Before we begin May’s reporting roundup, let’s have a little review of the year so far.
January
Barb Lamoureux, owner and broker with Lamoureux Real Estate in Everett, said the typical slow December market is over. She’s seen signs the market is picking up, including a significant increase in open house traffic and even some multiple offers on properties. Her agents are expecting a busy spring.
February
February housing activity around western Washington signaled signs of an emerging spring market with a noticeable increase in open house traffic, reports of multiple offers and a big jump in pending sales from the previous month.
March
NWMLS director Dick Beeson believes the local market has “reached bottom – or pretty darn close.” Even though inventory continues to grow, Beeson acknowledged, “so does optimism among buyers, sellers and agents.”
April
Spring did start slowly, said Coldwell Banker Bain agent Margo Hass Klein. But she said traffic in the last couple of weeks has increased by at least 10 percent at open houses.
May
“We still haven’t had summer hit us yet as the weather remains cool, wet and cloudy. I expect both temperatures and the market to heat up as summer approaches,” commented Dick Beeson, broker/owner at Windermere/Commencement Associates in Tacoma. “Open house traffic is picking up and buyers are coming off the sidelines to make buying decisions.”
I’m starting to wonder if maybe, just maybe “open house traffic” isn’t quite the best measure of real estate market health.
Read on for the this month’s roundup with all the blind real estate agent optimism you can eat.
Elizabeth Rhodes, Seattle Times:
Home prices remain soft, inventory remains high and interest rates are relatively low — all of which point to a buyer’s market. With interest rates at their highest levels since mid-March and likely to go up, it would seem that buyers would get off the fence.
But sluggish sales say buyers remain unconvinced.
Proof is in median prices of single-family homes, which declined year-over-year in King, Snohomish, Pierce and Kitsap counties, according to statistics released Thursday by the Northwest Multiple Listing Service.
…
Teresa Darragh, an agent in one of John L. Scott’s West Seattle offices, said the lack of pressure is allowing buyers to make thoughtful decisions.“They’re able to take some time to look at the market and the inventory,” Darragh said. She also said prices in her area are down about 5 percent.
How great that agents are suddenly so concerned about a buyer’s ability to make “thoughtful decisions.”
In a surprising change of pace, Ms. Rhodes also has an article out today that focuses on the meaty subject of financing: Higher hurdles to home loans slow real estate sales in Puget Sound region. Be sure to check that one out too.
Aubrey Cohen, Seattle P-I: Home buyers, it’s your time to haggle
Ewan Hruska and Leya Barr plan to buy a house in Seattle — if they can sell their home, which has been on the market in Shoreline since October.
“We have our price point that we can’t go below,” Barr said, outside of an open house in Greenwood late last month. “It’s made it difficult to price it to move.”
They estimated between 60 and 80 people have toured the house.
“We’ve never had a problem with viewings,” Barr said. “It’s just, we haven’t had an offer.”
Nice. I get the impression that maybe Aubrey is as tired of the “traffic at open houses” nonsense as I am.
“There is clearly some bargain hunting going on,” said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University. “Certainly there are some sellers out there that are panicking a little bit. Their homes have been on the market much longer than they had been accustomed to seeing homes on the market, so they have been accepting some disappointing offers.”
But the decreases are greater than what the market merits, Crellin said. “(I) don’t see that we should be having the degree of problems that these numbers are implying.”
Oh man, that’s rich. Prices are off just 8.5% from their peak, and Crellin’s freaking out. Granted, he’s been doing the real estate analysis gig longer than I have, but honestly Glenn, are you really that surprised? I think we’re just getting started. Of course, a good amount of Crellin’s WCRER funding comes from Realtors (more on that later this month), so I suppose that comments like those should be expected.
Mike Benbow, Everett Herald: Snohomish County home sales slow in May
Some brokers blamed newspaper reports on the national economy and poor housing for the lack of an expected revival in local sales. Others said the continued cold weather hasn’t helped.
Ok let me stop that one right there for a minute. How can real estate agents—with a straight face—blame the weather for slow sales? Do they seriously believe that there are people out there saying “gosh honey, I know we were planning to buy a home this month, but gosh darnit, would you look at that rain—let’s just wait until it’s sunny”? Really?
“There are such great opportunities for buyers right now to position themselves for the future,” J. Lennox Scott, chairman and chief executive of John L. Scott Real Estate, said in a news release.
