This month’s theme is “let’s scare fence-sitters by telling them that rising interest rates will eliminate any savings from falling home prices.” Let’s see how well our local papers do at driving this point home.
Read on for the this month’s roundup…
Elizabeth Rhodes, Seattle Times: King County home sales edge up in June as lower prices lure first-time buyers
Last month’s sales also continued a depressed price trend, with houses in the county selling for 4.3 percent less than in June 2007, although they are showing signs of rebounding.
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Others, apparently, are doing the math and also trying to beat rising mortgage rates, because some agents report increased sales activity from first-time buyers.
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Agents say that rise [in median prices] still reflects a decrease over sellers’ asking prices.In some cases, that’s given rise to a new phenomenon: multiple offers below asking price.
Vija Williams, a John L. Scott associate broker, started seeing them a few months ago. One home she sold drew multiple offers around the $495,000 range. It was listed for $509,000.
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One Ballard seller is dealing with that issue now.“I definitely expect to get an offer below list,” the seller says.
He says he got one offer “that was laughable.”
“I understand the buyers’ side of things,” he said. “It’s scary to think you could buy, and the house will lose another 10 percent.”
But he thinks many buyers don’t realize “the reduced value is already priced into the list price,” and sellers aren’t asking top dollar from the start.
What can I add to this delightful piece? It’s too perfect.
Aubrey Cohen, Seattle P-I: Local housing market warming up with the weather
The monthly market story is fairly short, probably because Aubrey was busy writing an entire story dedicated to the rising interest rates scare: Home buyers: Don’t forget interest
Like many potential Seattle home buyers, Beth Romano wonders if she could get a better deal if she waits.
Area prices have come down a bit but are still “outrageous,” Romano said outside of a Greenwood open house in late June. “I’ve really started to think I shouldn’t buy (now).”
Romano also is like most in that she isn’t factoring interest rates into when she buys.
“I think more about looking at the price, because you can always refinance,” she said.
But some local real estate professionals say buyers should be mindful of rates, which probably will rise in coming weeks, potentially wiping out any savings from lower home prices along with the chance to lock in historically low rates. Others say interest rates are even harder to predict than home prices so buyers shouldn’t focus too much on short-term fluctuations.
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Pam Johnson, who is moving to Seattle from the San Francisco area for work, said she has paid attention to mortgage rates.
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Johnson is forging ahead with her home search now, she said, even though some have advised her to wait six months.“I feel I need to find the right property rather than find the lowest possible price,” she said. “There’s no possible way to time the market.”
Aubrey’s articles have been fairly balanced lately, but this one seems to be pretty one-sided, pushing the “buy now before interest rates go up” line fairly hard. Oh well.
Mike Benbow, Everett Herald: Inventory increases as home sales slow
In Snohomish County, inventory was up, sales were down and prices were lower than they were a year ago.
While the number of available homes has increased in recent months, the local market is still more balanced than in other parts of the country, the listing service reported. Nationally, the number of homes for sale amounted to a 10.8-month supply based on the June sales pace.
Another fairly short piece. I’m really surprised that the reporters don’t have more to say about the apparent one-month strengthening of the stats.
Devona Wells, Tacoma News Tribune: Pierce County sellers could soon have their market
June’s year-over-year price decrease is the ninth in the last 10 months, though the declines have not been as steep as seen by many other areas around the country. And the price remained essentially flat from May.
Shrinking inventory could indicate a market shift in Pierce County as fewer houses and condos were for sale in June than the same month last year, which, if the listing decline persists, could eventually move the advantage from buyers to sellers. Not only did the overall inventory of listings dip by 5.7 percent, but the number of new listings dropped year-over-year by 20.3 percent.
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Still, the supply of homes for sale here remains above the region’s. Statistics pulled June 30 showed Pierce County with just below an 11-month supply of homes compared to nearly a seven-month supply for the four Puget Sound-area counties combined, according to Dick Beeson, an MLS director and a Windermere broker.The industry standard for a market that equally favors buyers and sellers is six month’s supply, meaning it would take six months to sell everything that’s on the market.
Wow, 11-month supply down in Pierce. Even with a slight drop in inventory, they seem to have a ways yet to go before the market works itself out down there.
