Reporting Roundup Flashback: September 2007

Let’s look back a couple years to see what local real estate agents were saying a few months after the price peak in Seattle, and about a year into the housing decline across most of the rest of the country. Here’s a selection of choice quotes from some October 2007 articles. Note that local home prices are down roughly 15% ($60,000 on a $400,000 home) in the two years since these articles were published.

NWMLS press release, October 5, 2007:

Trying to time the market is “a fool’s game,” remarked one MLS director. “If you are buying a home to live in for more than three years, then buy the one you love, not the one that you can save $25,000 on,” advises Matt Deasy, general manager at Windermere Real Estate/East Inc. in Bellevue.

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate said now is “an ideal time for buyers.”

“The time is right for buyers on the sidelines to step forward. They have many more home choices now than in the past few years,” observed [Windermere broker] Marcie Maxwell.

Seattle P-I, October 5, 2007:

One month of lower prices doesn’t mean much, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.

“I think it is suggestive that there is some real softness in the (Seattle) market,” he said. “But at the same time, I think we’ve got a more resilient housing market than in many parts of the country.”

Matthew Gardner, a Seattle land-use economist who works with developers, does not put much weight on the Seattle median-home price, particularly because it excludes most sales of new condos, he said Friday.

Actually, year-to-year increases of about 4 percent in the median price across King County and the 19 counties in the listing service were higher than Gardner anticipated, he said. He expects a leveling off — with increases of roughly 3 percent — for a couple of years.

“We need to get through this backlog of inventory,” he said. “Also, we need to start allowing time for wages to catch up.”

Tacoma News Tribune, October 6, 2007:

Agents on Friday, however, largely portrayed Pierce County’s one-month price decline as more anomaly than trend and what’s to be expected in a market normalizing after the boom years of 2004 and 2005.

Buyers shouldn’t view one month of lower prices as a sign that more are on the way, said Bill Riley, owner of Gateway Real Estate. Riley is vice president-elect of the Washington Realtors, which plans to launch a campaign this month encouraging buyers to purchase now rather than wait.

“This is not a start of a decline. We’ve never seen a decline in such a strong fundamental market,” he said, pointing to expected job growth…

Everett Herald, October 6, 2007:

“It looks like the market has kind of taken a deep breath and just corrected itself a little bit,” said Nathan Gorton of the Snohomish County Camano Board of Realtors.

“It’s a good time to be a buyer right now.” … “I talk to a lot of buyers’ agents whose customers are saying they just want to sit back right now because they don’t think it’s a good time to buy a home,” he said. “They think, ‘Oh my gosh, the market is falling apart.’ Nothing could be further from the truth.”

For comparison, here were my comments about these stories at the time:

It will be interesting to watch the increasingly ridiculous gyrations of local real estate salespeople as the market continues its downward path, and they come up with more and more outrageous statements that fly in the face of reality. It looks like the bubble deflation show has finally rolled into town.

Indeed it has been an entertaining show, and trust me; it ain’t over yet.


About The Tim

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.

33 comments:

  1. 1
    AMS says:

    “If you are buying a home to live in for more than three years, then buy the one you love, not the one that you can save $25,000 on,”

    My suggesting: Never, and I mean never, love anything that won’t love you back.

  2. 2
    wreckingbull says:

    Gardner and Crellin are both shoo-ins for a Hall of Shame induction. What really makes their past predictions pathetic is they were done under astroturf titles such as “Washington Center for Real Estate Research” and “Land Use Economist”. Statements like theirs from commissioned real estate salespeople is to be expected and can be tolerated.

  3. 3
    Ray Pepper says:

    This is why the 6% Golden Carrot cannot EVER work for the best interests of the consumer. When the reward is so great the interests of the recipient will ALWAYS out trump that of the client.

  4. 4
    Kary L. Krismer says:

    I would agree with the comments that: (1) Trying to time the market is a fool’s game; and (2) One month doesn’t make a trend.

    Those comments were probably said meaning something entirely different, but they’re just as applicable today as they were two years ago.

  5. 5
    Kary L. Krismer says:

    By Ray Pepper @ 3:

    This is why the 6% Golden Carrot cannot EVER work for the best interests of the consumer. When the reward is so great the interests of the recipient will ALWAYS out trump that of the client.

    Give me a break. On the topic of fool’s games, listening to a real estate agent about the future of prices (up or down) would have to be right up there near the top. None of the 6% goes for predictions.

