Here’s what I said on December 18th:
I predict that sales will be abysmal this month (worst December on record), and that the real estate mouthpieces quoted in the NWMLS press release (and subsequently in the local papers) will blame the low numbers on the weather. As if we never have inclement weather in December.
And here’s the NWMLS press release that accompanied yesterday’s numbers: Northwest MLS members expecting "market observers" will become "market participants"
Frigid temperatures and record snowfall brought home sales to a standstill for several days in December. The unusual weather, when coupled with the expected holiday slowdown, contributed to a 17.6 percent slide in pending sales compared to the same month a year ago, according to figures from Northwest Multiple Listing Service.
“December typically has a slowdown in sales due to the holidays, but the recent snowfall compounded this seasonal slowing,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “On the flip side, we should see deferred buyer activity from December pushed into January,” he remarked.
Worst December sales on record? Check. Predictably lame spin about the weather? Check. Plus as an added bonus we get another easily verifiable rosy prediction from Lennox Scott. Sweet.
So how reliable was the local press this month in repeating the NWMLS nonsense? Read on to find out.
Karen Gaudette, Seattle Times: Seattle-area home sales fall in Dec. to end a down year
December’s typically a slow month for home sales. Throw a snowstorm and flagging consumer confidence into the mix and you get the 11th consecutive month that home prices sagged in the Puget Sound region compared to the same month a year earlier.
“It was an unusual year. We’re glad it’s done,” said Mike Skahen of Lake & Co. Real Estate.
The silver lining? Median sales prices for single family homes in King County crept back above $400,000 for the first time since September, though they’re still down from a peak of $481,000 in July 2007, according to figures released Tuesday by the Northwest Multiple Listing Service (MLS). And sales prices for condominiums held steady and even climbed in some parts of the region.
The Times story manages to keep the weather scapegoating to just the first paragraph. Most of the article is full of anecdotes and personal stories of people that bought last month.
Aubrey Cohen, Seattle P-I: Housing prices rose despite holidays, snow
It’s hard to judge the market’s direction based on December numbers, because there always are very few sales during the month, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.
“December data’s always really squirrelly because of the holidays,” he said, adding that last month’s snow exacerbated the slowdown.
Pending sales, which best reflect December activity, dropped 27 percent for houses and condominiums from a year earlier in Seattle and nearly 22 percent countywide. While the annual decline in Seattle was in line with those from recent months, the drop in the county was actually the second-smallest since July 2007, despite the snow.
Aubrey did a pretty good job of highlighting the fact that December is always slow, and that last month’s slow sales had more to do with the economy and the existing market trends than any weather event.
Mike Benbow, Everett Herald: Recession, weather drag on home sales
Take what’s typically the worst month for home sales. Add a recession. Then put in a couple weeks of terrible weather that paralyzed travel.
That’s what real estate agents faced in December in Snohomish and Island counties. So it’s no surprise that home sales were so terrible that they dropped by nearly 36 percent in Snohomish County and 20 percent in Island County in comparison to a year ago, according to statistics released Tuesday by the Northwest Multiple Listing Service.
Take what’s typically a spin-filled sales pitch disguised as a press release from the NWMLS. Add a reporter. Then put a couple paragraphs of fluff, including quotes from discredited salesmen. That’s what readers of this month’s article faced in the Everett Herald.
Kelly Kearsley, Tacoma News Tribune: Few within Pierce County in the mood to buy a home
Snow, cold temperatures and a sluggish economy pushed Pierce County’s median home price down by 13 percent in December, according to figures released Tuesday by the Northwest Multiple Listing Service. That was the largest year-over-year monthly decline in 2008.
The end-of-the-year snowpacolypse didn’t help the already weakened real estate market as the weather kept buyers and agents from touring homes or even making it to work.
“I wasn’t seeing too many faces during the last half of the month, and a lot of it had to do with the weather and it being too dangerous to drive,” said Dick Beeson, an NWMLS director and broker/owner of Windermere/Commencement Associates in Tacoma.
There are only a couple of reasons I can imagine a reporter would continue to go to Dick Beeson for comments about the local real estate. They’re either lazy, or malevolent. Probably lazy.
Rolf Boone, The Olympian: Houses hit the market, Foreclosures cause uptick in new listings
The number of Thurston County homes newly listed for sale rose 13 percent in December 2008 compared with December 2007, a possible sign that more foreclosed properties were coming on to the market, according to Northwest Multiple Listing Service data released Tuesday.
The data show that 216 homes were listed for sale in December 2008, up from 191 in December 2007.
