I can’t wait for things to really get rolling this summer. Isn’t it obvious with supply increasing — the people who are listing now and have been in the last six months — KNOW the market has topped and are trying to get out and maximize profits. If people didn’t think the market was in a down trend — THEY wouldn’t sell and please don’t try the — all the people trying to sell now are relocating or going through a divorce or on their way to the old folks home.

Of course, it’s less than 600 sq ft. “A real charmer.”

I’ll post a pic this weekend on Deflation Land.

Here are a couple of Eastside area studies:
Redmond: http://www.workingforyou.typepad.com//realestate/2008/03/redmond-real-es.html

East Bellevue:http://www.workingforyou.typepad.com//realestate/2008/03/east-bellevue-n.html

If you truly believe that overall happening in the area won’t effect certain community, and perhaps you are overlooking too many other factors.

From the article

Pros: Talented workforce, growing downtown
Cons: Pricey homes, high cost of living

If hypothetically there was a surge in middle or low tier sales, it would make the top tier price come down, even though prices might not have changed at all, because of the way they compute the tiers. It is the median effect all over again.

Many of these numbers are percentages, and a negative percentage can pack a larger wallop to the base number. What do I mean? A simple example (with numbers that make the math easy..)

from 50 to 100 is a 100% increase
but from 100 back to 50 is a 50% decrease.

(This gets less pronounced when numbers are smaller)
from 50 to 55 is up 10%
from 55 to 50 is down 9.09…%

So if homes are up 10% over one year, and down 10% the next year.. the prices aren’t what they were two years ago.. they’re lower… I wonder how many people pick up on that..

I wonder how the feds actions of lowering interest rates will play out for the ARM resets. I think that people will be a little better off and there won’t be a huge panic in that crowd. (unless they were seriously leveraged to begin with). I don’t think that is going to be the primary catalyst to drive prices downwards. The catalyst may be the people who panic will do so because of falling housing prices naturally deflating from their unsustainable levels. Its the upside down mortage crowd who will be walking away from homes or declaring bankruptcy or selling at huge losses. This will in turn drive panicky selling practices. The realtors will just stand by and collect checks as this new crowd pushes transaction volumes. Every new panicky sale will push the prices downward.

So in other words, if we keep dropping at the current rate, this July we are looking at 11% off YoY performance for Case Shiller. Probably worse for Median price. And the RadarLogic index shows Seattle dropping at a 16% annualized rate!

Mathematically, that’s probably about as bad as I see the YoY numbers getting. After that the comps will be the post-dropoff months, which will mute the impact.

I am starting to see more price drops around the Eastside, both with new and existing homes. Redfin is good for watching this. Although I curiously see price histories where people have raised their prices for a while.

if we really believe the Shiller analysis that says that house values essentially do not change over time (in inflation adjusted dollars), the C-S index has to run all the way down to 125 from the 180 it is at today.

about a 30% drop.

this is only a reasonable claim if we think that Seattle hasn’t changed significantly since 2000 and if we assume that no government or market intervention will be important.

according to this tier analysis, the low end will correct the most.