    Next in line would be listening to economists and other gurus (e.g. Cramer) about the future of the world. But at least they are actually (over-)paid to make such predictions.

  6. 6
    Scotsman says:

    J. Lennox Scott, chairman and CEO of John L. Scott Real Estate said now is “an ideal time for buyers.”

    Scott is my favorite realtor, always has been. The man has myopia down to a science.

  7. 7
    Buford says:

    A bit off topic, but it seems Olympia is #10 in the nations healthiest housing markets.

    http://www.builderonline.com/local-markets/healthiest-housing-markets-2009-fall-update.aspx

  8. 8
    Back to basic says:

    The 8k tax credit extension passed. That’s good for the seller and buyers (67% American own home, 33% rent and could be 1st time buyer). It will delay the house bottom by credit demand and reduce supply. People here may happy or dismay depend your purchase horizon.

  9. 9
    singliac says:

    RE: Buford @ 7 – Yeah, Seattle was on that list back in February. I think that shows how reliable those rankings are.

  10. 10
    singliac says:

    RE: Back to basic @ 8 – source?

  11. 11
    pfft says:

    “Trying to time the market is a fool’s game”

    that’s what all the realtors say. if that’s true, how do they know that “now” is ALWAYS a good time to buy? wouldn’t they just say I don’t know if it’s a good time to buy?

    btw, mebane faber might be on to something. he finds that the housing market exhibits strong momentum.

    Is It Time to Hedge Your House?
    http://seekingalpha.com/article/47557-is-it-time-to-hedge-your-house

  12. 12
    Dave0 says:

    RE: Buford @ 7 – Here’s what they say about Olympia being #10 in their list:

    Olympia’s housing correction has been a mild one; at $184,000, existing home prices remain above 2004 levels. Even so, a state government hiring freeze, enacted in 2008, has curtailed employment here, and the unemployment rate is now running at 9.9% Though new households are still forming, median income levels have fallen 8.5% during the last year.

    Umm… how does that make it a strong market?

  13. 13
    TJ_98370 says:

    By wreckingbull @ 2:

    Gardner and Crellin are both shoo-ins for a Hall of Shame induction. What really makes their past predictions pathetic is they were done under astroturf titles such as “Washington Center for Real Estate Research” and “Land Use Economist”. Statements like theirs from commissioned real estate salespeople is to be expected and can be tolerated.

    .
    If you check out the WCRER Board of Trustees, you will find that 47% of them are Realtors and 35% of the remaining are into real estate developing / investing / consulting / financing. Given their backgrounds, it is easy to understand WCRER bias.

  14. 14
    wreckingbull says:

    RE: TJ_98370 @ 13 – That was my point, although perhaps I didn’t articulate well. They need to admit what they are, then at least we see the motivations. Hiding behind a state university and guise of a research organization is what gets my goat.

  15. 15
    TJ_98370 says:

    By wreckingbull @ 14:

    RE: TJ_98370 @ 13 – …….. Hiding behind a state university and guise of a research organization is what gets my goat.

    Totally agree.

  16. 16
    Buford says:

    RE: Dave0 @ 12

    Umm… Why don’t you ask the guys that wrote the piece???

  17. 17
    singliac says:

    RE: Buford @ 16 – Pretty sure he meant that as a rhetorical question.

  18. 18
    Back to basic says:

    RE: singliac @ 10
    Sorry. Only 12 months for oversea military. The civilian version is still in debate. I guess it would pass. For non 1st time buyers, you already got tax benefit on the mortgage interest. For renters, sorry, not a good news.

  19. 19
    softwarengineer says:

    I Goofed Up On What I Said About Seattle RE a Couple Years Ago Too

    I said the RE prices would follow the stocks.

    I’ll clarify that now that the dollar is plummetting in value and stocks are going up. Seattle RE prices will eventually follow the stock market when the price of everything bought with worthless dollars get’s so high no one will be able to afford it and then stocks will collapse [i.e., like the autos did].

  20. 20
    AMS says:

    RE: Back to basic @ 18 – Extending it for overseas military persons is a good thing, in my opinion. How many purchases will be made under this extension?

  21. 21

    If I recall correctly, back in the fall of ’07 on Seattle Bubble there was a larger contingent of real estate cheerleaders, and very few agents who were suggesting that prices were going down. As far as I know, at that time there were only two agents here suggesting that we were ” cruisin’ for a bruisin”. Me and a guy who went by the moniker ” Hair Farmer Joe.”

