King 5 News ran a great little piece yesterday that demonstrates just how ridiculous it is to call falling home prices “doom and gloom.”
The flat real estate market has been a source of concern for many.
But for some charities like Habitat for Humanity, it’s providing a long awaited opportunity to advance their cause.
After years of being priced out of the market, Habitat for Humanity closed on the purchase of 4 and a half acres in Renton on Monday.
It’s not much to look at now, but in due time 41 new town homes will be built there.
…
“We’re hoping if there is a silver lining in this downturn in the real estate market, that maybe it is for low income families to be able to afford to buy homes,” [Habitat for Humanity spokesman Tom] Granger said.
Last month Cory Lynn Berrios and her family moved into a new townhouse which she and her husband were able to help build and buy thanks to Habitat for Humanity of east King County.
“Silver lining?” Mr. Granger, affordability is the main event. And not just affordability for charities building cheap townhomes for low-income families. How about middle-class, responsible people that have been priced out of the market thanks to the housing bubble? How about modest single-family homes that shot up to $500,000 or more, driven by the mass hysteria of a pyramid scheme, that are now heading back down to earth?
This housing downturn would probably be better described as a return to housing market sanity, which I contend is good for society as a whole.
If you’re viewing this blog for the first time today because you saw me (Tim Ellis) on KING 5 News tonight, I’d like to take a moment to welcome you. Seattle Bubble is the Seattle area’s #1 resource for news, analysis, commentary, and community discussion on the local real estate market. This community site is focused on productive discussion of the local housing market, so that everyone involved can work toward a goal of improving understanding and dispelling myths.
Please take a moment to look around the site. Drop by the About Page for a brief summary of what we do.
Here are some recent stories that may interest you if you want to know what’s going on in today’s real estate market around Seattle:
or, if you’re a number-crunching kind of person, any of the posts in the stats category
For those of you that aren’t new, and didn’t catch KING 5 news tonight, I will update this post later with the video clip. For now you can view the video on the KING 5 website here. Check back later tonight or tomorrow morning for an embedded video on this post.
Update: Here’s the video that I uploaded to YouTube:
Update 2: Neat, I found out that you can view a noticeably higher-quality version of the YouTube video by going to this link. Unfortunately I can’t seem to embed this version without it stretching it vertically. Oh well.
The City of Seattle is offering a helping hand to homeowners facing foreclosure.
The pilot program would offer $5,000 loans to 40 families.
Wow, $5,000, huh? That will let some overstretched buyer keep making their adjusted-ARM payments for about… six months. After which, they’ll either need to find another sucker to front a loan, or they’ll end up in foreclosure anyway. Or maybe they’ll just take the $5,000 and get in touch with You Walk Away. Cha-ching.
“When a home forecloses on a block, within hours the value of the homes on that block are reduced by $5,000 each,” said Mayor Greg Nickels.
Oh, goodness. We wouldn’t want the value of other homes to go down. That would be terrible, just terrible. It might even lead to… actual, affordable housing! We can’t have that. Gotta have people relying on the government to get them into “affordable” housing.
More homes for sale, prices going down… Is it a good time to buy?
…
Where’s the bottom? And just how long might the slowdown last?
Unfortunately, to find the answers to these questions, he turns to people whose income is derived entirely from selling homes. What do you think they’re going to say?
Windemere Realtor Paul Slusher admits that the Seattle area is currently sitting on a record-high inventory of homes for sale, but gives it a delightful spin by calling it a “buyers market.” He says potential home buyers are “nervous,” but encourages them to jump in, because “you have leverage over sellers.”
Suzanne Britsch, with New Home Trends, Inc. (a company that sells housing market statistics and analysis to home builders to “help you stay ahead of the market“) tries to scare potential buyers into jumping in now by declaring that waiting for the bottom of the market is worthless: “The problem is, is when it flips, it goes in one day! You know… I mean… So you never know when the bottom is.” She also plays the “running out of land” card (which has been refuted on this site here and here, among other places): “That bubble never breaks. I mean… Because, it—we have too many impediments to development here, to really overbuild this market.”