Typically, December is a slow period for the housing market. Thurston County Realtors Association President Mark Steves said the increase could be a sign that more bank-owned properties were put up for sale, or that more homeowners in foreclosure were forced to sell their houses.
Although December listings were higher, year-over-year sales fell 33.8 percent to 174 units from 263 units, combined condominium and single-family home data show.
…
When there are more homes on the market, “buyers don’t have a sense of urgency to write a (purchase) offer” because there is so much to choose from, Steves said.“As the inventory cuts down, there are more buyers competing for the same home,” he said.
Unless of course the number of buyers “cuts down” faster than the number of homes on the market, which is what has been the trend in most places lately.
The Olympian also published this blurb on last month’s numbers: Winter weather affects December home sales
All in all, a pretty predictable set of stories from the local press this month. Most of these articles could have easily been written before Christmas, with blanks left to fill in once the numbers came out. Disappointing, but not unexpected.
(Karen Gaudette, Seattle Times, 01.06.2009)
(Karen Gaudette, Seattle Times, 01.07.2009)
(Aubrey Cohen, Seattle P-I, 01.07.2009)
(Mike Benbow, Everett Herald, 01.07.2009)
(Kelly Kearsley, Tacoma News Tribune, 01.07.2009)
(Rolf Boone, Olympian, 01.07.2009)
(Rolf Boone, Olympian, 01.07.2009)
You are the one doing the spin, Thee.
Since mid-December there practically no business done due to snow. What’s the point of your “irony”?
If you are intent on buying a home in the way that you are ready to sign a contract weather will make little difference. If you are out browsing for a future purchase it probably makes a big difference. So the less browsing in Dec could possibly lead to fewer people being ready to make a move in Jan, i.e the exact opposite of what Mr. Scott predicts.
What did the RE press have to say about sales two years ago when that wind storm knocked out half the power in the city?
Those who say don’t know, and those who know don’t say.
The above is a classic wall street quote, but I think it pretty much sums of the situation in the Seattle Real Estate market.
Its going to be ugly the first 2 quarters ot this year…I’m glad to be a just a casual observer with no mortgage on the line.
not so much… Apparently people where better drivers 2 years ago.
http://seattlebubble.com/blog/2007/01/08/december-reporting-roundup/
2kt @ 1,
There are a couple of points. First, as patient @ 2 said, the bad weather would only possibly have affected pending sales, not closed sales. Second, bad weather is a fact of December in Seattle. Just because the city shuts down for a few days, that doesn’t mean that scores of people are putting off a home purchase for an entire month.
I think commenter shawn on yesterday’s post put it well:
The mentality sounds ridiculous when you write it out like that, and yet the NWMLS and Lennox Scott want us to believe that people really think like that. As if they’re putting off a decision as major as a home purchase by an entire month just because there was one week of bad weather.
It’s nonsense.
Practically no business huh? Sounds like Tim (aka S-Crow) was plenty busy during December. If snow didn’t stop refinancings then why would it stop closings?
Yeah… I don’t understand the weather affecting closings argument. When I bought my home in Texas, nearly all the prep was done via phone, fax, or email. I only had to come in to sign the documents. I don’t think it would have been that hard to go out to do that if it was raining or snowing.
Additionally, even if people were deterred from looking at homes, closing, at least when I bought my house, took a few weeks, so the people looking in December probably wouldn’t close until January.
Finally, weather affecting pending sales is also misleading. If you found a home, it doesn’t take a lot of effort to get the paperwork together and sign a contract. It’s not like you are a long-haul driver trying to get over the pass. Also, the last two weeks of December are a nullity anyway since people are doing Christmas and New Years stuff instead of shopping for a home. I only missed two days of work due to snow. The other days were occupied with holiday activities. I doubt the snow had anything to do with the numbers. Heck, it has snowed three years in a row in December. I still remember when my power was knocked out for days in 2006.
So weather is a nullity in these sales numbers.
If people were really looking to buy but nervous about the weather, I’m sure there would have been no shortage of under-employed real estate agents only too willing to throw the chains on their cars and drive them around to look at places. It’s not as if they are turning away work these days.
but then, I think 6 months ago it was the good weather that was blamed for slowing down sales.
Foreclosures down for Q4 yoy if I read the reuters article correctly, they had a positive blurb on seattle but wouldn’t expect to see that here. Its the article discussing LA foreclosures.
Magnolia44 @ 10,
King County Records search.
Document Type: Notice of Trustee Sale
09/01/2007 – 12/31/2007: 1,363
09/01/2008 – 12/31/2008: 2,450
That’s an 80% increase, definitely not a decrease. I haven’t seen the article you’re referring to, but if they said foreclosures here decreased YOY, they’re way off base.
