Seattle Bubble

Yesterday I predicted that the local reporting would focus on the paltry month-to-month median price increase, backed up by a plethora of quotes from peppy real estate agents. Today’s reporting, for the most part, does not disappoint.

I’m starting to get the impression as I read some of these articles that the reporters are just as amused by agents’ blatant denial as I am. My sarcast-o-meter is detecting a slight hint of intentional irony in the juxtaposition of facts and figures that paint an increasingly drab picture of the market with upbeat comments from local agents that continue to insist that things are getting better every day. Maybe I’m reading too much into it. You be the judge.

Click below for the usual roundup of this month’s reporting.

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Yesterday’s Tacoma News Tribune had an article about new construction in outlying areas, which is becoming front line of the Puget Sound housing bust. In short: it ain’t pretty for builders.

Facing fewer buyers and many, many homes for sale, South Sound builders are pulling back and getting extra promotional.

Builders have slowed construction schedules in recent months, cut prices, offered their biggest-ever incentives and even rented out finished homes that couldn’t find a buyer.

…builders are looking to unload even more of what’s built and empty. In March, 1,485 new homes, excluding condos, were listed for sale.

It used to be that half of the homes sold by Soundbuilt, one of the area’s largest builders, were properties with homes either under construction or yet to be built, said Gary Racca, owner of the Puyallup company.

Uncertainty about the economy, however, means consumers are holding off, and now 90 percent of the company’s sales are on ready-to-move-in homes. But completing homes without a committed buyer can be risky, because the builder fronts the cost and often has to secure and pay to finance the construction.

The company has launched a first-time promotion: a price guarantee, which allows someone to buy a not-yet-constructed home at a locked-in price and ensures that if Soundbuilt lowers prices on other similar houses in the subdivision, the buyer will get the same discount.

Of course, they’re still confident that all they need to do is “get the momentum back” with a few discounts and incentives here and there, then they can get back to jacking up the prices.

(Devona Wells, Tacoma News Tribune, 05.04.2008)

I would have posted the reporting roundup on Saturday, but I was out of town for the weekend, and my only Internet access was dial-up (*shudder*). The tone of this month’s reporting isn’t too much different from last month, except that we’ve got a small dose of optimism thanks to a slight spring improvement. Of course, we’ve got still more bottom-calling as well, so that’s fun.

Also, Seattle Bubble gets yet another mention on TV.

Chris Ingalls, KING 5 News: A tale of two first-time Seattle home buyers

Real estate agents say that now is the time to buy in Seattle, especially for first-time home buyers.

But others say the latest data on home sales in the region suggests home prices could fall even more.
…
A recent report on the month of March says that home prices are stable — not dropping — and that means maybe they’ve hit the bottom.

The Northwest Multiple Listing Service, sponsored by the realty industry, says housing prices have stabilized for six months — a signal of the end for falling home prices.
…
But [potential first-time homebuyer Brendon] Duran isn’t convinced that the price drop is over.

“I think we’re content to wait and see what happens,” he said.

Analysts outside the real estate industry aren’t either.

Seattle Bubble, a real estate blog site, uses multiple listing service data to conclude the stabilization in home prices now is seasonal and that “now is not a good time to buy a home in Seattle.”

You can watch video of this report here. It would seem that Seattle Bubble is becoming a go-to source for King 5 News on the local real estate market. It’s good to see at least one news outlet getting quotes from someone other than real estate insiders. Thanks, King 5!

Click below for the rest of this month’s reporting.

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Here comes this month’s market reporting roundup. After seven months of declining/flat prices, declining year-over-year sales in 27 of the last 28 months, and 23 straight months of an ever-increasing number of homes on the market, I think we can officially declare that the Seattle-area housing market is in a slump. Of course, while the newspapers seem to have finally caught on to that fact, don’t expect most local real estate agents to admit it. Despite all the measurable data pointing to the market getting worse before it gets better, I think we can expect plenty of upbeat predictions and bottom-calling throughout this drop.

Click below to find out for yourself.

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It’s time for another reporting roundup. Let’s see what the local newspapers have to say about January’s not-so-positive numbers from the NWMLS. Will they claim that the market “bottoming out” and about to jump into full recovery mode? Or maybe they have finally come to accept the fact that Seattle will not avoid the downturn, which is really just getting started.

Read on to find out…
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If you’ve been reading this site for more than a few weeks, you’ve probably heard of the Washington Center for Real Estate Research at WSU and its spokesman Glenn Crellin. Mr. Crellin is frequently quoted as an authority on local real estate markets across Washington State. With a neutral-sounding name like “Center” and its existence as part of a state university, the WCRER would seem to be a logical place to look for unbiased information about the real estate market. Indeed, the description of the Center on their front page is quite lofty:

The WCRER was created in 1989 by the WSU Board of Regents to achieve the university’s tripartite mission of education, research and
service in real estate. The ultimate goal of the Center is to provide a wide range of useful and understandable information, analysis and knowledge using academic methods in practical context while reporting findings in common language.

However, there is a problem. It’s not that they are not acheiving their stated goal. It’s that they seem to have an additional, unstated goal: to encourage and protect the real estate sales industry. Given that their board of trustees consists almost entirely of realtors and developers, I guess it shouldn’t come as much of a surprise. Still, when Glenn Crellin comes out and encourages agents to stifle a housing market that is good for potential home buyers, it grates on me.

Yes, the local real estate market has softened. But let’s not call it dire. That was the message Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, delivered last week to those gathered for the annual meeting of the Tacoma-Pierce County Association of Realtors.

Crellin told the group that Pierce County’s housing market contained a nine-month supply of houses for sale as of Sept. 30, making it a buyer’s market. Counsel clients, he told the agents, to keep their homes off the market, if they can, to help return balance to the market.

He also said homeowners should shift their outlook on the true purpose of the purchase of a home.

“Owners need to focus on why we’re dealing with housing in the first place. It’s shelter. They need to focus on the shelter and potential tax breaks … and not worry so much about whether in a year a house is worth $5,000 more or $50,000 more.”

Heaven forbid we have a couple of years of a buyer’s market. It’s not like a multi-year, over-the-top seller’s market should be followed by a buyer’s market of similar magnitiude and length. No, we need a “balanced market,” so agents, tell your sellers to quit flooding the market already!

Where do you see sales activity going in 2008?

In 2008, we’re going to see a moderate reduction in sales, particularly in the first half and hopefully a recovery in the second half.

What will be the major forces guiding that one way or another?

Consumer confidence. If buyers believe these are satisfactory times in which to make a purchase, the market will recover. If consumers have been convinced home values are going to drop, they’re going to stay on the sidelines and the market will stay soft.

Do you see home values dropping in the near future?

I don’t think there’s any reason to think we’re going to see a sharp decline. Median prices have leveled off in recent months. I think we’ll see limited price increases through the middle of next year.

So here he basically outright admits his true purpose: to manipulate the market by giving consumers a false confidence. Good luck with that. I love the circular reasoning here. Sales will increase, because buyers will be more confident, because they won’t think values will keep dropping, because sales will increase. Personally, I don’t think positive (or negative) spin one way or the other is going to effect the direction of the market. Thinking otherwise seems to me like believing that if everyone on a roller coaster just wishes hard enough, maybe instead of falling down that next big drop, it will somehow level off, then keep going up.

(Devona Wells, Tacoma News Tribune, 11.12.2007)