By The Tim on May 4, 2009
Here is your open thread for Monday May 4th, 2009. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.
Be sure to also check out the forums, and get your word in the user-driven discussions there!
Posted in Open Thread | Tagged open_thread
Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.
In theory the sales data should all have been entered sometime today by agents for any April sales. It looks like the median and mean will be closer to January’s numbers than March’s. Roughly 15% off last April’s median, and 21% off the peak. Volume might even crack 4 digits, which is better than recent, but still off about 1/3rd from last year. So apparently there will be a Spring bump this year.
Interestingly, the pending numbers might not change much, except as to volume. The new rules are going into effect on disclosing short sales and bank owned via a check box, and in theory the changes need to be made now. The system will force the change any time the listing is changed (e.g. price change), so eventually we should have pretty good information on how many of these pendings are short sales and bank owned.
Finally, there were apparently less than 40 properties sold over $1M, compared to about 100 last April and about 175 the year before. So that market is continuing to suffer.
BTW, all these numbers are King County SFR, and the numbers are from NWMLS sources, but not guaranteed.
So many agents I have talked to are either liars or clueless about the state of our housing market.
Which one is worse?
RE: Racket @ 2 –
And there are plenty of agents who are both clueless and liars!
I’ll be charitable here, since these are my slimy brethren. It’s more like the vast majority of agents are not independent thinkers. They swallow the company line and believe it’s in their best interest to always have a sunny outlook. A lot of agents honestly do believe that we’ve hit bottom and that prosperity is just around the corner. After all, their broker told them so.
But it’s kind of like the boy who cried wolf. There’s not a lot of credibility left in the industry. Forever many agents have been saying that ” Now is the best time to buy :ever, and this opportunity may not present itself again.”
That’s so not my style. I’m just too cantankerous to just parrot the industry line, and I don’t mind people thinking a lot of things about me, but I hate to be thought of as a slimy liar or clueless.
But prices are down. Interest rates are low. If you intend to buy a house and intend to occupy it for many years, you might be better off waiting 6 months or a year or two, but you’re a lot better off buying now than you’d have been two years ago…If you can easily afford the payments and aren’t the type to look at the value on Zillow every other day, and your mortgage payment won’t be significantly higher than a comparable rent, sure, take the plunge. Owning a home has it’s rewards, it’s just that it may not be a financial reward, and if it is it may be while before you will see that.
RE: Kary L. Krismer @ 1
I see Ardell is slicing and dicing geographies to come to an opposite conclusion over at RCG for that area that is well known as “North King County”
In the words of Carl Spackler – “So I got that goin’ for me, which is nice”
RE: deejayoh @ 4 –
Yep, I love the fact that she zeros in on the 7% increase her bar chart shows in the <$400K range, while only giving a cursory mention of the glaring ~50% decline in the $400-$800K range right next to it.
RE: deejayoh @ 4 – For March 2 of the 30 NWMLS areas showed volume increases over the prior year. If you limited that to properties under $400,000 I’m sure a lot more would have.
Also, that’s sort of the flip of something I was thinking of for the $1M stat I gave. As the prices change, a lot of houses move from over $1M to under, and from over $400k to under, so you’re dealing with a smaller and larger population of houses repectively.
Seattle has still not moved into the inevitable foreclosure explosion phase that other bubble markets are well into. We are at about 2005 prices which gives 3-4 years of housing purchases that could be under water dependent on the down payment size. Many interest only loans have a 5 or 7 year time frame before they recast to ammortization. On top of that it takes what, about 6 months from default to foreclosure? We are just getting started with the price declines and any little spring bump or segment of the market that shows a temporary month-month upswing is with all likelyhood just a blip. I guess the heloc crowd is a dark horse that is a bit harder to predict when they will be impacted but they will only add to the foreclosure pressure on prices.
RE: deejayoh @ 4 – BTW, I responded to your latest post over in the PI forum area. Since that’s a low volume forum, I thought I’d point it out to you here.
http://www.seattlepi.com/forum/boards/viewtopic.asp?topicid=134504#1884387
So we are lifting off from the bottom? What are your predictions when Seattle market will start slowly rising again? I think Helicopter Ben is doing a good job at trying to inflate himself out of this mess.
By Robert @ 9:
Prediction: Bottom around 2012 but no significant lift until 2015
RE: Robert @ 9 – Personally I don’t make such predictions. About as far as I go out is the pendings, which typically would be maybe 2 months, and pendings are an imperfect indication even in normal times.
