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Search Results for Matt Woolsey

Link Roundup: Incentives, Economic Woes, Alt-A, and More

By The Tim on August 4th, 2008 at 10:11 AM · 28 Comments

Here are a few stories from the last week or so that are worth pointing out.

First up a TV report from KOMO News: “Open House” — sign of the times in Snohomish County

Real estate agents in Snohomish County are now resorting to a “shock treatment” for slouching home sales in their area.

Realtors advertised more than 400 open houses over the weekend. Agents say they hope playing the numbers game adds-up to more home sales.

“It’s to get the public excited about all the great listings they can see out here today,” said Rich Williamson, President of the Snohomish County Association of Realtors. “It’s a chance to see more homes than they ever saw in one day or one weekend.”
…
Chris Lamoreaux says the housing market story is more than just numbers.

“We’re going fight the media that’s been negative about the housing market,” he said. “The real estate market in Snohomish County and the Puget Sound is excellent.”

That darn media, always being so negative about the housing market. I wonder if anyone can find me a quote from a real estate agent thanking the media for all the positive press when the housing market was gangbusters? Let me know if you come up with anything.

Moving to the opposite end of the Sound, down in Thurston county the “incentives” are flowing strong. The Olympian reports: Home sellers turn to incentives to draw buyers

A new Honda scooter, a trip to a Caribbean destination and a chance to win free gasoline are just some of the incentives that South Sound real-estate agents are using to entice prospective buyers in a slower housing market.

Some agents, though, are split on whether such incentives and other marketing efforts are worthwhile. Re/Max Four Seasons broker and owner Dean Stohl says the best approach for home sellers in this cooler housing climate is to think carefully about the sale.

“The most important ‘non-gimmick’ are sellers pricing the property competitively and making sure it is in ‘tip-top’ condition before putting it on the market,” he said.

Still, some agents are rolling out increasingly creative hooks to land that next sale because sales have cooled since the piping-hot years of 2005 and 2006.

Sounds like Dean Stohl has it figured out. Good luck to all those salesmen thinking that the prospect of paying 30 years of interest on a scooter will sell houses, though.

Another great column from the P-I’s Bill Virgin popped up last week as well: Economic woes could run deep in the region

As large and influential as those companies [Washington Mutual, Weyerhaeuser, Starbucks, Costco] are, there are less-visible layers of small and medium-sized companies that also keep the region’s economy moving.

Or not.

Those smaller outfits are dealing with the pressures and headaches of a slowing economy, some generated by the same factors plaguing large companies, others the result of cutbacks and retrenchments by larger companies with which those smaller firms do business.
…
“In today’s deteriorating economic climate, the ranks of companies feeling the pinch are growing,” writes Michael Newsome, a principal with Seattle-based investment banking firm Zachary Scott, in a recent newsletter. “Even in a fairly buoyant Northwest economy, we are entering a period of rationalization that will cut across industries. For a number of companies, depressed consumer confidence, ballooning energy costs, restricted credit access and, before long, higher interest rates will trigger sufficient financial distress to mandate restructurings and, in some cases, business sales or outright liquidations.

It’s nice to have at least one voice of realism in the local press. Too bad it seems like nobody is listening. Most people would rather believe that pink ponies will dance through the streets of Seattle forever and ever than consider the possibility that economic slowdown might actually affect us here.

Here’s one a few people pointed out. The latest top-ten list from Forbes’ Matt Woolsey is America’s Most Overpriced ZIP Codes. Guess who gets #3?

3. Seattle, Wash.

Downtown
ZIP code: 98104
Purchase-to-rent spread: 30.3

Until recently, Seattle has been held up as the example of a city immune to price drops as its market posted price increases from 2006 to early 2008. But as transaction volume has slipped and prices have flattened or fallen in many neighborhoods, the downtown area, near Pioneer Square, which experienced some of the most rapid price escalations during the boom, particularly in condos, appears vulnerable to correction.

Hooray for Seattle.

Lastly, here’s one from the national news scene. New York Times: Default rates for “alt-A” loans increasing

The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building.

Homeowners with good credit are falling behind on their payments in growing numbers, even as the problems with mortgages made to people with weak, or subprime, credit are showing their first, tentative signs of leveling off after two years of spiraling defaults.

The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time.

But I thought subprime was contained.