…
“Buyers are realizing that interest rates may creep up, and they would be in a worse position if rates went up 1 percent than if prices fell 5 percent,” [MLS Director Dick Beeson] said.Mike Skahen, a multiple listing service director of Lake & Co. Real Estate in Seattle, said there really wasn’t a spring buying season this year as people stayed on the sidelines to see what would happen with prices.
“When the press gets less negative,” he said. “It’s going to push buyers off the fence and they’ll regret having waited.
Nice. Notice how the tone of agents has shifted somewhat in the last few months. It’s become almost threatening. “You’ll regret this…” Classy.
Devona Wells, Tacoma News Tribune: It’s spring, but home prices fall
…spring is the time of year when agents and brokers expect to see business picking up. Instead, prices have hovered around the $260,000 mark since January and the number of sales, while moving north from February through April, dropped on a month-to-month basis in May.
…
Buyers remain hesitant but sellers are getting a better handle on today’s market, said Dick Beeson, an MLS director and Windermere broker. Still, more whittling of inventory would help, considering how long some of today’s listings have been on the market and that some remain overpriced, he said.Real estate agents, he said, are having heart-to-heart sit downs with sellers and turning down properties they might have previously tried to market.
“Agents are finding they can’t spend their time on properties that aren’t sellable,” he said. “You get real with the market, no more hoping. It’s reality time.”
…says Mr. “I expect both temperatures and the market to heat up as summer approaches.”
Jim Szymanski, The Olympian: Home sales down 32 percent from ’07
Some agents say the dropping numbers mean it is a good time to shop for real estate because many homes are available.
“People are hanging on to their wallets,” said Blake Knoblauch, an agent with Greene Realty Group of Thurston County. “Buyers are waiting to see the bottom of the market, but we don’t know when we’re going to see the bottom. For all we know, it could be now.”
Ah yes, the “better not try to time the bottom” nonsense. Of course, for all we know, the bottom could be 2012, and today’s buyers will be kicking themselves a year from now. Also, we’ve already shown that today’s “fence sitters” have nothing to lose by waiting it out, so the argument really doesn’t hold water.
(Elizabeth Rhodes, Seattle Times, 06.05.2008)
(Elizabeth Rhodes, Seattle Times, 06.06.2008)
(Elizabeth Rhodes, Seattle Times, 06.06.2008)
(Aubrey Cohen, Seattle P-I, 06.05.2008)
(Mike Benbow, Everett Herald, 06.06.2008)
(Devona Wells, Tacoma News Tribune, 06.06.2008)
(Jim Szymanski, Olympian, 06.06.2008)
LUC,
Back to 224. Sorry, I had to get some stuff done.
You forgot the other three directions, North, South, and West. I think people will gradually migrate closer to their jobs. I don’t think they will sell right now for gas prices. I think renters, new time buyers, some people being crippled by gas prices, and people who actually want to live in the city will eventually migrate over time. They may be renters or buyers.
The suburbs have much bigger houses, which often cost more to heat. My father is looking at $5,000/year to pay for home heating oil. In addition, everything you do requires more gas. Including driving to the grocery store, restaurants, malls, friends houses etc.
More people work in Seattle than live in Seattle.
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Patient,
In the same breath you should take a look in the mirror. You would have amateur or first time home buyers think that price alone is the only consideration. I have provided dozens of strategies and considerations that home buyers must think about before getting in to a home. You provide one. BUY LOW.
If anything new home buyers will walk away knowing they need to look at specific neighborhoods. They need to do a tremendous amount of homework. They need to buy for the long-term. They need to consider interest rates. They need to consider future trends. They need to have back up plans (renting, roommates, etc.). They can leverage sweat equity.
Buying at a low price in a neighborhood that could further decline is not going to be helpful.
You should consider how your unidimensional approach could crush a new home buyer.
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Is this the longest running thread on this blog?
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Yes.
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Harley Lever,
What data do you have stating more people work in Seattle than live in Seattle? If that is true, what % of those working in Seattle could afford home prices or rents in Seattle?
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Harley, buying low is not good enough if you don’t define low. To me low is when the price is below the historic mean. You also need to look at the economic outlook, if there is a recession in the picture you need to factor that in and buy lower than the historic mean. I think that there is a much easier way though that do not require knowledge of means or other factors. Just wait until you have a stable trend of appreciation for about 6 months after a longer decline. Btw I never said you should only look at price but it’s a very good point to start.
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It should be: Just wait until you have a stable trend of case-shiller appreciation for about 6 months with good volumes after a longer period of declines.