  22. 22
    Greg Perry says:

    The Tim,
    Interesting comments from October 2007 and the drop in medians during 2008 and 2009. What do you have from the media in October 2005 and October 2006 along with your corresponding comments? Since the medians are about equal to 2005, it would be interesting to see these perspectives during the run-up years, as well as the year the bubble popped.

    Here is visual of what a market collapse looks like.
    http://blog.seattlepi.com/realestate/archives/124285.asp#comments

    These absorption rate charts are for the 3rd quarter 2007 (published in October 2007). The March 2007 AR heat maps were mostly red with most of the areas in the region coming in as sellers advantaged markets. The absorption rates started tightening in April May and June. Even though July was the highest median month, the absoprtion slide actually started in the 2nd quarter. These 3 months of the 3rd quarter were stunning in the way the market shut off. Median prices follow absorption rates whether they go up or down.

    The 2009 heat maps are turning from green to yellow / red with September 2009 heat map looks very similar to that July 2007 map.

  23. 23
    AlexI says:

    @The Tim

    I like your sarcasm – funniest thing I’ve red in a while

    @Softwarengineer

    The supply of dollars is controlled by the Fed, and the latter has all the power in the world to shrink it when time comes. The conventional wisdom of inevitability of out-of-control inflation under current policies is a myth. You’ll see.

  24. 24
    Jonness says:

    By Kary L. Krismer @ 4:

    I would agree with the comments that: (1) Trying to time the market is a fool’s game

    Who is more foolish?

    1) A person who believed economic fundamentals have nothing to do with house prices and bought a house near the peak of the bubble during a period when RE agents were claiming “house prices will go up forever”

    2) A person who payed attention to economic fundamentals, predicted we were amidst a housing bubble about to burst, held off buying a house, and saved a small fortune as a result.

    I can only imagine what the people who listened to you in 2006-2007 are thinking now? Recall this was at a time when websites were going up right and left warning people we were approaching a peak in a massive housing bubble on the verge of bursting. Those predictions turned out to be 100% accurate.

    BTW, what year did you buy your home? It seems to me, talk is cheap, but the proof is in the pudding.

  25. 25
    Kary L. Krismer says:

    By Jonness @ 24:

    I can only imagine what the people who listened to you in 2006-2007 are thinking now?

    BTW, what year did you buy your home? It seems to me, talk is cheap, but the proof is in the pudding.

    And you wonder why I attack you? It’s because what you write is nonsense!

    You know nothing of what I say to clients! You make assumptions which based on your ignorance (and apparent illiteracy) are wrong, and you want some respect? Get real. I’ve said over and over I don’t predict the market. Ignoring the fact I represent more sellers than buyers, I’ve said over and over that if a client asks about future prices I tell them know one knows. I’ve said over and over that if someone (a non-client) comes up to me and ask if the market is going to recover in X years, I often have to tell them several times that no one knows, because they have their own preconceived notions that are difficult to get out of their heads.

    And as to my house, yes I bought shortly at the peak, but I also sold shortly after the peak. And the net result is probably a gain because where I bought has dropped relatively little, while where I sold has dropped a ton. And I’ve also mentioned that people (mainly family) were encouraging me to keep both houses, but that I didn’t want to be that heavy in real estate. Again, you’re showing your ignorance and apparent illiteracy. You’re just like the person who comes up expecting the answer that real estate will go up in two years–you know I’m a real estate agent and you expect a certain answer and nothing I say changes your impression.

    Finally, again you’re showing the over-fascination with price that is typical of a group here. Most people are not going to sell a house and then rent because of price trends. That group would be a very tiny percentage of the population. I would guess less than 1%. As I’ve mentioned in the past I’m too much of a control freak to rent. Some people complain about HOAs because of the lack of control. Renting raises that to a whole different level. The idea of my selling and renting doesn’t fit me at all, but in any case, given my timeframe (over 10 years) it really makes little sense. Why would I want to move twice in a X year period? Moving sucks.

  26. 26
    Kary L. Krismer says:

    RE: Jonness @ 24 – Another point as to your baseless assumptions. I recently had a client contact me who wanted to look at a condo in a project that is not currently FHA approved. I provided him with this link:

    http://blog.seattlepi.com/realestate/archives/180084.asp

    Did that turn him off? No. He’s still interested in the complex (and can qualify for conventional if necessary), but has a better understanding of the risks.

    But in the bizarre world of Jonness a real estate agent would never give a client that information, and a buyer would never be interested in such a property if they knew of such information. That is why you get so little respect from me. You simply don’t understand the real world. You have your own preconceived notions that are more often wrong than right.

