I fit into the first time home buyer under 200K scenario. I put in an offer in March, and withdrew it after the seller started playing games. I guess she got giddy about the market bouncing back and started to try to move up the price and errata. She was a realtor by the way, and it felt as if she thought the sale was sport, whereas I am looking at my first time home and have been anticipating this for years. We were in completely different head spaces. No need to play games with people in this market, so I pulled my offer when something came up on inspection.

I lost out by not moving quickly enough this month on a few foreclosures that got multiple offers, coming in around just under 200K. Then I put in an offer on another house last Saturday (first day on the market) and am under contract. I am very excited about it. It was priced at 199,000.00 and that’s what I offered. It is in very well maintained condition in an attractive single family neighborhood in Bremerton, where the job market is stable due to the Navy. I have excellent credit and a VA loan option that I’m going to finally use. Sellers didn’t want to bother with my VA loan during the bubble. Do I think the value may go down? Yes, it’s likely over the coming months, but I think the price was very reasonable and will probably recover eventually. Houses priced 25K more, that have less to offer in the way of neighborhood or condition – I walked away from. I can live with and love this house and plan to stay there for 10 years at least.

Speaking of things that have changed, let’s talk about realtors. I could not get a realtor to give me the time of day back in the boom. Given my first time buyer status, my mid 70K single income, and my refusal to get involved in risky loans, I guess I wasn’t the optimal buyer. My first realtor, since I decided to buy this year, expected me to search the internet and call him when I found something I wanted to see. Of course I obsessively surfed. But he would never get out to the houses I wanted to see quickly after they came on the market and they already had offers three days later. These were under 200K and in generally excellent condition. I think the first guy is still living in the boom years. I rather quickly traded him in for a guy I love, who actually supplemented my efforts with research on the homes, suggested others that he thought were good etc. My new guy has a couple decades of experience, and that’s one reason I selected him. I actually interviewed him over coffee before committing because I was serious about buying and wanted someone whose outlook and practices would be a good fit. The old guy is actually upset that I went with someone else, and I plan to send him a thank you note and a gift certificate but, that is it.

My experience is that prices have come down, a lot. But not most sellers have not come down enough to be comfortably affordable to people like me. Payments still exceed rent by quite a lot, and throw in major repairs and lots of cosmetic stuff, the new wave of foreclosures coming and well, it isn’t attractive. But with the foreclosures, there are some excellent buys around 185 to 190K and if a seller of a clean well maintained home is willing to compete with that (200K ) they seem to be getting multiple offers in a few days.

What is interesting is when people interpret the entry of people like me into one segment of the market as indication of a recovery to the market as a whole. Buyers like me are so far from the 300K plus market that you can’t even see it from here. Maybe if they start dropping their prices, it will trickle down the ladder to us eventually, but I’ll still be happy with my rambler.

Nice. Thanks for posting that. Cruising around the country on that chart is very interesting, and explains the housing situation in the simplest way possible- a picture.

“I attribute a lot of that to stock market losses. ”

You would think that all the money people are saving by switching to Geico would help.

I think lower-tier momentum is great, since most stats have shown (even Ardell’s) that the higher tiers are not selling at all. So while volume may begin to recover from the 2008 lows in lower tiers, we should also anticipate a huge amount of price declines coming in the pipeline. If only lower tiers are selling, higher tiers will have to come down to meet them eventually, especially if there is a lot of “pent up sellers” (which is probably true, I know several of them!).

But those are mainly the houses well above median–you could use $1M as a cutoff, but it may start lower than that.

I attribute a lot of that to stock market losses.

Thats the boat I am currently in. My current mortgage is less than what I can rent my current house for. We make about $75k more a year than when we bought our house, so it seems like a perfect time to upgrade. We are looking at the 450k-500k range, and can easily float both mortgages if my old house stays vacant for a while.

My hopes are that I can nab a house that went for $650k+ in 2005-6 on a short, REO, etc. I feel that I have time to be picky, and interest rate increases would be more of a cause to rush me into a house than the market itself rebounding.

I often come to you guys to see a possible trend a year out or so, plus your analysis is great. Vancouver has loosely tracked Seattle… I mean, all the markets loosely look the same (down) but we’re later to the game. The Pacific Northwest share rain and realtors and we sure held on; Vancouver was still gripped with delusional Real Estate Fever even a year ago.

But this interests me, that you’ve got a numerical bounce (whatever that may end up being like in sales) at the same time we have.

Maybe the lack of Vitamin D is making us particularly irrational…

That is very odd. Why would someone say they are going wait until their property reaches its rock bottom price before they try to sell it? There are a few rational scenarios, the primary one would be they want to upgrade, and so they want the price scale to be at its minimum so that the differential in price to their newer house will also be at its minimum. One could try to sell now and rent until the bottom is reached, but the sales volume is very low. Apparently most people conclude they will have to drop their price so much to sell now that it is not worth it to rent in the interim.