Oh wait foreclosures will sky rocket once the MS layoffs hit right guys, we are behind the curve. Right?
The whole economy Is in chaos and the fact some here think they will make out on the up and up is amusing in some ways. We are all screwed unless they find a fix which won’t happen. Until then keep the pom poms out.
All kidding aside I don’t see any bright spot for anything in the next couple of years. We are going to sit tight and see where things go but with companies going down left and right I really feel like both sides of this equation are screwed.
That’s all… I may just go back into lurk. Mode because the bantering back and forth is old. If I can hold back from posting ill be back in a few years lol
The Tim and Magnolia44,
here’s the article: http://uk.reuters.com/article/ousiv/idUKTRE5066P120090107
“Seattle, however, was a bright spot. Its foreclosure numbers fell about 12 percent compared with the fourth quarter of 2007 to 318, a sign that its market is stabilizing. While prices in Seattle may not rebound because tighter lending standards are making it hard for aspiring buyers to obtain mortgages, they will not fall further, Staniford predicted.”
What gives?
buystocks @ 14,
Perhaps they’re referring to only the city of Seattle proper? That could explain the difference.
regarding article @ 14,
So, Staniford is predicting Seattle proper is stabilizing while the rest of King county is collapsing…
“People buy and sell houses as a general rule because of life changes.”
“It was an unusual year. We’re glad it’s done,” said Mike Skahen of Lake & Co. Real Estate.
The real story is why Lennox Scott, Jill Jacobi Wood, and Mike Skahen were all ready to make comments to the press.
I put the comment about people buying and selling because of life changes at the top because it’s become the new spin in Real Estate sales. You hear it repeated like the phrase Real Estate doubles in price every ten years and people move every seven years.
In the world of spin it used to be “Top Real Estate Professionals” making predictions, comments, or creating hype. Now we have all the top CEOs, making statements every month.
What really surprised me is seeing Mike at Lake and Company commenting. He is hands down the very best main stream boutique brokerage. He hand picks agents who have skill, and does straight shooting good business. He works hard for his staff, is conservative, and really keeps his head down.
I’d like to know how much trouble the Real Estate Industry is in. Aside from the hype it would be a good thing to know how brokerages are going to represent clients in the coming year.
Are we really going to continue to turn agents onto the public who are desperate to make a “sale?” What will the business model look like in the coming year, really?
As in Genesis, the “years of plenty” have ended. The improvident wasted the bounty of the years of prosperity and now find themselves in want in the “years of dearth”.
http://www.rgemonitor.com/financemarkets-monitor/254949/2009_prospects__trench_warfare
gitano @ 18,
Nice analogy. Maybe Gregoire or Locke had a dream 7 years ago about a bunch of skinny cows eating a bunch of fat cows. If only we had a dude with a fancy coat to warn us, it could have all been avoided.
80 Realtors prepaid for my short sale class tomorrow morning. That’s an extremely high headcount for the first week in January.
The last time I can remember Realtors turning out for their continuing ed classes the first week in January was….never, and I’ve been teaching for 15 years.
I heard that the State Dept of Revenue may decide to go after the homeowner on a short sale for excise tax if the homeowner received any sort of debt forgiveness from the lender. They want to collect excise tax on the debt forgiveness from the seller. Tim, let me know if you want me to email the memo to you.
Considering Fannie/Freddie is not foreclosing anymore, and many banks are at least lengthening the process considerably, I do not think foreclosures are an accurate metric for any market right now.
Jillayne has a good post on the non-existent foreclosure process at RCG.
Goodness, things changed a little.
Seattle is a bright spot the same as San Diego proper, or properties close to the Strip in Las Vegas.
When did West Seattle get to be the same price as Ballard? Why are houses in Sea Tac or Columbia City selling for beyond value.
If you bought a town house close to Light Rail you should have bought cheap. Those units were designed, approved, and built to sell cheap. Light Rail was supposed to make a corridor of affordable housing. People working down town or in warehouses, or manufacturing were supposed to be the people who benefitted from Light Rail. Instead speculators told people those properties would appreciate and they did.
The reality is that those housing units need to sell again for cheap. People, banks, and investors are going to take a loss. It’s a fact there is no core value in those units.
The bright spot is that Real Estate never changes. You only own a property when you pay it off. You only have wealth when you are out of debt.
Hopefully you have all you need or want, because now you can concentrate on paying cash, saving cash, and creating a cash position. Cut up your credit cards, pay on your principle balance and never take out another loan for anything.
Refinancing your home is a suckers bet, pay it off. If you get a car loan, pay it off, or better yet save until you can pay cash. If you want a home take over some one elses payments and pay the house off.
