The National GDP is declining at record rates, the increase in Federal Spending is out of control.
Illegals are treated Royalty with entitlement and grant programs unchecked.

You tell me but how can a country spend their way out of debt?

How can a country sustain economic and military strength when it does not produce anything of value and their most valuable export comodity is PORN?

You smart guys have all the answers… How long can we continue when our president puts us into 3.5 TRILLION DOLLAR additional debt this year alone with more OBAMONOMIC SPENDING on it’s way.

I got it… PRINT more money. The money is not owned by the USA citizens anyway and only costs $10,000. per million to print.

I still think Donald Trump and Suzie Orman are right; we are headed for a depression larger than the Great Depression. All the signs are present. IF YOU SEE A STOP SIGN, I think one should STOP or collide with oncoming traffic, DON’T YA THINK?

RE: Rojo @ 54 –
Me? I’ll buy in early next year. have the money now, but am off the market as I’m frustrated w/ pricing.

Me too. I have the money and have looked at several houses. Prices are too high. There’s been a few houses that I liked but they’re overpriced. They’re not selling…just sitting there or going off the market. A 3% price reduction doesn’t mean much after 200+ days on the market. By July I need a new place and it looks more and more like it will be another rental.

Look at a few bank repos in your price range in the area you’re looking at. Then look at some non-repos and compare what you’re getting for your money. Using bank repos, you get the price it originally sold for, and the new price it’s listed at. Sure it’s not perfect, but it quickly lets you know if the house you are looking is overpriced in the current market.

Finally, Aubrey is reporting that the cramdown legislation might be dead. That won’t help. Cramdowns are a far better solution than loan modifications, but Congress is being purchased by the banks, on nice little payment plans.

The numbers are the numbers. There are X number of houses and housing units. The number is determined by price. Any one will sell for the right price.

On any given day there are X number of people who want to buy a house or housing unit. There again it depends on price.

Real Estate is a meeting of the minds between a buyer and seller. Again it usually, not always, comes down to price.

Whether it’s a good deal depends on a wide variety of economic factors. Those factors also have a bearing on the price.

Snohomish County and I mean in particular the 164th Street Exit West of the freeway is a prime example. There’s a ton of dirt to build housing units, some strip mall development, and a wide variety of construction practices that are spotty. Some developments are good, some are very bad, but they all look the same to buyers.

This is were an agent can make a call that may be of benefit to a buyer. Of course you would need to find an agent who knew something of value to agree to work with you.

A lot of folks are interpreting a slowdown in the rate of decline as the start of a new bull market. That may be an incorrect interpretation — just as the rapid increase last fall didn’t mean it was going to be 3% a month forever.

As for the long term, “the” Tim may be correct about end of 2010 being the bottom. However, other mortgage experts see a bubble of alt-a and pay option arms resetting in 2011. It’s hard for me to imagine any real recovery could happen before that.

RE: Eastside Westside it’s all good @ 62 –

�”It’s difficult to make a man understand something when his paycheck depends on his not understanding it.”
Kary’s living depends on not understanding that the world has changed.

Actually it’s just the opposite. I need to understand how the markets are changing.

But unlike some of you here, I work off real facts. For example, I wouldn’t make statements such as “Redfin is probably eating people’s lunches” (or whatever), when the reality is they’re a very small time player and probably in some financial difficulty in this market. Others here assume they’re doing well because they charge less. That’s not a draw at all for the vast majority of buyers and sellers. It’s good that option exists for those that want it, but it’s not what most people want.

Well something must be happening in the Seattle market right now. You’ve got the Kismers and Tytlers and Perrys all emboldened by Spring activity and posting up a storm right now. .

How was my post “emboldened?” I mentioned the pending being up, but their price being down. And that’s the list price, not the agreed sale price. That’s hardly uplifting news for the future–as I mentioned.

Maybe there is a consumer site that allows someone to pull up comps from 2004, but I sort of doubt that. It’s even difficult on the NWMLS system to go that far back.

But beyond that many/most people don’t know how to value properties at today’s value.