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Well based on the fact the inbound lanes on the freeways are jammed getting into the city every morning, and are packed leaving when leaving the city every night. The countless trips the ferries makes each day and the long lines leaving in the afternoon. That is why they Open the extra lanes inbound in the morning and outbound in the afternoon on the bridges and highways. Did you not know this?
What makes you think that people can afford the skyrocketing gas prices for their cars, heating their large suburban homes, and gas’ pervasive costs. In 2005 the Department of Energy predicted that the average price of oil in 2030 would be $100/barrel. OOPS, they were wrong. The automotive industry is far behind the curve.
I have to say I love Seattle City Light. My first bill ever was $24. It still brings a tear to my eye. My highest bill ever was $74/month.
Here is an interesting article. Mass transits has the most ridership since 1957. IBM conducted a survey where 66% of drivers said they would seek alternative modes of transportation if gas got above $5.00 per barrel.
http://money.cnn.com/2008/06/11/news/mass_transit/index.htm?cnn=yes
I do not predict that people will sell their homes immediately to hedge against gas prices. I do believe that when making buying decisions that proximity to work and public transportation will be a major consideration if not an influencing factor.
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Harley Lever,
So you are basing it on observation alone? Also, so all the homes in the suburbs are large and only heated by oil? Mass transits doesn’t just mean transportation to the Seattle. It would also include transportation to Redmond, Bellevue and other areas surrounding Seattle.
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The people who lives in the suburbs but want to live in-city was obviously not able to afford in-city living prior to the hike of gas prices. What make you think that they can afford it now?
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LUC,
Is is not common sense that the reason the freeways are packed before 9 am going to Seattle is because people are going to work? The outbound lanes are packed in the afternoon because they are leaving from work. The transportation department has spent millions of dollars and designed the freeway systems to accommodate traffic to and from Seattle. Why do you think that is? I didn’t think I had to go to the Washington Department of Transportation to dig up facts about the painfully obvious.
Whats facts do you have to offer? I have yet to see you put forth anything with any of our debates other than baseless points and unidimensional pot shots.
You talk about your Aunt and Uncle the school teachers, who owned rental property, and made a killing off of CD in the 80′s and how they were not wealthy. Yeah the school teachers with rental property… that is common. You only proved my original point.
You talk about how your Real Estate Agent says the condo market is dead, yet the YOY prices is up 4.1%. King, Pierce, and Snohomish counties have all seen increase in condo prices. Yet you have a real estate agent who is employed in a market that is dead. Why do you even have a real estate agent if the market is so bad???? Why hasn’t your real estate agent found another job?
You talk about the 1 Townhouse out of 10 that has not sold on the corner of Thorndyke and Boston, yet they all sold for $400/sqft. 1 unsold townhouse is not exactly a sign of project failure.
You talk about how there is no construction on Thorndyke, yet there are 6 nearly complete buildings on the east side of the street, 3 adjacent house lots all fenced off and ready to be demolished, and an apartment conversion on the west side of the street along with the newly constructed town homes I mentioned above. Yet you tell me that there is no new construction going on.
You talk about jobs in Redmond as a rebuttal to the jobs based in Seattle.
How about you hold yourself to the same high standards you hold me. I have provided you with countless facts and articles and all you can muster up is singular points, most of which are baseless facts… actually I think I am insulting the word “facts”. We should call them “Butt-isms” because it seems that is where you are pulling all of your information from.
Please do me a favor when you can amass more that just one point for any topic and back it up, them make a comment. Otherwise you are just highlighting your lack of “observation”.
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Harley Lever,
What coutless facts and articles have you provided? You have provided no numbers to support your assumptions or facts.
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Patient,
Bad neighborhoods will eventually transition to nicer neighborhoods. Look at Rainier Beach. It has a ways to go, but it will transform.
People will do with and expect less. Just ask the people of New York City where crappy basement apartments rent for thousands of dollars and you can rent floor space in a kitchen for $600 (my friend does). It is not uncommon for 8 people to rent a 2 bedroom apartment. Granted, Seattle is not even close to being there, but you cannot deny that some will migrate closer in with the expectation of less. It might not be the Baby Boomers, but generation Y and Z already show signs of this.
I have seen the same process in Boston where the need to live closer to the city transformed neighborhoods that we as children were appalled at the idea of living in. The projects and slums of old are now the newest and best neighborhoods to be in.
