It’s time once again to check in with our local press to see who simply rehashed the NWMLS press release and who did some actual journalism.
First up, the NWMLS press release that accompanied yesterday’s numbers: Inventory shrinking, sales rising, prices stabilizing in some Northwest MLS areas
Waiting longer to buy a home is not likely to pay off, according to Northwest Multiple Listing Service director Kathy Estey after reviewing reports summarizing May activity. Estey pointed to shrinking inventory (about 20 percent fewer listings than a year ago), double-digit increases in the number of pending sales (up 17.7 percent from a year ago), solid open house activity, and signs of stabilizing prices (eight of the 19 counties in the report show price gains since January) as indicators of an improving market.
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Estey, the managing broker at the Bellevue Downtown office of John L. Scott Real Estate, said affordable homes inventory is down to the levels of a normal market and reaching for a sellers’ market. “Multiple offers are common in the under $400,000 range when the home is priced well, shows nicely and is marketed professionally,” she remarked. “Buyers who are waiting for prices to come down more have missed the bottom,” Estey believes.
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“What we’re currently seeing is real estate’s version of Back to the Future,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. He believes the combination of historically low interest rates, adjusted lower prices, and the $8,000 tax credit has created advantageous conditions for buyers that haven’t been seen in decades. He noted sales in the four-county area continue to see double digit increases.
You heard it here first, folks. You have missed the bottom. Again.
The release also makes mention of an “explanatory note” that is not included online. According to Aubrey Cohen’s article, the note “mention[s] the change in the definition of a pending sale but blam[es] short sales and foreclosures for the “widening gap” between pending sales in one month and closed sales in the next.”
I can’t help but think that the ever-increasing disparity between the NWMLS’ much-touted “pending sales” and the number of actual closed sales is the kind of thing they would much rather not have explained. But with the Times and the P-I both finally making a big deal about this issue (which we have been following here since August), it looks like the NWMLS couldn’t ignore it any longer.
Eric Pryne, Seattle Times: Deals made for homes are slow to close
Pending sales of King County single-family homes — offers that have been accepted by owners, but haven’t yet closed — were up 27 percent from May 2008, eliciting cheers from brokers starved for good news.
Closings, in contrast, were down 14 percent. Real-estate professionals attributed the disparity to slow-closing short sales.
Historically, the number of closed sales in a month has been about 90 percent of the previous month’s pending sales. May’s closings in King County were only about 62 percent of April’s pendings. In a note, the listing service said the gap “should begin to shorten as short sales close and the short-sale inventory shrinks.”
But others question whether the turnaround suggested by the pending-sales statistics will happen. “Short sales don’t close at the same rate as normal sales,” says Tim Ellis, who edits the bearish Seattle Bubble real-estate blog. “I definitely expect the gap to shrink, but I don’t know by how much.”
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Dave Sunlin, a senior vice president with Bank of America, which acquired Countrywide last year, told reporters last month that it typically takes 45 or 50 days to decide on a short sale. Complications can make the wait significantly longer, he added.
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But Sunlin told reporters more than 60 percent of the short sales the bank does OK, nationally, ultimately fall through, often because the buyers back out, buy another home or have trouble getting financing.
That 60% statistic is especially interesting. If indicative of the market as a whole, that would definitely indicate why so many of the now-pending sales are never turning to closed deals. The article goes into more depth on why short sales tend to take so long and often end up failing to close altogether. Also, this marks the first time I have been quoted or this site mentioned in the Seattle Times real estate section. Thanks, Eric!
Aubrey Cohen, Seattle P-I: Pending home sales up again, but will they close?
Buyers and sellers reached deals on 711 houses in Seattle and 2,246 countywide in May, up around 24 percent and 27 percent, respectively, from a year earlier, the report said. Those pending sales totals were up from increases of around 15 percent in the city and county from a year earlier in April.
Closed sales continued to lag however, down more than 15 percent in the city and 14 percent countywide in May from a year earlier, although that was around half of April’s annual drops.
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“I’m not ready to call the bottom yet. I think we’ve still got too many mortgages that could have problems in the months ahead,” Crellin said, noting that Washington had some of the biggest increases in mortgage delinquencies and foreclosures in the first quarter, according to the most-recent report from the Mortgage Bankers Association.
It’s nice to see Crellin resisting the urge to call a bottom. Aubrey’s article also includes a great little graphic that does a good job illustrating the disparity between the pending and closed numbers.
Mike Benbow, Everett Herald: Inventory of unsold homes down in Snohomish County
There were 5,656 homes on the market last month. That compares with 7,472 homes for sale a year ago, a drop of nearly 25 percent, the listing service reported.
Inventories were down by double digits in every county in the listing service except San Juan and Skagit, indicating the market is stabilizing.
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Listings weren’t the only thing to fall.Prices continued their slide, falling by more than 9 percent in May. The combined median price for a home or condominium in the county last month was $299,950, according to the listing service.
No mention in Mr. Benbow’s article of the still-record-low number of closed sales, but he does repeat the bit from the NWMLS press release about the high volume of short sales, estimated to be a third of the total pending sales volume.