You had a lot to say trying to convince yourself that the numbers aren’t the numbers. Yup, they are the numbers no matter how you try to cut them.

1. The definition that I am using of pending is new pendings with a pending date that falls within 4/16 and 4/22. So when you say that pending sales are not new sales…..now you know they are!

2. The numbers I am representing are for SFH homes only not condos.

3. I actually dislike most any market commentary that focuses only on pendings OR inventory supply. I prefer market ratios (supply and demand) to analyze markets. Further, analyzing these ratios by price ranges and area help us to understand the local and micro markets to best assist a buyer or a seller.

4. Prices up or down always FOLLOW supply demand ratios, they do not precede them.

5. Most market analysts use the ratio between active and pending as the lag time does not tell us what is happening TODAY. Yes some of the pendings fall out, but if you think about it, they go straight to the Active side of the ratio. In every bad market, more pendings fall out than in good markets. That’s one of the reasons why the market is bad.

6. You completely misunderstand my analysis of the under $500k market. If we continue to compress, we may face unprecedented challenges as market compression matures. The FACT is that the market IS bottom heavy and becoming more so. I am studying the percentage of listings vs. total listings by price range from 2003 and forward. Market compression, which nobody is really catching on to is disturbing to me. So the under $500,000 market leading recovery makes me wonder what is going to significantly impact the 2nd and 3rd tier markets. At this point I am against putting $8,000 rebate money in the hands of buyers as a down payment. It just may make things worse.

7. I also do not like to analyze markets strictly on median prices. Yes it is a measurement, but if the market continues to compress will give false readings in the lower price ranges if ratios continue to tighten.

8. As usual, the spring market is better. This spring market turned ON in one week. The pending sales and sales ratios are MUCH better than last year. The Pendings (not supply) are very close to 2007, which was at the end of the bubble market.

9. I have said it often before, despite the rise in demand, we still have pent up Seller demand, which should be a moderating influences to the ratios.

And yes, there are plenty of pot holes as we move forward through the economy that will affect ratios both at the top and the bottom.

But for today (as every day), the numbers are the numbers. What I am sharing is closer to real time, as opposed to the 2-3 week lag from NWMLS reporting.

Tim, what do you think the chances are that you’ll have to recalibrate that “Y” axis by the end of the year? Looks like we are indeed getting close to the bottom!

Today’s potential buyers don’t want to get burned and it’s for good reason. Many hardworking souls don’t want to see their money evaporate as they see co-workers, friends and acquaintances lose homes and jobs. So, in a sense, everyone here is an investor: trying to build or maintain equity in housing. I’m not terribly different. The only way I could hedge, per se, against a downturn was to find a property that I could improve by sweat equity.

Sweat equity is not for everyone, so depending upon your budget, if I were a buyer today that does not have the time or money for sweat equity, I would consider recently built homes from 2004 forward. Because I’m out in Snohomish Co. I drive by newer neighborhoods where there have been substantial pull backs from peak 2007 prices. For example, in a higher priced tier, a $1,000,000 purchase of a newer home in 2006 is currently on the slate for foreclosure auction in June and listed for $699K. While that is a substantial haircut, understand though that just because a home was purchased for such a premium does not mean that you are SAVING anything. The house was grossly overpriced at the onset when it sold at 1mil. The key here is having information on the development you are considering purchasing in. It is possible to find out sales history and financing history of a development so you know the characteristics of your immediate neighborhood. Has the neighborhood experienced significant price declines already or is there potential for more declines due to a high sales ratio of 100% financed homes in the development. If declines are nearing the bottom in your assessment, then you may enjoy a LOT of house for the money.

The question today is not if we were in a massive real estate bubble, but whether or not buyers can, with all the information at their fingertips, be comfortable about a purchase in today’s market with incredibly low rates (I’m seeing 4.5%-5% depending upon financing programs). While pending sales are encouraging IN ANY SEASON, if we are in fact nearing the bottom locally and nationally, it would be arguably one of the most remarkable swift economic recoveries ever seen. If one takes the blinders off, unfortunately, this economic problem is global in nature.