RE: Robert @ 9 –
Bottom: late 2009 to fall 2010, followed by a couple of years of flatness, with prices rising again around 2012.
I’ve got no problems making predictions, with the admission that I often don’t know what the heck I’m talking about, and that on those instances in which I do turn out to be right: Even blind squirrels find acorns now and again.
From “The Onion” – Oh how true this is for many…
WASHINGTON—After nearly four months of frank, honest, and open dialogue about the failing economy, a weary U.S. populace announced this week that it is once again ready to be lied to about the current state of the financial system.
Tired of hearing the grim truth about their economic future, Americans demanded that the bald-faced lies resume immediately, particularly whenever politicians feel the need to divulge another terrifying problem with Wall Street, the housing market, or any one of a hundred other ticking time bombs everyone was better off not knowing about.
In addition, citizens are requesting that the phrase, “It will only get worse before it gets better,” be permanently replaced with, “Things are going great. Enjoy yourselves.”
“I thought I wanted a new era of transparency and accountability, but honestly, I just can’t handle it,” Ohio resident Nathan Pletcher said. “All I ever hear about now is how my retirement has been pushed back 15 years and how I won’t be able to afford my daughter’s tuition when she grows up.”
“From now on, just tell me the bull"chocolate" I want to hear,” Pletcher added. “Tell me my savings are okay, everybody has a job, and we’re No. 1 again. Please, just lie to my face.”
The national call for decreased candor began last month, after the Department of Labor released another soul-crushing report that most Americans agreed “wasn’t helping anything” and “didn’t need to be so specific, at least.”
Totally off topic.. (or not?)
I came across this this weekend, and it made me laugh:
Tom Paxton sings “I’m changing my name to Fannie May”, a re-work of his 1979 song “I’m changing my name to Chrysler”
Or, the same song sung by Arlo Guthrie was also good :)
The inventory tracker just climbed back above 10k.
Here is weekly sales ratio information for KC, Seattle Metro and Eastside.
http://www.workingforyou.typepad.com//realestate/2009/05/king-county-eastside-and-metro-april-sales-ratios.html
50% of Pendings on the Eastside are under $500k
74% of Pendings in the Seattle Metro are under $500k.
I bet more than 74% of the properties listed in seattle metro are over 500k
RE: Racket @ 17 – Well, based on March’s NWMLS figures, here are the median list prices county-wide for King, Pierce, and Snohomish. The definition of median is the mid-point, where half the properties are listed for more, and half for less.
King
Res + Condo: $430,990
Res only: $499,000
Condo only: $299,950
Pierce
Res + Condo: $284,900
Res only: $289,900
Condo only: $227,400
Snohomish
Res + Condo: $339,950
Res only: $359,950
Condo only: $249,950
In King County, 10 NWMLS areas had SFH-only list median prices over $500k: 390, 500, 510, 520, 530, 540, 550, 560, 600, and 710. Except for 390 and 710, those are all Eastside (see a map here).
RE: Racket @ 17 –
This report is a week old, but you can see where the listings are by general price ranges.
http://www.workingforyou.typepad.com//realestate/2009/04/eastside-and-seattle-metro-volume-still-growing.html
Today’s http://www.housingtracker.net/ shows that the trend of falling inventory and rising list prices has now spread to most of the country. It is probably a case of people picking off the lower priced stuff before it is gone. That may be why the stock market took off today, because it signals that the water may soon be safe for developers of low priced houses to wade in and start hiring again.
RE: jon @ 20 –
“It is probably a case of people picking off the lower priced stuff before it is gone. It is probably a case of people picking off the lower priced stuff before it is gone.”
Correct me if I am wrong, but lower priced houses in inventory are a completely different monster than constructing newer cheaper houses.
After that you have the addition of those newer cheaper houses competing with existing low priced inventory which would saturate the market further lowering the prices of both?
US home prices may be lost for a whole generation…
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aiiT.sNeq2YQ
RE: CJM @ 22 – I only got to this part before determining the article was worthless: “Mortgage lending has also been an unusually tightfisted process of late. Lenders are demanding a 20 percent deposit for home purchases, and want impeccable credit ratings.”
What’s this person’s source? Zillow forums? Usually it’s just a headline that is misleading. You seldom see an article that is so FoS.
RE: Racket @ 21 – The new construction has been driving down the price of resales, but not necessarily the lower priced resales (other than indirectly). There’s actually a ton of inventory priced around $200,000, and the new construction isn’t really a threat to it. Completely different buyer for one thing in that most of it needs carpet and paint pretty badly.
