Seattle Bubble

News & discussion about real estate & the housing bubble in the Seattle area.

Seattle Bubble - News & discussion about real estate & the housing bubble in the Seattle area.

Entries Tagged as 'AP'

News Roundup: Jobs, Everett Condos, Illusions…

By The Tim on May 22nd, 2009 at 8:18 AM · 49 Comments

Here are a few relevant news stories that have popped into my inbox in the last few days:

In the last article, Aubrey Cohen picks up on the pending story we explored on here a couple weeks ago. The NWMLS representative he spoke with provided the same two explanations for the pending/closed discrepancy that we independently deducted here: short sales and the NWMLS definition change.

From Aubrey’s article:

Bob Gent, director of business development and member relations for the listing service, acknowledged the definition change had an impact. In fact, he provided statistics showing that the rate of pending listings going back on the market jumped from 1.5 percent in January through May of 2008 to 4 percent in June 2008 through April 2009.

But said the change could only account for part of the recent increase in pending sales. Take out all the pending sales that went back on the market last April and this April, and there’s still a 6-percent increase.

”Did it have an impact? Yes,” Gent said. “It’s not big enough to explain the situation.”

So why are the increased pending sales not yet showing up in closed deals?

“The length of time from going pending to close has increased dramatically in the past few months due to short sales,” Gent said.

You may notice of course that Mr. Gent avoids addressing the issue of how many of these “pending” short sales simply never close. Local agent and Seattle Bubble regular Kary L. Krismer points out some common reasons why short sales are often failing to close in the P-I comments:

There are a number of reasons a short sale could fall out, including:

  1. Buyer gets tired of waiting.
  2. Bank refuses to accept unrealistically low price, and buyer refuses to pay more.
  3. Seller figures out that the bank isn’t going to release the balance, and that they’re better off being foreclosed.

Again, I’m not contending that sales are not increasing. In fact I have predicted that they will increase as prices continue to fall, just as they have in other parts of the country further along the bust cycle than Seattle. I just think the combination of short sales (which fail more often than normal sales) and the NWMLS “pending” definition change are overstating the increase.

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National Interactive “Stress Index” Map from AP

By The Tim on May 18th, 2009 at 11:31 AM · 33 Comments

The Associated press published an interesting interactive map recently that is worth checking out. They took a handful of economic measures such as the unemployment rate, the foreclosure rate, and the bankruptcy rate, and calculated an “Economic Stress Index” for every county in the country.

Here’s a snapshot of their March 2009 map (click to head to the AP’s interactive version):

AP Economic Stress Index

The Seattle area comes in better than much of the West Coast and the South, worse than much of the Midwest, and about on par with the Northeast.

Meanwhile, the Seattle Times surprisingly reprinted a Bloomberg piece this weekend titled Home prices may be lost for a generation:

We might be looking at a lost generation for U.S. home values.

Far too many analysts are calling a bottom to the housing market after home prices in 20 metropolitan areas declined at a slower pace, according to the recent Standard & Poor’s/Case-Shiller index.

Don’t be blinded by the glint of optimism in headlines about rising consumer confidence and slowing price declines. Demographic and market realities tell a more sobering story.

There definitely appears to be the beginnings of a mental shift going on in the country right now. Are we finally ridding ourselves of the notion that we—individuals, corporations, and governments—can live lifestyles beyond our means with no consequences? One can only hope.

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Morning News: National Housing “Crisis,” Boeing, Alaska Air, & More

By The Tim on April 23rd, 2009 at 9:28 AM · 1 Comment

Here’s a few national stories of note, and a handful of local economic news stories from this morning:

Quote of the morning is from the New York Times article:

[Home prices] don’t have as far to fall today, but the great real estate crash is not over, either. So if you are part of the 30 percent of American households who rent and you’re trying to decide when to buy, relax.

The market is still coming your way.

Be sure to also check out the nifty interactive chart in the New York Times piece that directly compares home price to median income ratios for the 20 Case-Shiller markets. If you’re wondering why their ratios are so much different than what we graphed earlier this month, note that they are using median household income, whereas our chart used per capita income.