I’m sorry to say that the Real Estate business followed these principles for a thousand years until banks, “investors,” and speculators made up the credit and Financial Markets.
Let credit die a slow painful death and let’s get back to business. High Finance is for the very wealthy to steal money from working people. It was called the “company store.” It translates into Corporate Welfare.
“The silver lining? Median sales prices for single family homes in King County crept back above $400,000…”
That shows how out of touch the press and realtors are. What is going to get buyers back in is lower prices, not higher.
Interesting article on MarketWatch. Home Buyers Advised Look Before You Leap
A short quote:
I think the large drop illustrates how large the housing bubble was.
…and now thanks to the flooding, real estate agents already have their excuse planned out for why sales were lousy in January.
Hahahha;
No one wants to think about a home if you are losing your job. How else will you pay for an overpriced liability?
Perhaps people should understand that carrying a debt load at 3X your families income is unethical.. Home prices should be 1X Income; NO MORE!
Homes all across this area are overpriced beyond measure – no one can afford a home anywhere.
It won’t stop – until we put the debt pushers outta business. Thye are responsible for inflating this buibble..
People that push debt are not securing a dream; they are destroying your family’s future…
Just take a look at all the idiots filing for bankruptcy; they over leveraged with a huge mortgage, student loans, credit cards, and car payments…
Debt…Pure Evil…Come and Get Overburdened…
Tim @ 26
They are probably doing backflips over the floods
What a way to make a buck
My heart goes out to anyone flooded
Andy, How many college students do you know that pay cash? I’m guessing that most people in the US have some form of debt or another and that not all are filing for bankruptcy. You are a dreamer.
Shawn @ 24, nice point about “silver lining.” This also shows that Gaudette at the Times is playing to an audience of real-estate agents, developers, sellers, and those with an interest in keeping prices high. She’s engaging in boosterism, not journalism.
There was a report today that said credit was the “life blood” of the American Economy.
Manufacturing, Retailing, Distribution, Agriculture, and Housing are second seat to credit, which is true. Credit, in my opinion, is what has driven up the price of everything.
Education? What does it really cost? Where’s the inflation in education. Teachers are screaming about a lack of pay, facilities are in disrepair, class rooms are crammed, and there is no real infrastructure cost.
Cars? Car inflation I think can directly be tied to the cost of financing a vehicle.
Credit does nothing, builds nothing, provides nothing, yet I agree, reading here you would think we just can’t live without it.
Not sure if this has ever been posted on here but here is an interesting little film about debt and money, or rather money as debt. Well worth a watch…
Money as Debt
http://seattletimes.nwsource.com/html/localnews/2008605113_apwajoblessclaims.html?syndication=rss
Wash. jobless claims set record in December
House prices will see the bottom not before 09 3rd quarter…
@24 and @30
I was looking at crude prices the other day and wondered why they were going up, when demand was down. Speculation of supply problems of course.
Anyway… I think the supply and demand for oil is much like the housing market. Iran and Venezuela would love to raise oil prices or keep them at a high level, but that simply won’t work. If there is no demand for oil at $30/bbl, then there would be less demand at $40/bbl.
Hence, if there is no demand for a $300,000 studio condo now, keeping the price at $300,000 will not increase demand. Just like the oil producers, if you want to increase prices, you have to wait until the general economy gets better and demand increases, or lower their prices.
It doesn’t help the general economy if prices are artificially high. If realtors really want to help get the economy going, then they have to bite the bullet and let prices fall to the point where people start buying again. If they don’t then they have to wait until the economy gets better, which may take years.
Update:
SKCAR (Sea King Co Assoc of Realtors) and WAR (Wash Assoc of Realtors) have put out a joint statement coming out against an opinion letter from the State Dept of Revenue memo claiming that if a homeowner is receiving debt forgiveness on short sale, that the amount forgiven is subject to excise tax and the DOR will proceed to collect that from the homeowner or place a lien on the home.
I disagree with the DOR’s interpretation of the RCWs and WACs but I’m no attorney. If anyone wants me to fax over a copy of the DOR memo, send me your fax at jillayne at gmail. It’s 5 pages total.
I don’t think the real issue here is the realtors keeping prices “artificially high”. More often than not, its the owner’s mindset that has to change. By the time that changes, its probably too late and they will have “lost” money, since prices will keep on coming down. A realtor is faced with 2 evil choices:
A. Tell the client. Are you nuts? Your house would have sold for 600K in those nutty times. Today you better be pricing this at 400K if you want any serious offers. The client will probably find 10 other agents who are willing to list at 550K (which leads to B).