Rojo @ 48- what I meant in my earlier comment was that I have a suspicion that if some of the refi’s I see had to actually sell, they would become a short-sale (underwater). An no, many refi’s are going FHA because of the higher loan-to-value allowed. So, not all refi’s are confined to 80%LTV. Without FHA many homeowners trying to refi would become must sell candidates. Most of the refi’s I see today are exceptionally credit worthy folks.

“”It’s difficult to make a man understand something when his paycheck depends on his not understanding it.”
Kary’s living depends on not understanding that the world has changed.

Here’s a chart of the decline in the Case-Shiller HPI so far, with 2007 2008 and 2009 all stacked next to each other.

Last year we had a spring bounce that took until June/July to fully erase. Something similar will probably happen again this year. It’s spring. People get excited about buying houses. It happens every single year.

How would they possibly know what a house was worth in 2004?

Um…how about Zillow or Redfin for starters? Take your pick. There is no shortage of tools to make a reasoned estimate at what homes were worth in 2004.

With all due respect Kary, you make it sound like people couldn’t possibly estimate a home’s value. I think you underestimate how more educated consumers are today than a decade ago.

Prices are supposed to go up in March – actually, they are supposed to go up March to July (sometimes August), and then they slide backwards through December, giving back most (but not all) of the spring gains.

That is not what is happening here.

Uh, pending sales. These are not new sales. And they are not closed sales. You are saying that increase in the number of pending sales means things are strong. Because pending sales are a measure of market strength. The increase in pending sales is the measure of market strength. Week over week. In April.

And it couldn’t possibly represent anything else.

It’s not…say…the measure of how hard it still is to find financing for a purchase…it’s not…also a possibilty…an inflated number based upon the ratio of closed to pending sales in 2009 v 2007.

You’ve presented a “curious” look at how tightening supply of 500k homes is going to turn around this market from the bottom up. Here are a few problems with the notion that the market is firming that you need to address in a rationale manner before – and I am being presumptuous about this community here – most non-realtors posting on this blog will believe anything you are writing:

- the continued weakening of the condo market and the glut in downtown Bellevue in particular is taking away any support for 500k homes. A little aside here – when you say 500k homes – do you mean homes that were 500k in 2007 or homes that were 700k in 2007?

- lack of equity has just about eliminated the move up market.

- where is the population growth drive home price appreciation? where is the job growth to drive population growth? Home prices moving with inflation is not appreciation, that’s just cost of living. If our population doesn’t increase, there is no need for more house – only replacements for the ones that need to be torn down. So…where is that population growth coming from? And for the Eastside, where is the income growth going to come from to drive demand for these 500k homes?

- where are the California transplants that have been driving up population/income/demand for the past 5 years? When do you think they will head this way, as opposed to the exodus to LA/SanDiego/SanFrancisco that I hear aboutevery week?

- here is the most insidious risk to home value and the greatest long term threat – people who are reducing their housing cost out of necessity are suddenly discovering greater disposable income. The belief that your house IS your life is loosing its grip on Americans. And if that idea sticks – if rampant consumerism weakens, if thrift becomes the norm, the game prices stay flat for years to come.

And for Steve Tytler – it’s rare to see non-statements and backtracking taken to an art form. Your predictions are all so heavily qualified as to be meaningless. Your predictions all sound like, “within the next two to five years there may be a flattening or drop in the 5-20%+ range.” You get zero points.

Rojo,

I do know people who are buying. They are not looking at anything listed above 2004 prices.

How would they possibly know what a house was worth in 2004?

Maybe targeting neighborhoods that have dropped significantly would be a strategy if you think there’s going to be another runup. I’d consider that risky.

And if they’re only going after houses bought around 2004, that would be a huge mistake in getting a bargain.

July 2007: $389,406
October 2008: -11.4% = -$44K
February 2009 $ -20.9% = -$81K

So far your prediction for % dropped fared well, but let’s hope nobody took you advice and bought in October 2008. IMO, this market is still correcting. 25% of all subprime loans in WA will reset this year. Commercial is starting to hit, and we still have a giant wave of Alt-A/Option ARM out there starting to break loose.