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Seattle Economy Maybe Not So Isolated After All

By The Tim on October 9th, 2008 at 9:27 AM · 41 Comments

Here are a couple of recent stories to drive home the point that the Seattle area economy is not in fact magically separate from the national/international economy, as some have made it out to be over the last few years.

Brad Wong, Seattle P-I: Tough economy forces cutbacks for area residents

The economic shocks to the nation’s banks, stock markets, credit industry and real estate business have forced Seattle-area residents to review their finances and save what they can.

Thoughts about how to pay for bills — from mortgages and rent to higher food and gas prices — have consumed area residents fearful their quality of life could diminish.

As residents — including those not in immediate dire straits — hatch new plans to weather the turmoil, even young people said they are learning how quickly national problems can affect daily life.

Donna Gordon Blankinship, AP: WA people worried but not desperate about economy

People worried about the economy are more likely to seek help paying their bills or feeding their families than turning to suicide or violence as one man did in Los Angeles this week, mental health experts in Washington state said Tuesday.

“I don’t think the average response to the downturn in the economy is more people thinking of suicide because they can’t pay their bills,” said Kathleen Southwick, executive director of the Crisis Clinic in Seattle.

Southwick said her nonprofit agency’s 24-hour crisis line has not seen an increase in calls these past few weeks, but the “211″ non-emergency line has seen about a 50 percent increase in the number of people calling to find out where they can get help paying the rent and keeping the lights on.
…
The last time the help line saw such a sharp increase in calls was a few years ago “when the tech bubble burst,” Southwick said.

So much for the theory that we’re better prepared to weather the storm than we were when the dot-com bubble popped. Who could have guessed that seven years of pretending everything is fine and that we’re magically immune wouldn’t be enough to stop economic calamity from arriving in Washington State?

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Seattle Housing Market vs. National Headlines

By The Tim on July 24th, 2008 at 1:21 PM · 55 Comments

One common refrain lately among real estate agents desperate to put a positive spin on the local market is that potential home buyers in the Seattle area are just being frightened by all the bad national news on the housing market. The local market is doing just fine, and would be even better if only everyone would stop paying attention to the national stories.

Well, let’s take a look at the latest national housing market data, and compare it to the Seattle area.

Associated Press: Existing home sales fall 2.6 percent in June

The National Association of Realtors reported that sales dropped by 2.6 percent last month to a seasonally adjusted annual rate of 4.86 million units. That was more than double the decline that had been expected and left sales 15.5 percent below where they were a year ago.

The downward slide in sales depressed prices, too. The median price for a home sold in June dropped to $215,100, down by 6.1 percent from a year ago.

The drop in sales pushed inventories of unsold single-family homes and condominiums to 4.49 million units, up by 0.2 percent. That represented a 11.1 month supply at the June sales pace, the second highest level in the past 24 years.

For the purposes of this post, we’ll use King County SFH + Condo statistics, since it is closest to what the national numbers are tracking. Let’s see whether Seattle’s housing market is in better or worse shape than the national market. We’ll see which market is in better shape in a number of categories, rating victories as “strong,” “weak,” or “neutral.”

Year-to-year sales were down 15.5% nationally. Locally, closed sales were down 40.9%. Ouch, that’s nearly three times the drop in the national numbers.
Advantage: National (strong)

Nationwide median prices were down year-to-year by 6.1%. In King County, prices were down 3.6% from last year, about half the drop, but still down, and only a few points different.
Advantage: Seattle (neutral)

At 4.49 million vs. last year’s 4.20 million, nationwide year-to-year inventory was up 6.9% in June. In King County, inventory was up 28.9% year-over-year. Seattle comes in with four times the increase.
Advantage: National (strong)

Nationwide “months of supply” (inventory divided by pending sales) was 11.1, versus King County’s 6.2. Both buyer’s markets, but Seattle is just barely in buyer’s territory.
Advantage: Seattle (neutral)

So, we’ve got Seattle on top in two categories, and the national market performing much better (or less crappy) in the other two. I’d call that a toss-up at best, with Seattle’s huge increases in inventory and decline in sales possibly ranking its market worse than the nationwide stats.