(Eric Schudiske, KOMO News, 07.28.2008)
(Rolf Boone, The Olympian, 08.04.2008)
(Bill Virgin, Seattle P-I, 07.30.2008)
(Matt Woolsey, Forbes.com, 07.29.2008)
(Vikas Bajaj, New York Times, 08.04.2008)

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Forbes: Seattle 5th Best Market to Invest In

By The Tim on July 15th, 2008 at 1:32 PM · 113 Comments

Believe it or not, Matt Woolsey is still writing bullish real estate pieces for Forbes (some of his previous work). His latest gem: Top U.S. Real Estate Markets For Investment

Encouraged by a weak dollar and a belief in the resiliency of the U.S. economy, individuals like [Australian dentist Rahul] Reddy, along with institutional investors such as pension funds and private equity groups, are seeking investment properties and development opportunities in the United States.

Their markets of choice include New York City, Los Angeles, Washington, D.C., Seattle and San Francisco.

The bullishness of the article was at least somewhat moderated this time around:

“The U.S. is good for speculative higher-risk investments from our perspective because the strong Australian dollar will enable us to gain hold of properties at prices we will probably not see for a long time,” says Reddy. “The U.S. is an economic powerhouse that I think will recover, and if the exchange rate goes back to figures from a few years ago, that will benefit us.”

Key word there: Risk. With every passing month, a few pieces of conventional wisdom fall by the wayside.

Since Forbes is so fond of the top 10 list format, here are their top 10 US markets for real estate “investment.”

  1. New York, NY
  2. Washington, DC
  3. Los Angeles, CA
  4. San Francisco, CA
  5. Seattle, WA
  6. Boston, MA
  7. Chicago, IL
  8. Las Vegas, NV
  9. Phoenix, AZ
  10. Orlando, FL

Here’s what he has to say about Seattle on that list:

American investors have been a little ahead of the curve on the opportunities available in Seattle. While the residential real estate market has cooled, Seattle has so far bucked the unemployment trends plaguing much of the national economy. According to the Bureau of Labor Statistics, metro area unemployment has remained flat in year-over-year terms at 3.7%, something that bodes well for commercial and retail investment opportunities.

I thought we had heard the last of the “bucking the trend” clichés, but apparently not. It also seems that Mr. Woolsey is using rather dated information, since the latest unemployment statistics for the Seattle area showed a sharp increase, which throws the trend-bucking idea out the window.

But don’t let the facts deter you if you want to throw your money at a real estate “investment” in Seattle. We are the fifth best market according to Forbes, after all.

(Matt Woolsey, Forbes, 07.10.2008)

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Forbes: Seattle a “Down Market” & also 8th Best

By The Tim on December 6th, 2007 at 1:48 PM · 7 Comments

I’m a bit confused. Just two weeks ago, Matt Woolsey’s latest real estate list in Forbes placed Seattle as the 8th best real estate market in the country. Now this week, Forbes writer Joshua Lipton pens an article titled Selling Your Home In A Down Market, which highlights the difficulty many people are having in selling their homes. So where did Mr. Lipton find the example of this phenomenon that he chose to highlight in the article? Believe it or not… super-special Seattle!

When Doreen Cardin first put her house on the market, she was hopeful that the house would find a buyer right away. Cardin’s husband, a mechanic, was unable to work. The loss of an income had proven tough for the young couple, who live 20 miles north of Seattle. They needed the money.

So they first spent some cash fixing up their three-bedroom, 1,600-square-foot house, with a new coat of paint, carpeting in the family room and flooring in the bathroom. They hired a local real estate agent and put the house on the market for $300,000.

That was five months ago.

There have been a couple of offers since then, but those both fell through. The Cardins have now hired a new realtor, slashed the price down to $279,000 and even thrown in a $5,000 buyer’s bonus. Doreen Cardin blames the lack of real interest in her house now on the cold weather, which discourages people from visiting open houses, she says, and also a more general sense of financial unease in her community, as people face new challenges like higher gas prices.

The couple recently moved into her parents’ home. They’re starting to consider whether they should rent their house, at least for now.

Okay, so it wasn’t technically Seattle Proper, but 20 miles north puts them roughly in Lynnwood / Mill Creek area, which I’m certain is being included in Mr. Woolsey’s definition of Seattle for the “Best Housing Markets” piece.

So I guess the question is, if the Seattle market is so great, how can there possibly exist people like the Cardins, who put their home on the market in Spring (the best time of the year for home sales) at 80% of the median single-family price in Snohomish County, and still haven’t sold? Hmm…

I liked the comment from Grvetti the other day that calling Seattle one of the “best” housing markets is like calling “the last part of a ship to sink ‘temporarily the most driest.’”