Kelly Kearsley, Tacoma News Tribune: Pierce County home prices hold steady in May
The median home price in Pierce County held steady in May at $225,000 instead of dipping slightly as it has in recent months, according to figures released Thursday by the Northwest Multiple Listing Service.
And the year-over-year declines seem to be slowing. Though the median home price was down 13.4 percent compared with last May, the decline was less than the 14.5 percent decrease in April.
Dick Beeson, a broker with Windermere and a Northwest MLS director, said a two-month flattening out in the home price doesn’t necessarily mean rock bottom – or that prices can only go up from here.
“I think we’re going to bounce along the bottom for a while,” Beeson said, though he does see prices beginning to stabilize in some areas.
An interesting turnaround for Mr. Beeson, who you will notice is responsible for three of the four quotes in the above bottom-calling graphic. Perhaps he finally learned his lesson about calling the bottom.
Rolf Boone, The Olympian: Home sales rise, but prices fall
The number of homes sold in Thurston County rose in May, although South Sound real estate professionals say the housing market still has plenty of room for improvement.
Last month, more than 200 units sold in Thurston County for the second time this year, and pending sales increased 12 percent in the year-over-year May period, according to combined single-family residence and condo data released Thursday by the Northwest Multiple Listing Service.
The increase in pending and closed sales likely is due to the seasonal uptick in real estate activity during spring and summer, Thurston County real estate agents say.
Disappointing reporting from Mr. Boone. The number of closed SFH sales in Thurston (210) was up from April (191), but down 26% from May 2008 (284). Is a regular seasonal increase in sales really worth reporting? In other news, average temperatures this week are reportedly higher than a month ago.
(Eric Pryne, Seattle Times, 06.04.2009)
(Eric Pryne, Seattle Times, 06.05.2009)
(Aubrey Cohen, Seattle P-I, 06.04.2009)
(Mike Benbow, Everett Herald, 06.05.2009)
(Whitney Coleman, Tacoma News Tribune, 06.05.2009)
(Rolf Boone, Olympian, 06.05.2009)
RE: deejayoh @ 99 – “The NAR says the average length of home ownership is 6 years. So how can MOST people keep their homes more than 10 years? ”
I have owned and lived in my current house X years, but the total amount of time that I will keep my house is some unknown number that is longer than that. I won’t know until I move out. So when you ask people how long they have lived in their house, it will be a smaller number on average than the average number of years that people live in the same house.
Also, it is kind of like marriage where flippers go around owning houses for a year or so. They bring the average length of occupancy down, while most people stay in their houses for a long time.
I’m not speaking to the statements of the NAR, just the statistical problems.
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Lately, I’ve been posting about why it makes sense to save money and buy with as much cash as possible instead of rushing out, and borrowing most of the money necessary to purchase the dreamhouse. As Steve T. points out, for most people, buying a house is an emotiional decision where financial common-sense isn’t a factor. Actually, that kind of buying works in an inflating market, but when house prices are going down, it’s the death nail.
To me, buying a house on credit is similar to asking the govt. to borrow money for jobs and services it can’t afford to pay for. Eventually, you become a debt slave, and wind up paying a very large portion of your income to finance the debt. But remember, this kind of emotional credit-based borrowing actually works during times of inflation.
I believe most people would rather inflate our way out in order to get around the burden of sacrificing most of our future wealth to pay for the party we already had. Many older people I’ve talked to want me to have a lot of babies (and embrace immigration) so someone will be around to pay for their retirements. I got to thinking about this the other day and realized it’s a complete ponzi scheme. Our entire country’s economic strategy is a gigantic ponzi scheme! What keeps it alive is politicians’ need to satisfy voters in the short-term. Nobody wants to pay the necessary price to correct this mess, so every decision that comes down the line is directed toward the best short-term outcome as opposed to looking at the big picture and embracing the long-term health of America. In short, we are like a bunch of spoiled little children who want, want, want, and the govt. is our parent and does it’s best to satisfy our desires one day at a time. In a way, it’s like driving with a blindfold on.
I believe most of my future investments, other than a place to live, will be made in other countries that are up and coming as opposed to wealthy and entitled–especially when that wealth and entitlement is dependent upon borrowing money from countries who are up and coming. IOW, it’s not anit-American to dump U.S. stocks and buy into companies overseas. You either buy their stocks and make money, or you borrow money from them you don’t have. I suspect many other Americans will adopt a similar strategy.
The green shoots we keep hearing about are laughable to me. We are experiencing the effects of borrowing money, but where are the jobs going to come from when we attempt to balance the budget in the last half of Obama’s term? The U.S. attempted to bring down the debt after the economy begin to heal during the Great Depression, and it sent the economy back to Hades. No wonder the Chinese laughed at Giethner when he pledged to bring down the debt and protect the dollar. Unlike the American’s, the Chinese have read up on American history; thus, they know exactly what’s going to happen when we try to bring down the debt. The reality of the real underlying economy is going to set in. What will the U.S. govt. do when faced with that reality? Borrow more money.