You have to pick your children’s school in March. It used to be before February 15th and now it’s March 30th. Mom, Dad, and the kids are the biggest buyer pool.

In Real Estate January and February are the biggest months do to corporate transfers and changing schools. This is also a buyer pool with motivation different than economic trends.

We also consider May and June as selling seasons so people can move after the end of the school year and have the kids settled in before September.

Yes, and this weekly trend has held true (and rate of sale accelerating) for 4 straight weeks. Based on what I”m seeing, this week will be good, as well. And, I’ve been posting stats highlights here as well as detail on my blog http://www.425Realty.com. Go to “market watch” to see the rest.

Last week (the seven days ending on 4/22) King County had its best week in pending sales (532) since July 2008 (537).

On the Eastside, listings priced under $500,000 has less than 3 months of inventory at the current rate of sale. Overall the entire Eastside, which consists of NWMLS Areas 500,510,520,530,540,550,560 and 600 had 5.5 MOI, improving from 8.3 MOI in the same week last year. This year 50% of the Pending sales were under $500,000. Last year 26% of the Pending sales were under the price of $500,000. This year we saw 5 sales for the week over $1.5 million vs. 13 sales for the same week last year.

For the Seattle Metro Areas of 140,380,385,390,700,705,710,715,720:

The weekly Months of Supply for the Seattle Metro area came in under 3 months of inventory at 2.6 MOI. Last year these areas had 5.1 MOI. A HUGE 75% of the Pendings were under the price of $500,000. Last year 56% of the Pendings were under the price of $500,000. There were no sales for the week over $1.5 million in the Metro area.

To see the charts:
http://www.workingforyou.typepad.com//realestate/2009/04/eastside-and-seattle-metro-volume-still-growing.html

Active listings are down from last year, and pending sales are up.

The core areas have less than 3 months of inventory that is priced under $500,000 at the current rate of sale.

What will happen to median prices?

1. There is little support on the high end. Anything sold at the high end pretty much starts at 25% off what it could have sold for in 2006.
2. What is currently selling is heavily weighted on the low end.
3. This market has few “move up” buyers.
4. There are many Seller’s in the 2nd tier who want to sell and buy down.

Prices will follow supply and demand. If sales continue, the low end remains tight, prices will stabilize and start to rise. We are starting to see many multiple offers — offers that are escalating — even multiple offers on short sales.

At the same time, I see little to no relief at all for 2nd tier and high end homes. Homes in these strata will continue to fall in price.

This market currently compressing.

I understand today, the Washington Legislature voted to give the $8000 tax credit to new buyers as a down payment option. The effect of this could be like throwing gasoline in a fire in King County. What will the unintended consequences be?

No need for the dimmer, just blink faster.

Sell enough crackhouses in Compton and the banks can “pick” their own bottom for L.A.

Then they’ll give the people in the upper tier homes some “hope” by screaming from the mountaintops that…

1. There is a recovery (which will have people thinking that 2007 pricing is back)

2. The median has risen for yada yada months.

So….the ones that are fooled by a “rising median” will put their homes back on the market (at bubble prices of course) .

But, the bank knows they can’t rewrite a bunch of Jumbo Neg-AM liars loans. So…they’ll steamroll their way through the nicer hoods in a very methodical manner and the upper tier will now be selling…albeit for much lower prices.

But wait…even those lower prices on the “better” streets are higher than the “bottom” so…hooray!

The housing market has recovered!

Unless you live in one of those “nicer” hoods on a toxic loan.

How many people buying houses today will be reselling in two years as it becomes apparent that prices will continue to fall further than expected? What happens to the entire market once the tipping point is reached, and owning a house is seen as an expensive luxury, not just a means to shelter? We joke about “sell now, or own it forever,” but that remains a real possibility. Folks forget that in a declining economy, with all levels of government seeking revenue, private property can be looked upon as the golden egg. It’s not uncommon in much of the NE and Great Lakes region for monthly property taxes to exceed the mortgage payment. There are many as yet undiscovered twists and turns in the home ownership road ahead.

