house prices below 90’s valuations.