B. Agree to whatever the client says. List at 550K which results in NO sales and hence NO commission.
Either way you look at it they are screwed. More agents have to keep fighting over smaller and smaller scraps of food. Increasing supply also means buyers have many more choices and increasingly better negotiating power. This also means sales take longer.
Would any real estate agent care to chip in and provide a counterpoint?
Hulk, agents could go to their national associations and large brokers and tell them to stop putting out misleading data and false predictions in their press releases and commercials. That could result in fewer homeowners believing depreciation hasn’t happened to them.
Jillayne @35
I’m no attorney either but I seem to recall the IRS will tax debt forgiveness as income. If the feds can tax it I don’t see why the state won’t be able to either …
“Would any real estate agent care to chip in and provide a counterpoint?”
I’m not going to provide a counterpoint and pretty much agree with almost all of what you said. I’ve had clients whom I’ve had to convince to lower their prices after insisting on asking too much for their property…Ya have to be a little more diplomatic than saying ” Are you ****ing nuts? You’ll never get 600,000 dollars for that falling apart hovel you call a home.”
I try to be dispassionate and show comparables and price trends. It doesn’t always work, and part of that is because when some agents are trying to get a listing, they’ll say things like ” That is a beautiful house. I can get you 600,000 dollars for it.” And people believe it.
December never has been and never will be a benchmark for how real estate is going to perform in the coming year.
The press was saying the same thing about the lousy weather in December 2005 and the Seahawks Super Bowl run in January 2006 keeping buyers away and look what happened in 2006.
Anyone who can exactly predict what is going to happen before Feb-April sales numbers is just hazarding a guess.
Having said that, I would hazard to guess that the sales price decline will continue its trendline downward at -1% per month perhaps accelerating if pending sales year over year continue to drop in double digits.
Link to PI article January 2006
http://seattlepi.nwsource.com/business/254748_homesales06.html
Ira said:
When we sold our place in CA, we had the same kind of feeling. Our agent didn’t argue with us, he just took us to 5 – 6 places near by in about the price range we had wanted to list at. After seeing what a buyer would see, we went with his (lower) suggestion, as our place wasn’t as nice. (He had shown us the trends too, but there’s something about stepping into the other house that really made it easy to see).
Not offensive, not pushy, just attempting to show the client a real picture. Smart of you Ira :)
Are you aware of any agents (including yourself) who have refused to post a listing simply because you know it will never work out at that price?
Sure, agents refuse listings all the time. Agents also release listings that will stagnate on the market. It does very little good having your sign on a property that has problems selling.
I disagree David. The more 500 Realty signs up throughout the city helps educate more and more Buyers and Sellers. Its our leading source of customer generation.
Hi DJFOTT,
There’s a federal moratorium on taxing debt forgiveness on a short sale right now.
@36
“More often than not, its the owner’s mindset that has to change.”
I don’t like it when realtors blame the customer, in fact I don’t like it when any business blames the customer. It’s a cop out. They are trying to shift blame.
I think all the news releases from NWMLS, the NAR, and the realtor talking heads shows that the blame is mostly on the realtors because it gives customers unrealistic expectations.
Owners don’t listen to realtors because they have lost credibility. Only a couple years ago I remember seeing on the news a realtor brag about how there were 30 to 40 offers on a home. Ridiculous and no doubt a lie. How can there be 30 to 40 offers for a home, then a couple years later, under 1000 homes sold unless there was some fraud.
It’s not the owners fault, it’s the loss of credibility in the real estate industry. Realtors that truly care about the industry would be best served trying to reform their own industry and holding realtors that violate ethics accountable before blaming owners, the victims of this mess.
I couldn’t believe the TIMES headline myself, that prices bounced up in December. It’s obvious that the NWMLS numbers are too volatile to make *any* month-over-month conclusions, let alone to make them Page 1 headlines.
I thought the same thing when the October NWMLS price dips were over-reported.
God help us without the Seattle PI, who has had better real estate reporting.
Thomas @ 47
I totally agree that the NAR “economists/frauds” and the Real estate PR lobby are totally to blame for all the positive spin that they attempt to put out.
However, try putting yourself in the realtor’s shoes. If your prospective client is telling you “But my neighbor’s shack sold for 650K! And it was a dump! My palace MUST be at least 800K”. What do you do? The whole business works on commission. The only a couple of ways an owner can realize his asset is no longer worth what he thinks. Either no offers are made OR the realtor tactfully attempts to tell the owner what the asset price really should be.
By putting out positive spin all the time the NAR/NWMLS is simply shooting itself in the foot. The whole model relies on business volume. If you truly want people to start buying and selling houses stop drinking your own kool-aid.