  27. 27
    Jonness says:

    By Dave0 @ 12:

    Even so, a state government hiring freeze, enacted in 2008, has curtailed employment here, and the unemployment rate is now running at 9.9%

    Not to mention, Gregoire sent a letter out last week saying the revenues will be AT LEAST a billion below the previous forecast and to expect more State employee layoffs.

    Japanese house prices didn’t correct overnight. They slowly eroded year after year.

  28. 28
    Jonness says:

    By Kary L. Krismer @ 25:

    It’s because what you write is nonsense!

    The truth is, buying a house right now comes with an enormous risk to the downside. By claiming market timing is “a fool’s game,” you are minimizing the massive downside risk. As a home consumer, I resent RE professionals who gloss over risk. I am seeing too many people getting completely wiped out and having to start over amidst a jobless recovery because they placed their trust in slick-talking RE know-it-alls who minimized home-buying risk.

    “When people are greedy, be fearful and when people are fearful, be greedy.” We all recognize the source of this market timing recommendation. You would do well to stop insulting those who pay attention to market timing and historical value-related fundamentals. Just because you have a poor track record of using these tools does not mean that others cannot benefit from their use.

    That is why you get so little respect from me. You simply don’t understand the real world

    I’m the buyer Kary. That puts me smack dab in the middle of the real world. As long as buyers buy houses, you profit no matter what direction prices trend. Thus, it’s easy for you to claim market timing is for fools, and historical value ratios are meaningless. But I’m stuck with the consequences of poorly thought out decisions that result from blindly listening to self-proclaimed know-it-alls. Median price/median income, unemployment rate, interest rates, value ratios, etc, they appropriately rule the value investor’s world. You aptly point out that very few home consumers care about such things. I point out this doesn’t mean such things are of non-importance to those who wish to make good investments.

    Warren Buffet said: “Price is something you pay. Value is something you get.”

    In 2003, credit was cheap and easy, house prices were much cheaper than now, jobs were plentiful compared to now, and inflation-adjusted incomes were roughly the same. Relatively speaking, buying a home right now gives you very little value. Obviously, exceptions to this rule exists, but this should not downplay the existence of the rule.

    IMO, the reason you attack me is precisely because I understand the real world. Unfortunately, the real world is not currently rewarding your profession at the same level it did in the recent past.

    http://seattlebubble.com/blog/wp-content/uploads/2008/10/japanes-and-us-housing-bubbles.png

  29. 29
    patient says:

    RE: Jonness @ 28 – Well said Jonness.

  30. 30
    Kary L. Krismer says:

    RE: Jonness @ 28 – You’re the buyer? Now that’s funny. You’re a fence sitter and you’ll always be a fence sitter because there will always be downward risk to buying a house. You’re frozen by fear, always have been, and always will be. You’ve never bought a house and never will buy a house. You’re too scared to ever pull the trigger.

    Gee, this making assumptions about others that are totally unsupported by any facts–could be pretty fun stuff for some. However, to really enjoy it you’d really have to not give a damn about not being wrong. I can see why you like it.

  31. 31
    Jonness says:

    By Kary L. Krismer @ 30:

    RE: You’re frozen by fear, always have been, and always will be. You’ve never bought a house and never will buy a house. You’re too scared to ever pull the trigger.

    Actually, I own a house outright, which I bought for well less than the current value. That’s why I can easily save (i.e invest) over 50% of my income. I’m in the market for a 2nd home, but have held off due to the obviousness of the bubble. I’ve made a small fortune so far using my investment tactics, and I’ll buy a 2nd home when, as Warren Buffet says, I get sufficient value for the money I spend. The key here is to understand the risks involved in leveraged investments. This means–know your markets.

    Gee, this making assumptions about others that are totally unsupported by any facts–could be pretty fun stuff for some. However, to really enjoy it you’d really have to not give a “golly” about not being wrong.

    See above.

    The fact remains that Tim, Patient, Patrick, myself, and a plethora of others have been right so far. But don’t lose hope. I’d say we’re about midway through the game, so there’s still a lot of play left.

  32. 32
    AMS says:

    RE: Kary L. Krismer @ 30 – There may always be some downward risk, but when the upward risk is greater than the downward risk, it’s a better time to buy.

  33. 33
    Kary L. Krismer says:

    RE: Jonness @ 31 – The point of that entire post was just to point out how incorrect assumptions can be. Your response helped prove that. Thanks!

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