But the people who are going to downsize or move to the Sun Belt should be dumping their houses now, and they aren’t. Even if they don’t want to move to an interim rental, and they think that the Sun Belt is still falling, their current house is falling even faster and so they would be losing less equity each money.

Left out of all these “momentum” interpretations is one simple factor that will negate any potential momentum bounce: affordability.
–Groundhogday

Good point. Check out the Las Vegas affordability and then check out Seattle.

http://www.zoyzoy.com/realestate/ofheo.php?msa=29820

Curiously however, every lender we dealt with pre-approved us for probably 8% more of our net income than I would be comfortable spending. Apparently some habits are harder to change than others.

All has come through fine as of now, but for about 24 hours I was a bit distressed (and will be able to apply the rebate to an escrow fund for repairs and improvements).

An interesting anecdote (which is hard to quantify) is the huge number of offers, especially rejected offers, that don’t make it to mutual acceptance (aka pending) we are seeing in our market.

http://iciclecreekrealestate.com/2009/05/01/leavenworth-no-swine-flu-in-our-market/

Are other agents seeing this in their market?

My impression is that buyers are ready to buy, but are looking for price drops that haven’t necessarily occurred.

Good observation. The smart agents are doing a bit of financial analysis and showing sellers what it takes to actually buy their property under today’s lending guidelines (or at least they should have a loan officer provide this information), particularly those homeowners in the upper price ranges. Quite a few of the higher tiers HAVE to come down to meet the buyers where they are active.

I still find it difficult to swallow all the marketing I see touting 100% nothing down loans (outside of VA where it has been in place for years). While some may be able to swing it, it seems like quite the roll of the dice.

–Groundhogday

The school districts changed the dates for picking next year’s school for kids from February 15th to March 31st. Mom, Dad, and the kids are the biggest buyer pool in any market.

It’s the same west of issaquah. The difference compared to earlier years spring time is really huge around my hood in Kirkland/Redmond. From running through most of the area west of 148th to the water front on a regular basis it feels like there is a about 1 home for sale where there were 10 the last couple of springs. It feels like we have reached the “stand-off” phase were few are buying and even fewer are listing. There’s only one side that can win that game. Buyers. It will be interresting to see how this evolves during the next 12 months, if it will all turn to a foreclosure market like CA.

From 295.00 to 20.82

Good God! This rally may take it to 0.

(I think I begin nibbling tomorrow)

The jump in pending sales has come as a relief to real estate agents, their ranks now thinned by the recession.

“When you reach rock bottom and you start to trend upward, we’re very happy,” Eliason said

http://www.kitsapsun.com/news/2009/may/05/rising-pending-sales-a-bright-spot-in-housing/

I agree (pent up sellers)

I wonder if all this great news will bring a lot of sellers out of the woodwork?

This is from a Zillow press release today:

Meanwhile, potential sellers appear to be holding back until evidence of an improved housing market. In a separate survey of homeowner sentiment(4), one-third (31 percent) of homeowners said they would be at least somewhat likely to put their homes on the market in the next 12 months if they saw signs of a recovering real estate market.

That represents nationwide stats, but I still think there is definitely a large amount of pent-up supply out there, even here in Seattle…

I wonder if all this great news will bring a lot of sellers out of the woodwork?

I guess my main confusion is what exactly is the absorption rate.

The way I have seen it used, “absorption rate” is usually just the inverse of “months of supply.”

So MOS is [total end of month inventory] / [pending sales in given month]
And AR is [pending sales in given month] / [total end of month inventory]

Here’s a chart of the monthly “absorption rate” for each year since 2000:

So yes, March is usually the high point for “absorption rates.” But pending sales also usually convert to closed sales at a rate close to 90%, rather than the 60% we’re seeing in recent months.

Could someone explain to me this statement ‘March absorption rate has always been the highest absorption rate for the entire year.’ I have seen it several times, and I don’t get it. I guess my main confusion is what exactly is the absorption rate. The term absorption rate implies that it is closed_sales/time, in which case, the above statement is false, as we can easily see from the charts in Tim’s previous post. However, I guess it could mean something else.

The pendings in March were just over 1600. The sales for April were just over 1,000, or roughly 63%. For any given month I’d only expect a percentage of those to close the next month because very few sales provide for a close of less than 30 days.

Going back to 2007, there were over 2700 pending sales in March. In April there were 2173 closed sales. That’s roughly 80%.

The two periods do show a 17% drop off, but back in 2007 there were very few short sales.

What other statistic do you propose to use to view the market going forward? Closed sales and YOY pricing are not forward looking indicators.

We need three months of data to see where the market is going in any case, but I do find that April activity indicates the market is not dead. For the past 12 years, March absorption rate has always been the highest absorption rate for the entire year, yet this year, April far surpassed March absorption rate.