Seattle Bubble

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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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)

If you thought last month’s reporting was fun, just wait till you get a load of the goomy tone of the latest wave of articles.

I find it interesting that the NWMLS chose to release the statistics so late in the day yesterday, on the fourth business day of the month (rather than the fifth, which has been the recent standard). It’s probably just a coincidence, but I can’t help wonder whether it might have something to do with the fact that the election results are sure to grab all the headlines today, pushing the nasty real estate news out of the spotlight…
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Okay, the biggest real story this month: plummeting sales, resulting in a record-high “months of supply.” The fake story: dropping median prices—which is most likely at least partly an illusion (so far), which can be largely attributed to… you guessed it: the plummeting sales. Let’s see what the news outlets chose to focus on…

There are just too many good quotes in this month’s articles to keep this post short, so click below to read the whole post.

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Here’s the usual roundup of the NWMLS press release echo chamber for this month. As expected, most of the focus is on price, price, price. As long as the median price keeps going up, expect more of the same.

Bibeka Shrestha, Seattle Times:
Median price for house in Seattle tops $500,000

The median price for a single-family home in Seattle topped the half-million-dollar mark for the first time last month, the latest sales figures show.

That price, $501,000, was up 10.1 percent from last year’s $455,000, the Northwest Multiple Listing Service reported Monday. (Median means half the houses sold for more, half sold for less.)

The report is unwelcome news to those already priced out of the local housing market.

A worker would have to earn $57 an hour — about $119,000 a year — to afford that Seattle home, according to the Seattle chapter of the Urban Land Institute.

The significant drop in the number of sales is not mentioned at all in the Times article, and she only makes a passing comment that “number of homes on the market continued to climb.” Bravo, Bibeka, bravo.

Aubrey Cohen, Seattle P-I:
We’re still buying in Seattle — with caution

As buyers hear about a deflating national home market, they’re being more cautious in Seattle, where prices haven’t declined but the market sure has slowed.

“There are a lot of first-time buyers who are holding onto the belief that the market’s going to change, so they shouldn’t buy,” Windermere Real Estate agent Jim Patterson said at an open house in West Seattle.

Buyers’ reticence and difficulties getting a loan — or at least one with a desirable rate — are obvious in August statistics the Northwest Multiple Listing Service released Monday.

Seattle’s closed sales were down nearly 11 percent from August 2006 — the first yearly drop since February and the largest since October. That was better than the 19 percent drop in King County as a whole and the 17 percent decline across the 19 counties the listing service covers statewide.

Pending sales, which can be a better indicator of recent activity, were down 17 percent in Seattle and 23 percent in King County and the 19 counties as a whole. The number of homes for sale, meanwhile, shot up about 50 percent in Seattle and King County, and 46 percent in Western Washington.

Mr. Cohen wins this month’s coveted “most balanced reporting” prize, by actually bothering to mention the skyrocketing inventory and suddenly-plummeting sales—right at the beginning of the article, even. I love the quote from the Windermere agent, who appears to be implying that “the believe that the market’s going to change” is somehow naïve and foolish, rather than a reasonable conclusion supported by the available data.

Devona Wells, Tacoma News Tribune:
Pierce County home prices up

Otherwise, sales activity in Pierce County – and around the Puget Sound area – looked much like it has for months: More homes for sale with fewer pending and closed sales compared with the same month last year.

Real estate agent Bob Niehl, with Spanaway-based Crescent Realty, said the apparent contradiction between rising prices and sluggish sales can be attributed to the best houses selling at the best prices.

And some sellers who see the state of today’s market are sitting it out, he said.

“A lot of sellers are looking at this and think, why take a beating? If you don’t have to sell, why sell now?” Niehl said.

Ms. Wells’ article was fairly tame, and even highlighted median price declines in neighboring Thurston County. The bottom line down in Tacoma seems to be a market with very unsure footing. Reminds me a little bit of a sputtering biplane, hovering through the air on momentum.

Michelle Dunlop, Everett Herald:
Home sales sag, but prices remain up

The number of homes listed for sale in Snohomish County mushroomed in August amid slow sales, though real estate prices remained slightly above this time last year.

In case there was any doubt the hot market for homes has cooled, consider this: There were almost 63 percent more single-family houses and condominiums on the market last month than a year ago, according to the Northwest Multiple Listing Service figures released Monday. Sales dropped 25 percent compared with the previous year.

And the days of double-digit percentage rises in home prices every year may be gone, too. In August, the combined median price for houses and condos was $352,475, about 4 percent above August 2006.

Awesome. Yearly double-digit price increases may be gone. The article ends with the usual quote from a local agent: “I think it’s a great buyers’ market.” Great, indeed.

Rolf Boone, Olympian:
Home sales see upturn

Thurston County home sales improved in August but the sales totals still didn’t match the record number of homes sold in August 2006, the Northwest Multiple Listing Service reported Monday.

Increases in home and condo sales values also flattened out last month while inventories of unsold homes continued to grow.

Last month, 439 houses and condominiums sold in Thurston County, down from 522 sold for the same period last year, the data show.

Although home and condo sales in August reached a new high for the year, it resulted in a 16-percent sales drop when compared with last August’s sales totals.

The combined house and condo median price remained essentially unchanged in the year-to-year period at $269,000, according to the data.

For those of you keeping score at home, what Mr. Boone is so artfully avoiding stating outright is that the SFH + Condo median in Thurston county actually decreased from last year, to $269,000 from $269,900 last year (and the high of $275,174 in July). Pretty hard to spin that one.

Overall, it’s really getting interesting out there around the Puget Sound.

(Bibeka Shrestha, Seattle Times, 09.11.2007)
(Aubrey Cohen, Seattle P-I, 09.11.2007)
(Devona Wells, Tacoma News Tribune, 09.11.2007)
(Michelle Dunlop, Everett Herald, 09.11.2007)
(Rolf Boone, Olympian, 09.10.2007)