What makes you think that gas prices will not cripple people in the short term, if not permanently and change their mindset about what is acceptable living? We are just seeing the beginning of this process. People expectations will change. Having to heat a 2500 sqft. house on oil, natural gas, or electricity will be costly. Then having to jump in your car to go everywhere on top of having to go to work will completely cripple people ability to afford the fuel costs associated with living in McMansions in the burbs.
Emerging economies demand for oil will offset technological innovation, our ability to source and develop new oil, not to mention that our refining capacity is just not there. This is just the beginning of a painful process which I hope will lead us off of foreign oil. Renewable energies currently lack the technology and infrastructure to come on line any time quickly. Congress and the American Automotive industry has further exacerbated this by their refusal to produce more efficient automobiles. GM and Ford are getting what they deserve. Their shortsightedness or unwillingness to see what was ahead has put nails in their coffins. I guess they should not have killed the electric car after all.
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The Tim,
Perhaps we should to talk to LUC about her reading comprehension.
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Real Estate as an inflation hedge during the largest real estate bubble in the history of the country while RE prices are crumbling far greater than the rate of inflation… Now I’ve heard it all!
Instead of going out and buying some gold (which is easy to buy and sell) I’ll go buy some RE.
Jon you should just go long SRS (Ultrashort RE) it was up 4 percent today.
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Gentrification.
That’s gotta be one of the larger bull$hit marketing pitches out there. I saw it play out in Los Angeles for many areas that are now trying to unload foreclosures at half price. There was even an article in the LA real estate ad mag…I mean…the LA Times about the “gentrification” of Watts, and that the median price for the area was approaching 500k. The essence of the article was “get in before Watts turns unto a latte sipping luxury enclave before you get priced out forever”. How do you think the cute couple that was portrayed in the article feel about their purchase now?
Some people are gonna have to learn the hard way…there is such a thing as “reverse gentrification” and it doesn’t just apply to places like Detroit.
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EconE,
You are using Watts as your example? You are too funny.
Seattle is going to degrade to the likes of Beirut right? Why would you even rent here? Maybe it would be best to go else where… after all you don’t want to be here for Seattle’s Apocalypse do you?
With the risk of sounding like a Pink Pony, Seattle has the highest concentration of millionaires in the United States, we have several globally diversified companies which provide thousands of high paying white collar jobs, and like it or not we are a technology hub. I don’t see us degrading to the likes of Watts or Detroit. Let’s face it, Detroit’s economy was driven by blue collar factory workers who relied on 3 companies that did nothing to secure their future as they pandered to oil companies and an energy policy that was bound to strangle America.
California’s rate of subprime lending is twice that of Washington’s mortgages in a market where the median home price is almost twice our own.
My point, which you completely missed, is that due to skyrocketing fuel costs people will likely try to reduce them by renting or purchasing home closer to their jobs. They will settle for less and not want to pay for the high costs of heating big homes, in far out places, where they are forced to drive everywhere for basic services.
EconE how would $5, $6, or $10/gallon prices effect your choice on where to live? We are at $4 now and people are crying about it. Easy oil is our past. I hope your bike is greased and ready to go.
With a name like EconE you think you would have a more “global economic perspective” and a better mouth.
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Gas Prices as a percentage of income. Apparently NY times thinks it’s not as bad here in Seattle or the DC/NY area.
Looks like it hurts in SD, Montana, etc. There is also a graph on median income.
“The Varying Impact of Gas Prices
Gas prices are high throughout the country, but how hard they hit individual families depends on income levels, which vary widely.”
http://www.nytimes.com/interactive/2008/06/09/business/20080609_GAS_GRAPHIC.html?#tab1
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Harley,
Seattle does not have more millionaires than any others city. You are pulling stats out of your ass. The only studies I have seen that show millionaires per area, rank them by county, not city. And the last one I saw had LA County as #1 and Orange County is #3, guess what, San Diego County is #5.
Check it out… http://money.cnn.com/galleries/2007/pf/0704/gallery.Millionaire_Counties/index.html
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Mtthw // Jn 11, 2008 t 7:28 m
Mkl,
My jb s 100 prcnt blltprf. m n n dngr f lsng my jb n mttr hw bd th cnmy gts. n fct, whn tms gt rgh my jb ctlly hs mr wrk.
…………….