Of the sales taking place during this normal Spring seasonal sales period, consumers and bloggers do need to keep in mind that every closed sale does provide a building block or groundwork for a bottom of prices. They are used as comps for justification of other homes coming on the market and for refinances (sales data is sorely needed for refi comps).

I do know people who are buying. They are not looking at anything listed above 2004 prices. They are anxious to buy. And they fully expect to lose another 10-30% in value before bottom.

And, obviously, they sold their last house during the bubble and they don’t have to sell an existing home into the downturn.

Just to recap:
- have 20-30% down payment
- stellar FICOs
- sold during boom AND rented for last 1-2 years
- do not own a house that is underwater
- have enough liquid assets that can afford to lose their down payment and willing to do so
- need/desire to buy is greater than willingness to wait and get more house or cheaper house

One question for Rojo and everyone here: What percentage of the potential buyers in this area fit the above description? one in a hundred? one in a thousand?

There is no sustained turn around or even bottom based on this microfraction of the population.

“Sell now or be priced in forever” The only thing is you need buyers who are willing to buy right now but that is changing also. Buyers are getting off the fence and making offers. Given that some (if not majority) are bottom shopping, there are still genuine offers being made. The fact of the matter is that there are people out there who have the means and the need to buy homes to live in. For most (except the extremely logical bubbleheads) buying a home is an extremely emotional decision. A good investment or not, people will continue to buy to satisfy their family’s housing needs. For a lot of people, paying 20-50% more than renting is very acceptable than dealing with landlords, renewing leases and other rental headaches. I personally will pay extra to own the place rather than rent it.

I have seen so many comments from the regulars that they are visiting open houses on a regular basis. I bet many of bubblehead regulars are making offers and buying houses this spring.

Just a few weeks ago, a REO in Kirkland sold for 11% over asking with 9 simultaneous offers. Another place to look is capitol hill where 11 of 12 new townhomes all sold this spring. The inventory <600K is seriously short there. When you see multiple offers in the market, doesn’t that tell us something? Hasn’t the market bottomed out enough that people see enough perceived value to go into a bidding war?

Great point about the moratorium inflating the numbers. There are so many variables in Seattle that are not yet bein factored into pricing that only people with an agenda would believe any rosy predictions (and the end is near is the epitomy of optimisim right now).

Some of these factors include:

- one third of ARMs issued during boom will hit SEA in next 12 months
- moratorium on foreclosures (does anyone think that foreclosures tripling while the the moratorium was in effect is a reason for optimism??)
- recent Boeing/[insert company name here] layoffs
- all higher compensated laid off employees who are waiting until children finish school year to move out of district
- rental market downturn tilting renting v owning even further towards renting
- condo market collapse driving even more affordable inventory on market (as someone who lived in NYC during 89-90, the collapse made condos so cheap that I didn’t even think of buying a house)

In Bellevue, right now (late April) there is is only two kinds of inventory – priced 2004 or better AND nobody cares inventory. There is no spring recovery.

And if prices aren’t up by June/July, then the fall/winter will be quite ugly.

David, I’m continuing to pursue my family room can light transporter. (See the Shiller post.) At this point I can fry chicken on the floor under the lights. Tim says I need more power, and we’re working on it, having now tapped into the 440V feeder lines on the main road. It looks like I’m gonna need a new dimmer switch though, as the old one smells really bad. But as soon as this thing is up and working, I’ll have you over, and we’ll go visit that fantasy world you dream of. Over and out.

You mentioned in an earlier comment about trillions of dollars. You keep talking about currency.

Let’s pretend that currencies are arbitrary. Relax, it’s OK let’s just pretend. They did after all create the Euro out of nothing and we now consider the Euro a currency. I know lot’s of financial planning went into the Euro, it’s backed by a manufaturing base, and the GDP of conglomerate governments. Still it was created.

Aside from that what ever happened about the Rubles? Big country lots of resources and they have the Ruble. How about China and the Yuan?

At the end of the day lots of currencies are phantoms. People trade them on a spread of will they go up or down or sideways.