But it’s only been recently that when pricing a house you need to go and check the new construction competition. Two years ago you could pretty well ignore it in most instances, because it was almost certainly priced higher than the recent resale comps. No so now.
RE: Kary L. Krismer @ 23 –
Kary,
Thank You. Posts that are short and sweet and to the point are so refreshing to read.
but…not everything I read in Zillow forums is fact? Another illusion smashed.
RE: Ira Sacharoff @ 25 – I only mentioned it because in 2007 people there universally thought 100% financing disappeared months before it did, apparently based on reading “news” reports like the one linked. Bad reporting and word of mouth is a horrible combination.
RE: CJM @ 22 – Pretty uncontroversial point of view if he is talking in inflation adjusted dollars. Actual dollars will be a different story.
RE: Kary L. Krismer @ 23 –
“What’s this person’s source? Zillow forums? Usually it’s just a headline that is misleading. You seldom see an article that is so FoS. ”
Indeed. My wife and I have excellent credit and can borrow way more on a house than we would want to mortgage.
By Kary L. Krismer @ 23:
Kary, for a guy that always claims to want to base his analysis on “Facts” you are pretty quick to throw someone under the bus with no basis. Where in the article is zillow even mentioned?
Do you know what the Fed’s Senior Loan Officer Survey is? It’s a real and credible source of bank willingness to lend – and the author cites it correctly.
http://www.federalreserve.gov/boarddocs/snloansurvey/200905/
As far as business press goes – I consider Bloomberg to be more credible than CNBC or Forbes.
And by the way, this article is from today…
RE: deejayoh @ 29 – Needing 20% down and excellent credit. That is complete and total BS. The author of the article doesn’t even understand the present, and he’s trying to predict the future.
As to Zillow, I brought that up. That’s the type of information you got off of Zillows forums back in 2007 when 100% financing was still available.
RE: jon @ 27 – I’d agree inflation is probably the most likely cause for property prices (not values) to increase significantly. The question is, how likely is inflation?
RE: Kary L. Krismer @ 24 –
So is there a way to see what percentage of homes that have sold this year have put 20% down?
I don’t read zillow boards, I do know from the only person I know that has bought a house this year that they had a credit score over 750 and had to put 20% down.
I also know someone who tried to refi and was not able to because the 20% they put down on their place in 2007 was gone. They were not underwater but the appraisal was less principal owed and original down payment.
Can the resident realtors access finance data to clear up some of the misconceptions in the mainstream media?
RE: Kary L. Krismer @ 26 –
“Bad reporting and word of mouth is a horrible combination”
I couldn’t agree more, however i don’t see any damage done by reporting that credit is tight. A buyer that is serious will always contact a lender to check his options, no serious buyer just reads a report and decides that he probably can’t get credit. BUT horrible reporting and word of mouth can and did push people to buy more home than what they could afford, that is the real damage done by bad real estate reporting and word of mouth.
RE: Acerun @ 32 – I would suggest looking at Rhona Porter’s Friday Rates pieces she does practically every week over at Rain City.
http://www.raincityguide.com/2009/05/01/fridays-rates-24/
FHA requires 3.5% down, and she’s quoting the same rate at 620 or higher for credit score. The best rate for conventional does apparently require 740 or better, and that’s probably the tightening that the banks are referencing. They are getting to be more and more credit score based when it comes to getting the best rate. That’s a good thing, and would be even better if they used something better than credit scores.
Over 80% does require PMI on conventional, and the last I heard it was still available up to 90%.
Finally there is VA which is still 0%, but you have to have had military service to qualify for that. Rhonda quotes rates for that also.
In general, your best source of information on this would be a mortgage originator. At times the information changes rapidly, especially rates.
RE: patient @ 33 – I would disagree. In late 2007 higher income people were as you describe, and not worried about the reports on credit at all. They had always gotten credit all their lives and assumed they still could. The more marginal folks, however, tended to believe the reports.
As it turned out that was good for them. But undoubtedly the reporting contributed at least some to the downturn.
RE: Kary L. Krismer @ 34 –
That appears to just be about rates.
Is there a way to see actual statistics of what has sold and average down payments?
The NWMLS will be releasing the stats today for April’s sales, but that doesn’t show down payment. I’m unaware of any source for that information. Periodically I’ve done some spot samples at different price ranges. Once you get over the median the down payments rise as a percentage. Under the median and 10% down or less is very common.