Rolf Boone, The Olympian: Local home values hang on as sales decline
Thurston County home sales are down, building activity has tapered off and more people have fallen behind on mortgage payments, according to newly compiled data for the first half of the year.
The data raise new questions about the vitality of the county’s real-estate market, but South Sound real-estate experts say the county still has job growth, low unemployment and population growth to stimulate home sales. The housing market also has slowed since 2006, which was a record year for home sales, yet Thurston County homes continue to hold their values.
Also, I noticed this bit in the article, which is somewhat related to other discussions we’ve had here recently:
Lisa Brand, who lives in south Thurston County, said she searched for a house for more than a year until she came across a rarity: a two-story, 1,800-square-foot house built in 1899. It cost her $133,000.
“I consider it a blessing,” she said.
During her search, she noticed that many houses were sitting on the market unsold.
And although she now has a 40-minute commute to work in Olympia, higher gasoline prices don’t concern her, she said.
“I didn’t give it a second thought because it was so nice to have my own place,” Brand said.
Finally, although it has nothing to do with real estate, I have to say that this is my favorite article in today’s papers.
(Elizabeth Rhodes, Seattle Times, 07.07.2008)
(Elizabeth Rhodes, Seattle Times, 07.08.2008)
(Aubrey Cohen, Seattle P-I, 07.08.2008)
(Aubrey Cohen, Seattle P-I, 07.07.2008)
(Mike Benbow, Everett Herald, 07.08.2008)
(Devona Wells, Tacoma News Tribune, 07.08.2008)
(Jim Szymanski, Olympian, 07.06.2008)
“Similarly, expecting renters to pay rent amounts that allow landlords to earn an acceptable rate of return on highly priced real estate is like expecting company earnings to rise to provice an acceptable rate of return for stock owners.”
If rents are not high enough for an acceptable rate of return, then no new apartment buildings will be built, and renters will have to wait for older SFHs to be rented out. With population in Washington rising, there would quickly be a shortage of places to rent and thus rents would rise. It is not a matter of expectation, it is a result of growing population. The population is growing because prices here are lower than other growing job centers, except Texas.
There may be a short term supply of apartments now because of condo overbuilding, but the numbers are fairly small compared to the monthly growth in population.
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“The population is growing because prices here are lower than other growing job centers, except Texas.” ………..and Florida, North and South Carolina, Georgia, and Alabama. Arm pits? Sure; but the numbers and forecasts show higher job growth than WA.
And let’s face it, prices are lower than California’s job centers; you can pretty much live cheaper anywhere else (sure Boston, NY are higher).
Also; cold and rain are not good for your joints; I don’t see too many seniors sticking around.
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I think what’s funny is the attempt to discern, with very simple formulas, exactly what will happen in the future. Outside of historical patterns (which Tim is good at point out) we don’t have any other models with which to predict the future. We can speculate endlessly, but who knows.
Maybe population growth will diminish. Maybe it will go up. Maybe everyone will want to live downtown (b/c of time value or changes in attitudes). Maybe suburban living will become popular again (b/c of rising crime or perception of the city being ugly). Maybe we’ll build awesome light rail. Maybe another city will take away the type of people that would move to Seattle (Portland?)? Maybe the rich will get richer and buy up all the close-in properties, but the suburbs and ex-urbs will languish b/c middle-class incomes go down. Maybe the opposite will happen, b/c we get a growing economy.
Maybe we’ll be in a global depression. WWIII? Maybe the Stock market will keep going up an average of 10%/year (like it has over the last 75 years). Or it will never go up again.
Maybe everyone will face rising costs by cutting back and living with more roomates. Or their incomes will go up and they won’t. Or they will declare bankruptcy and move back in with their families. Or everyone will move out of rural towns and into cities b/c rural life will become unbearable.
I could go on forever, but after reading this blog for a while the only thing that’s clear to me is that armchair economy theory is worth about as much as you pay for it. I think NotaBull has the only sensible viewpoint – things are more complex than anything the extreme bulls or bears claim, and housing is generally overpriced because of a recent unsustainable runup, but not nearly as overpriced as some believe/hope.
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[...] common theme in recent real estate reporting is to repeat the scare-tactic that rising interest rates will eliminate any savings that [...]
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[...] I guess Wanda didn’t get the memo. “Rising interest rates” was last month’s scare tactic. [...]
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