(Joshua Lipton, Forbes, 11.29.2007)

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Forbes: Seattle “Continues its Ascent”

By The Tim on November 29th, 2007 at 10:38 AM · 61 Comments

These “top real estate market” lists by Matt Woolsey in Forbes are really starting to seem pointless and repetitive, but I suppose I should at least mention the latest one, since it will probably be proudly touted in local real estate marketing material for the next few months. The latest fill-in-the-blanks list from star reporter Matt Woolsey is titled Best And Worst U.S. Housing Markets, and Seattle comes in at #8 on the “best” list.

Scaled-back lending practices, risky loans, oversupply and low demand continue to plague the nation’s housing markets, driving down prices and stalling sales.But it’s not so in Salt Lake City, Charlotte, N.C., and San Jose, Calif., where prices have continued to climb without so much as a hiccup.
…
The Emerald City housing market continues its ascent on the back of a strong local economy and the prudent construction rates of the past five years. Although prices are reaching record highs, the city remains a cheap alternative for Northern California residents and businesses looking for better value.

Funny he should say “continues its ascent,” right at the time when the ascent finally seems to be leveling off and changing into a descent. Of course, if we stay behind the curve like we seem to have been the last five years or so, we could still qualify as one of the “best” housing markets next year on the way down, with a -5% change in prices, compared to -10% or more elsewhere.

(Matt Woolsey, Forbes, 11.21.2007)

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Depends on what the meaning of “stable” is…

By The Tim on October 3rd, 2007 at 11:16 AM · 19 Comments

Forbes just loves to frame their articles around lists. You may recall Seattle showing up frequently on previous such real-estate-related lists, such as Best Places to Flip a Home (#1), Richest Cities In The U.S. (#8), Best Cities For Jobs (#34), and Most Overpriced Places In The U.S. 2005 (#1). Well, lucky us, we made yet another Forbes list: America’s Most Stable Housing Markets (sort of like picking out the warmest hangouts in Antarctica).

Nationwide, home prices are falling, sales are sluggish and the number of foreclosures is mounting. Ask any economist and you’ll hear that things are bad, and likely to get worse.

Unless you live in Seattle, where the market is slowing but fundamentals remain strong.

“Fundamentals remain strong” appears to be nothing more than code for “prices haven’t fallen… yet.” Here in Seattle, things aren’t yet “bad,” but they are almost certainly likely to get worse. I guess being “barely ok, and likely to get worse” is enough to catapult us to the top of the list.

The Emerald City has experienced strong price appreciation over the last six quarters, and that’s expected to continue in the new year, though at a slower pace. In addition to a very low housing inventory and a strong sales rate…

Wait, did he just say “a very low housing inventory”? That’s a riot. And while sales have been slowing YOY for 21 of the last 22 months, I will grant that through July, it could still be described as a “strong sales rate.” July’s sales were higher than every year outside of 2003-2006. Of course, with the tightening mortgage market, sales in August came to a screeching halt, coming in lower than any August since 2001… but we’ll let that slide, since Forbes probably isn’t working off of data that current.

…there are few non-conforming and high-risk loans on the books than in other cities, which means the area will likely see fewer defaults in the coming months than the rest of the country’s markets.

Really? I suppose with a statement as vague as “than in other cities,” it’s true. But the list of qualifying “other cities” is frankly pretty short. We’re right up there with most of the other cities that started experiencing increasing foreclosures once the appreciation music stopped. For more on the loan picture, check out this and this.

To arrive at our list, we teamed with Moody’s Economy.com to develop three prediction models based on a range of factors that affect how prices move. These include, among other things, the state of local economies, new construction contracts, foreclosure rates, local credit markets, sales rates, affordability and inventory.

[From the slide show:]

Median home price:$395,000
Annual price change from 2006: 8.9%
Projected price change to 2008: 3.09%

Moody’s Economy.com sure seems to be fickle with these predictions. Just last month CNN reported on “an analysis conducted by Moody’s Economy.com” that showed prices in “Seattle-Bellevue-Everett” declining 2.9%.

Also, it’s not at all clear from the article what specific geographical area they’re referring to when they say “Seattle.” It’s definitely not just the city of Seattle, where the median home price sat at $439,000 last month. It’s also apparently not King County, where the median is $415,000. My best guess is that they’re using some combination of King, Pierce, and Snohomish counties—which makes the prediction of continued price increases seem even more unlikely to come true.