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RE: jon @ 101 – Please read my comment right above yours.
You are right, the average does not supply sufficient information. but the Median = 8.2 years
half own longer, half own less than this. definitionally
so the statement that “most people keep their homes more than 10 years ” is definitely incorrect
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RE: deejayoh @ 103 –
From the study you cited in 37, “While renters maintain their residences for a median duration of 2.1 years, homeowners stay in one residence for a median of 8.2 years.”
That is a statement about the period of time of each ownership. The statement “most people own their homes for more than 10 years” is a statement about people. I don’t have information to verify that, so I simply assume that sampled a group of people and measured the length of time they owned their previous home. That is going to be a differently weighted sample than if they measured based on a sample of sales. Flippers will be weighted more heavily in a sample of sales than they will be in a sample of all people. That’s how flippers will bring down the average length of ownership relative to the amount of time of all people on average.
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RE: Ross @ 71 –
Thank you for sharing that, Ross.
Did you use a real estate agent to help you through the process?
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RE: Groundhogday @ 97 – RE: Jonness @ 102 –
Yes you can invest in foriegn countries, and yes there is profit.
When Americans talk about a global economy they assume we will be importing goods as we always have. Today is the first time any one has mentioned exporting American goods. A lot of talk about Japan centers on stagflation and deflation, but Japan needs to import. They are a rock surrounded by water.
The United States is self contained. We can afford a weaker dollar. We can export.
The way it gets inflationary is by having a dollar that is worthless.
A dollar that’s worth less: Exports become cheaper, while imports become more expensive. All else being equal, gasoline prices go up. So do other commodities — meaning that we’d likely resume the upward pay-more-for-food and pay-more-at-the-pump trend that was evident about a year ago.
A stock market and bond market crash: If investors start to view inflation and a devalued dollar as inevitable, it could result in a broad sell-off of stocks and bonds, and a flight of capital to other assets and currencies. (Swiss francs might become more attractive.) Inflation expectations are important.
U.S. banks have an enormous amount of excess reserves, according to Federal Reserve data, that would rapidly expand the money supply once lent out. “The enormous increase in reserves is potentially inflationary,” Stanford economics professor John Taylor told the U.S. Congress in February. “With the economy in a weak state and commodity and many other prices falling, inflation is not now a problem, but at some time the Federal Reserve will have to remove these reserves or we will have a large increase in inflation.”
Think of paying your debt with worthless dollars. It’s not that wages will increase it’s that the dollars you get will be worth less.
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Per our discussion on foreclosures, here is a great piece by Matthew Padilla (hat tip Calculated Risk) reporting on a new academic study:
http://mortgage.freedomblogging.com/2009/06/05/do-these-homeowners-deserve-help/11597/
Guess what, the housing ATM might be more responsible for the massive wave of foreclosures than market dynamics! Yep, some really sympathetic victims out there.
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RE: jon @ 104 – Again, now I know you are just trying to yank my chain.
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On the amount of time people stay, what about neighborhoods that are less than 10 years old?
I looked on my block and the mean and median were both over the reported stat, but we have two that have been here over 20 years.
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RE: deejayoh @ 13 –
I don’t think Steve was trying to quote a statistic regarding length of home ownership. It was a prediction based on an assumption it will be a poor sellers market for a while.
“the majority of people who bought their homes during the credit boom will probably keep their homes for 10 years or more — partly becuase they would have to take a loss if they sold.”
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RE: Alan @ 105 –
Indeed, we’ve been working with a very patient real estate agent.
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Do people actually walk away from their homes because of the big price drops, even when they can financially afford the home?
I can understand the logic, but what about everything that comes with a foreclosure? I’m not talking about ruined credit alone, but all the pressure, the shame, the notices being put on your door, the harrassing phone calls from the bank, mortgage negotiators, attorneys, and other people “who can help”?
Can people handle all that?
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RE: SeaBuyer @ 112 – What we need is people that bought at the top to walk away. Since their timing was so bad before, that would likely be the sign of a bottom. ;-)
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RE: Steve Tytler @ 10 –
Um, if the house has lost 400K, I would walk away, and rent, until my credit cleared. Why sell it? Give it back to the bank. If it is upside down 10, 20, 30K, fine, I will eat it,.. but 400k? time to walk. The bank has a loan with an asset to back it. Give them back the asset they they AGREED was worth the loan. You don’t agree the house is worth the loan? Fine, the bank can have it back. Totally moral.. businesses would do the same thing.. If the banks were ambitious and didn’t require 20% down, have a cushion.. well, maybe the head of that bank should not have gotten a million dollar bonus.
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[...] Again, much of these clues pointing to market bottom could just be an illusion. Seattle Bubble recently pointed out that many of the market bottom predictions have been completely off. [...]
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[...] we’ll have the monthly foreclosure report for May, but today here’s a comment left by “Ross” in the reporting roundup last week that deserves to be highlighted. Ross recounts his experience [...]
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