And lastly, Robert has Chairman and CEO of John L. Scott Real Estate J. Lennox Scott himself in-studio for a free advertisement of John L. Scott’s services. Referring to the Fortune forecast, Scott quips: “That’s not the projections that we’re seeing. We’re in one of the best markets in the nation here in the Northwest. We have positive job growth, we have low interest rates… And we just do not see that taking place.”
We’ve busted the “job growth will keep home prices propped up” myth here somanytimes, it’s not even funny. Yes, if the jobs situation was cruddy, the housing market would suffer (e.g. Detroit). But just because we have a good job situation doesn’t necessarily mean that homes will continue to sell at over-inflated prices (e.g. San Diego).
Scott admits that things are slow, but writes it off as a normal market cycle: “Well, we’re definitely in the adjustment phase of the real estate cycle. Every time you come off a frenzy market, a surge market… you do see sales pull back. Sales activities does lower about ten to fifteen percent. And right now, we’re going through the mortgage market scenario… that’s getting better every week. And, in fact, rates are just as good as they were in July.”
Except, sales were lower by ten to fifteen percent this time last year, and now they’re down from that another thirty percent, for a total decline of thirty-five to forty-five percent in sales activity. That doesn’t sound like the normal market cycle Mr. Scott described. And how can he sit there with a straight face and describe the present situation in the mortgage market as “getting better every week”? Somebody should tell that to Washington Mutual and Citibank. A little later in the segment he admits that easy money drove the disparity between income and home prices, but pegs it entirely on interest rates, ignoring the lack of lending standards. Rates may still be reasonable, but a huge number of people who would have qualified for a massive loan in 2006 are now completely shut out (as they should be).
Mak: Should I be scared though, of jumping in, and then seeing the price continue to slide, even once I’m in? Scott: You’re not going to see the prices come off that much. They may come off ever so slightly off the peak.
While Fortune at least can point to the logic behind their analysis, all that Scott offers up is discredited clichés and blanket statements with no supporting evidence. Granted, the available time to make points in a news segment like that is limited, but he could have at least said “we don’t see that happening, and here’s a brief explanation of why.” Is “positive job growth” seriously the best argument he can come up with?
At the end of the segment, Robert invites viewers to share their thoughts about the housing market on the Up Front blog. Here’s the post if you’re so inclined. Maybe when the spring bounce fails to materialize next year, I can get Robert to have me in-studio to explain what’s really going on with the housing market in Seattle.
If you’re viewing this blog for the first time today because you saw me (Tim Ellis) on KING 5 tonight, I’d like to take a moment to welcome you. Seattle Bubble is the Seattle area’s #1 resource for news, analysis, commentary, and community discussion on the local real estate market. This community site is focused on productive discussion of the local housing market, so that everyone involved can work toward a goal of improving understanding and dispelling myths.
Please take a moment to look around the site. I recommend you take a look at the following posts:
or, if you’re a number-crunching kind of person, any of the posts in the stats category
For those of you that aren’t new, and didn’t catch KING 5 news tonight (as of this post, you can still catch it at 11:00 PM on KING 5), I’m hoping to update this post later with the video clip. Check back later tonight or tomorrow morning.
Update 2: Here’s the video. I apologize for the lousy quality. I had some issues with my TV capture card last night and had to use a roundabout method to digitize this.
Continuing The Tim’s trend of quick posts, I thought I would add this to the flurry of news today. King5 ran a news piece last night that is summarized in this article, entitled Home sellers upping incentives in crowded market
The piece quotes Reba Haas, one of the contributors over at Rain City Guide. She is quoted as saying:
“There’s too many people coming here for us not to have it continue to be strong,” said Haas.
Let’s see how that statement stands up to reality. Here is the most recent report on immigration from the Washington Department of Licensing.
Wow. Looks like the number of people coming to Washington is actually off 21.6% year over year. Perhaps some fact checking is in order?
The flat real estate market has been a source of concern for many.