Yr jb mght b 100% blltprf bt y rn’t Mtthw.< hrf="#" clss="rplyt" nclck="rplyt('50025','∓#91;trll∓#93;','320'); rtrn fls;">Rply – < hrf="#" clss="qt" nclck="qt('50025','∓#91;trll∓#93;','Mtthw \/\/ Jn 11, 2008 t 7:28 m \r\n\r\nMkl,\r\n\r\nMy jb s 100 prcnt blltprf. m n n dngr f lsng my jb n mttr hw bd th cnmy gts. n fct, whn tms gt rgh my jb ctlly hs mr wrk.\r\n................\r\n\r\nYr jb mght b 100% blltprf bt y rn\'t Mtthw. \r\n dn\'t knw xctly wht y d bt vryn s rplcbl, spclly smrt bnxs ss lk y.','320'); rtrn fls;">Qt
dn’t knw xctly wht y d bt vryn s rplcbl, spclly smrt bnxs ss lk y.
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Oh Matthew – Don’t you know that when you add in Bill Gates, Steve Ballmer, and Paul Allen – we’re all millionaires, on average?
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crrctn:
bnxs smrt ss< hrf="#" clss="rplyt" nclck="rplyt('50027','∓#91;trll∓#93;','322'); rtrn fls;">Rply – < hrf="#" clss="qt" nclck="qt('50027','∓#91;trll∓#93;','crrctn:\r\n\r\n bnxs smrt ss','322'); rtrn fls;">Qt
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LA County millionaires: 268,138 pop: 9,935,475 = 2.7%
King County: 68,390, pop: 1,793,583 = 3.8%
Any questions?
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Palm Beach County has 5.5% millionaires, so King County still isn’t close if you go by per capita. Either way you slice it, we aren’t number 1, and I didn’t look at any of the other counties.
Any questions??
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Hmmm, Kng Cnty hs 40% mr Mllnrs pr cpt thn L Cnty?
dd t tht Sttl s th 2nd mst dctd cty nxt t DC (dvncd dgrs pr cpt).
Y rntrs bttr gt t thr nd pnd th pvmnt lkng fr hm!
By whl th byng’s gd r b lft n yr 600 sq ft, y knw th rst….< hrf="#" clss="rplyt" nclck="rplyt('50031','∓#91;trll∓#93;','325'); rtrn fls;">Rply – < hrf="#" clss="qt" nclck="qt('50031','∓#91;trll∓#93;','Hmmm, Kng Cnty hs 40% mr Mllnrs pr cpt thn L Cnty?\r\ndd t tht Sttl s th 2nd mst dctd cty nxt t DC (dvncd dgrs pr cpt).\r\n\r\nY rntrs bttr gt t thr nd pnd th pvmnt lkng fr hm!\r\n\r\nBy whl th byng\'s gd r b lft n yr 600 sq ft, y knw th rst....','325'); rtrn fls;">Qt
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this thread is crazy… keep on guys
lmfao
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About the millionaire’s, WHO CARES. Matthew , I can’t believe I’m saying this, I agree with you about investing in gold right now instead of RE. Have you all missed me? Since my last post at 5 I have been working. I have a job. RAL, don’t use obnoxious asshole as a negative, please.
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the more I think of it this blog is somewhat worthless.
Real Estate here is really down to the neighborhood, if someone is cheering because prices in Kenmore are down…do i really care? Prices in outlying areas will fall more than mine. WIll Magnolia fall..yes i say 12 – 15% tops but we are a long way from there. There is no point for me to read about pierce county, kenmore, bothell, lynwood. The things are drastically different. If you wait 3 years and get into home there for sub $400k more power to you.
Real Estate is local down to the neighborhood and yes even streets in some cases.
Good luck cheerleading guys, wasted energy to me since you wont be buying anyway when you need to put 20% down on a sub $400k home…. most still and cant qualify with the new guidelines. Not all.. most.
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Mikal,
I like having millionaires around me makes for a better place to live and more desireable. The fact that someone paid $1 million plus to live on a street right next to mine makes me feel good about my purchase, it may not mean my house is worth the same amount but shows me the kind of people that i am around and that is important when determining a place to live and call home.
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Too funny! Well, news from the bowels of RE; people in the “burbs” are selling for less than last year. Why? To move into Seattle and get closer to work. The problem may be that Seattle prices won’t see the deflation that the suburbs will experience. Ouch…could it be the sound of bidding wars again on Queen Anne? I doubt it, but watch out for those “country bumpkins” with $800K in cash from the sale of their 2 acre farm in rural KC. Our office is closing one this week and (you guessed it) they’re moving to the city.
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[...] protect that precious open house traffic, after [...]
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