In related news, the author of this piece and the previously-featured “Best Places to Flip a Home,” Matt Woolsey, contacted me after my post about that article:

I came across your blog while looking for information on Seattle real estate and I must say a lot of the analysis looks great. Your apparent desire to punch me in the face regarding the flipping story is of some concern to me for my next visit to your city, but I nonetheless will continue to follow your site. For future consideration, you should know that all of our stories are comprised of data driven analysis

For the record, my comment that I would “really like to gut-punch these reporters” was tongue-in-cheek. You have nothing to fear in Seattle, Matt. Well, not from me, anyway. I can’t speak for anyone that giddily jumped into the market to flip a house after reading that article, only to find that the time for flipping in Seattle is long gone…

(Matt Woolsey, Forbes, 10.01.2007)

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Flipping in Seattle for Fun and Profit

By The Tim on July 27th, 2007 at 7:56 AM · 40 Comments

Are prices in Seattle based on strong fundamentals or speculation? While we can certainly look at the data and draw conclusions for ourselves, there is little to no hard information out there about how many people are buying merely to turn a quick buck.

There are those that treat the lack of hard data regarding speculative buying as evidence that there is little to none of it occurring in Seattle. I highly doubt that is the case (for reasons discussed here numerous times before), but even if we assume that it were true up to this point, I’m inclined to think that speculation in Seattle is on the rise.

Exhibit A: Thursday’s Seattle P-I front-page story about a local flip:

The last time Al Johnson was inside the house at 4425 Cascadia Ave. S. in Columbia City, there were no walls.

“You’ve done a nice job,” Johnson told owner Thomas Loeser after touring the rehabilitated 1911 Craftsman house Monday.

Johnson, an associate broker with Windermere Real Estate, was the listing agent who sold the “extreme fixer” in February to Loeser and his brother, Derek — lawyers when they’re not fixing up houses.

In recent years, many developers have fixed up run-down houses and then put them right back on the market. The Loesers’ house offers an extreme example.

They paid $315,000 for the run-down abode Feb. 20 and put it back on the market for $549,000 last weekend. Thomas Loeser wouldn’t say how much they spent on renovations, but acknowledged that one agent who said back in February the house would take $150,000 in work wasn’t far off.

Johnson speculated just before the sale that the house, once fixed up, could fetch $150,000 over the sales price in the current market — at most.

So, $549,000?

“Let’s see what happens,” Johnson, who is not representing the house this time, said Monday.

Exhibit B: #1 on Forbes’ latest list, “Best Places to Flip a Home“? You guessed it… Seattle!

Flipping—in which an investor buys a home, makes quick improvements and resells at a higher price—”was a rage in the housing market surge,” says Anthony Sanders, a professor of real estate finance at Arizona State University. “But it is not as popular in this flat housing market.”

It’s easy to understand why. With prices falling quarter after quarter, the prospect of buying low and selling lower doesn’t sound nearly as appealing as buying low and selling high.

However, those looking to make a quick buck may do so in a number of markets ripe for a well-spotted flip.

Best among them is Seattle. It landed atop our list based on a number of measures.

I’m not a violent person by nature, but part of me would really like to gut-punch these reporters that are encouraging people to go out there and jump into Seattle’s already-stalling housing market to try to turn a quick buck. The days of easy money from flipping real estate in Seattle are over (if they were ever even here to begin with).

Exhibit C: Anyone seen or heard from “Seattle Eric” lately?

(Aubrey Cohen, Seattle P-I, 07.25.2007)
(Matt Woolsey, Forbes, 07.26.2007)

P.S. (For those not in the know, Seattle Eric was the proprietor of a blog titled Tales of a Seattle Real Estate Investor (formerly located at this address), where he chronicled his quest to flip houses in Seattle for fun and profit. He was also a contributor over at Rain City Guide for a short while. The last time anyone heard from him, he had gotten out of the flipping business to become a real estate agent, and was still having trouble unloading a few of his houses.)

Addendum: Be sure to check out a relatively new Seattle-area blog that focuses specifically on local flips: ReMuddle. I have added a link to them on the sidebar under Bubble Sites -> Regionals. Thanks to RedmondJP for pointing them out in the forum. Speaking of the forum, also be sure to check out the long-running thread on this very subject: Audacious Flips and Renovations.

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