In other words, there’s little to no substance to arguments that the local market is doing better than what you read about in the national headlines. We’re certainly doing better so far than the worst-hit cities such as San Diego, Detroit, and Miami, but I don’t recall seeing many headlines about those cities in the Seattle media.

(Martin Crutsinger, Associated Press, 07.24.2008)

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Gregoire: “The economy is strong. Buy your home.”

By The Tim on January 29th, 2008 at 9:37 AM · 22 Comments

Everybody’s pal Christine Gregoire gave a pep talk to the Washington Realtors last week in which she made some interesting comments.

Gov. Chris Gregoire told about 400 Washington Realtors on Thursday that she has been working to meet goals the group has for transportation, affordable housing, education and quality of life.

Gregoire, who spoke a day after Republican gubernatorial challenger Dino Rossi went before the group, cited a report in Fortune magazine and said the state is a good place to do business. She also offered encouragement for an industry slowed amid recession fears.
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“The only thing we have to fear is fear itself,” Gregoire said, quoting former President Franklin Roosevelt and referring to national recession fears. “It is a very frustrating time, I know, for you, and it is for me. … I’m struggling to get the message out to Washingtonians. The economy is strong. Buy your home.”

From the Associated Press account of the same meeting:

Addressing the politically powerful Washington Realtors, the Democratic governor said she sometimes wishes people wouldn’t watch the evening news because of all the “doomsday” talk of a home mortgage meltdown and a pending recession.

Gregoire said that in actuality, the state economy has seldom been so strong, with record low unemployment, 222,000 new jobs created in the past three years, and national publications praising the business climate here.

She conceded that the national news is having a psychological effect on home buyers, even though there are relatively few mortgage failures here.

“This is a very frustrating time,” the governor said, adding “Our economy is strong — buy your home. … There is no good reason for a slowing of home purchasing in the state of Washington today.”

Now why do you suppose Mrs. Gregoire would promoting the idea that Washington State residents go out there and throw caution to the wind, ignore the warning signs of declining prices, and jump into that real estate market right now? Obviously one likely reason is the usual pandering of politicians telling people what they want to hear. In this case, the people in question are a room full of “professionals” whose income depends on suckers consumers continuing to buy homes all the way down the declining price slope.

I think there may be another reason though. I think Mrs. Gregoire may really be on the Realtors’ side here, not just talking the talk. Here’s a story that appeared in yesterday’s P-I… (emphasis mine)

Gov. Chris Gregoire and leading Democrats in the House and Senate have reached one early agreement in this year’s budget negotiations: It’s time for a reality check.

Anticipating a bleak revenue forecast, they’ve agreed to start looking for places to trim the $33 billion budget they passed last year. They say they want to have their priorities in order in case the slowing economy forces them to find efficiencies or even cut programs altogether.
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Gone are the halcyon days of a skyrocketing real estate market and a ballooning economy that had led to back-to-back-to-back upward adjustments in the state’s revenue forecasts.

And gone is the free and easy feeling about spending, the unflinching commitment to “targeted investments” that Democrats have enjoyed for the past three years.
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Gregoire already has called for frugality this election year and has asked lawmakers to adopt her budget that leaves $1.2 billion unspent.

But her budget also calls for $244 million worth of new spending.

Is it really any surprise that Mrs. Gregoire, who has overseen a 33 percent increase in state spending since taking office (source), would want people to ignore the “doomsday talk” and just buy, buy, buy? What do you suppose has enabled spending to increase by so much? Could it perhaps have been the high-flying home prices and red-hot pace of home sales in 2004-2006 (every one of which puts more money into the state coffers)?

And now Mrs. Gregoire wants us to ignore reality so she and her pals can fund their pet projects. Yeah, that sounds like a great reason to keep this bubble alive. Who’s with me?

(Brad Shannon, The Olympian, 01.25.2008)
(Associated Press, KGW.com, 01.25.2008)
(Chris McGann, Seattle P-I, 01.28.2008)

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