The last time I did a spot sample is was of over $1,000,000 properties, here: http://seattlebubble.com/blog/2009/02/25/case-shiller-tiers-low-tier-falls-over-15-in-a-year/#comment-67108
The NWMLS site is here: http://www.nwrealestate.com/nwrpub/common/mktg.cfm
Also, Tim will probably have at least two to three posts discussing the stats at this site, starting either today or tomorrow.
By CJM @ 22:
The last few paragraphs are very telling.
“One of the reasons the housing mania was so damaging was that median home prices rose to about three times average household incomes as opposed to double income levels in 1950.
Wages simply weren’t keeping pace with housing inflation, so homeowners overleveraged to make up the difference. The wave of deleveraging will depress home prices in most markets.
It’s time to assess your options. Your home may not be a nest egg. You may never recoup your losses from the dot-com and credit busts in the stock market.
For most homeowners, wealth building and retention may depend more on a diversified, inflation-indexed bond portfolio than on real estate. This new reality, though, may be lost on those still trying to price their homes at 2006 levels. “
RE: Cheap South @ 38 – You can afford to spend more of your income on housing when you have a double income family. In theory, all of the lower income spouse’s income could be devoted to housing if the main earner made enough to otherwise support the family. Comparisons to the 50s are just silly.
That wouldn’t be my choice, but that was the choice a lot of people made.
By deejayoh @ 29:
Agree with Deejayoh. Although it is worth pointing out that the piece linked is an opinion/commentary item, not a “news” article.
Not to mention CNBC has about zero credibility. (Except for of course the Stock Pickin Chicken.)
RE: Kary L. Krismer @ 34 –
Isn’t FHA for first time buyers only? Your two examples of low down payment loans available are both restricted set government loans. That would seem to not be incompatible with actual banks requiring high downpayments and FICO scores to get loans, which is what the article is talking about.
RE: b @ 42 – Nope. Just about anyone qualifies for FHA. Some condo complexes don’t qualify, and those are really hurting.
You can only have one FHA loan at a time, so that means if you have one you’d have to sell first. But most existing homeowners have conventional loans because 80/20 packages (or some other second) were so popular. Thus most existing homeowners can get an FHA loan without selling their existing house first.
Karl @ TF had a good summary of what’s hiding in the stress test results this morning- there’s a reason the results haven’t been released.
http://market-ticker.org/archives/1008-Stress-Tests-Whats-That-Light.html
NWMLS data is out for April
http://www.nwrealestate.com/nwrpub/common/news.cfm
RE: drshort @ 45 –
Do I read that right? Only 1004 closed sfh sales in April for KC?
RE: drshort @ 45 – Dang dude, you got to give me a few minutes to put it all into my spreadsheet and png-ify the graphs! :^)
I’ve posted graphs on my blog with the Snohomish County homes sales by price ranges. I’ve broken it down by every $100K. Most sales are in the $200 – $300 range followed by $300 – $400 range. The over $500K range is nearly non-existent. These are all residential home sales – no condos.
I also have a graph of the foreclosures with NOT’s and Trustee Deeds. I also added the Bargain and Sale Deeds as these are also part of the equation since they are the deeds that are filed from the auction sales. I went through every deed individually available at the King Co. records to pull these out by hand.
http://snohomishcountymarketstatistics.blogspot.com/
I’ll try to do the same graph on price ranges for King County tomorrow. Should I do it by city, by area, or just as a whole?
From the NYT: A New Web Site Helps Borrowers
http://www.nytimes.com/2009/04/26/realestate/26mort.html?_r=1&em
….FICO, formerly known as the Fair Isaac Corporation, which developed the most widely used scores for assessing credit risk, unveiled a Web site this month — MortgageReliefOnline.com — to help these homeowners…
I also see this article on Yahoo Finance this AM:
Where Home Prices Crashed Early, Signs of a Rebound
http://finance.yahoo.com/real-estate/article/107037/Where-Home-Prices-Crashed-Early-Signs-of-a-Rebound
The Tim,
It would be interesting if you could collect the vitals for the markets that they mention in this article to compare the relative price/rent, affordabilities, decline from peak ect ect compared to Seattle to see how far we will have to come to meet their levels. The article states that these areas are where the bubble first started to implode, thus have come down the furthest, thus they are nearing the bottom… if we are infact on the same path, it would be interesting to know what our market prices might look like based on the premise that people are talking about a bottom in the other markets at their current levels and so we too could expect to call a bottom when we hit those level.
thanks!