They only reflect what the economies can do over a period of time, a cycle.

So will the United States go away? I doubt it. Zambia might get taken over, Thailand may have a regime change, but the United States just showed one of the boldest moves in a Presidential change that the world has ever seen.

Economically the government needs to do nothing. The currency can crash and burn. It makes no difference here.

Steve Tytler, keeps moving the goal posts, you can only cry wolf so many times before people stop believing you. Give it up already.

I predict big drops this spring with no spring bounce for houses that are priced 400K+. Houses below 300K will see a slight bump from prices in winter. People are not able to qualify for mortgages at 400K+ because the move-up equity from the previous years has rewound to June 2005. Anyone who bought after that time is officially underwater. People who purchased around 2000 / 2001 still have *some* equity that they can leverage but they are not going to move up unless they can sell their existing house, thus they are stuck. Taking transaction costs into account anyone who purchased end of 2004 can still break even, but that timeline is disappearing fast.

Once again… Sell now or be priced in forever.

Tim, is it possible to put up graphs of sales by volume on a quarterly basis (going back to say the year 2000). A graph for the ranges 200-300K, 300-400K, 400-500K (borderline for qualifying loans), 500-600K, 600-800K, 800-1 Mill, 1 Mill +. I think we would see a pig-in-the-snake effect where the sales volume gradually crept up the food chain and will now be visible coming back down. That might be another way to predict the bottom.

Do you have a whole bunch of refis in the works? Are people shelling out tons and tons of dough your direction?

Here’s the thing Steve, there are no predictions in Real Estate. There is no top or bottom. It’s Real Estate.

The fact that you are making predictions is a very clear indication that you are attempting to create that group think mentality Doctor Schiller, emphasis on the doctor, is talking about.

Context, people- stand back from the trees and look at the forest. The national economy is headed over a cliff, and housing will follow.

Bingo. We still haven’t really seen the impact of layoffs and pay/hour reductions, those will ripple through the economy over the next year. Much MUCH worse to come.

There is no “bottom” Steve next summer. Just a long flat line with a trend line down bias for many many years.

Find your GEMS Buyers. Time is definitely on your side and the let the prices come down to you. Set your offers and walk if they are not accepted. Within a few years you WILL land a GEM.

Listen to nobody but your own judgement. Analyze cost to build and the current financial environment. I assure you over the years the builders and sellers will see it your way.

I haven’t read of any significant positive news on a fundamental basis for months. The foundation of this house of cards continues to crumble, out of sight and the realm of general public awareness. Don’t let a spring bounce and anecdotal evidence of a revived market draw your attention from long term structural realities, or you’ll get hurt.

I was talking about by the end of 2008 NOT the end of the housing bust!

Nope. There you go again trying to revise your statements. This is your exact quote:

Home prices may drop an average of 10 to 20 percent during the correction, but keep in mind I am talking about dropping from the very peak of housing boom prices.

Notice how it says “during the correction”. Not “during 2008″. Unless you meant that the correction was only going to last until the end of 2008 in which case you are still wrong.

Face it. You have been wrong on multiple documented occasions and yet you have the gall to come here every month and brag about how prescient you are and how you’ve never made a wrong prediction before.

Really, It’s okay to be wrong. It’s okay to change your prediction as you learn and experience new things. It’s idiotic to pretend you’ve never been wrong when you prediction have been published on the internet for everyone to see.

I’m just preparing myself not to be shocked when I try to buy a house in a year or two and get out-bid.

Try right now. My wife and I made a bid on a forclosure this month and were outbid when we offered full price and covering closing costs (4 offers total). Granted it was priced 10% below asking market (or at selling market value), but it simply wasn’t worth more, even though we could have bid higher. We’re just waiting until real estate is a bad investment; not a suicidal one. It looks as if we’ll be waiting another year. A house is home, not an investment. As Robert Shiller said in his SPU address: Housing is a depreciating commodity.

RE: Steve Tytler @ 24 – A wise man once said, if you are in the business of making predictions, make a lot of them!! Something will eventually be true!!

That worked out really well for Jim Cramer. ;-)