2007 Predictions

[Lake Hills Renter]

[Erik]

Heh. It's kind of funny to say that we feel pessimistic about the prospects for a major market decline not happening, but I feel exactly the same way. The current market is a bad thing and the sooner it corrects the easier the correction will be and the sooner sanity will reclaim its throne (at least in this market).

As for predictions...well, gosh. Chang Mook Sohn, the state's chief economist, has been predicting some form of decline in the market for years. Eventually, he's going to be right and in a big way. But he'll have ended up calling it wrong (in many people's eyes) a lot of times by then. We're in the same boat.

Right now there's a bit of a spurt as the folks that are anxious to cash in list for maximum dollars and sell to some of the folks that are going to buy no matter what. As the year progresses, I guess that I sort of expect to see fairly stagnant prices at least through the summer, hopefully with relatively low sales volumes and building inventory. Then we may see the first wave of serious price drops in the fall.

I freely admit, however, that I could be a year off or more.

[T, V & Mr. B.]

I actually think things will begin sooner than most. Only becuase the meme is now beginning to hit the area and the snowball effect will begin to take place. I watched it happen in a matter of weeks in San Diego, with lots of talk, no drop, lot's of talk, no drop, and then BOOM!!!!! things started to get ugly and have gotten substantially worse.

Once the MSM even starts to hint about such things, which they are, people will realize what is happening. And then of course it will be blamed on the MSM for purpetuating the self fullfilled prophecy.

[Erik]

T, V, & Mr. B:

I certainly hope that you are right! The REIC is certainly pushing their message hard in their multiple-section paid advertisements in the Seattle papers. It does suggest a certain desperation on their part.

Anecdotally, there are quite a few houses sitting on the market in Tacoma for long periods before selling (or not). I haven't seen any statistics for Tacoma/Pierce Co listings, but I do wonder if Tacoma will prove to be a sort of canary in the ever-so-deep hole in the ground that this lemming market has dug.

[B-hamster]

Up north here in Whatcom County it seems to be a microcosm of what's going on nationally with excess supply, etc. But we all know it's different up here because of the Olympics in 2010 in Vancouver and the low cost of housing versus Seattle, and ya know with the muddy beaches of Birch Bay being touted as the next Santa Barbara (that one really made me laugh).

At any rate, you I notice on my ride to work, which takes me many different routes, many more homes on the market. Last summer when we bought (yeah, almost at the peak) the houses for sale were few and far between. And now I see For Sale signs sprouting like mushrooms after a spring rain. And I live in the low-priced side of town. I know the mid- and high-priced sector of the market should be weak, but not the 'starter' homes. (I love the term 'starter home.' My wife and I both are forty with college degrees and we moved into a 1929 home built new for a coal miner. But 1,000sqft is enough for us.)

Same thing can be said of Ferndale, Lynden...everywhere both in the city of Bellingham and outside there is an overabundance of homes for sale. And more being built all the time. I work with a bunch of builders and things are not slowing at all up here. And I won't even start on the condos.

[biliruben]

A cut and past from comments last month, updated with Jan actual:
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I'll take a wild stab at a very specific prediction. This is a fool's game, but as long as I have little skin in it...

My prediction is that we see an initial slight increases in price in March and April, flattening in mid-summer as we start to fall into a national recession, then a huge up-tick in inventory, and a decline in prices YOY, inflation adjusted by July. We see our first nominal YOY decline by September.

I'll even throw out some actual for SFH (res):

Inventory, median King County price, month:

5423, 440K, Dec (actual)
6100, 450K, Jan (est)- 5932, 429K (act)
6800, 445K, Feb
7500, 455K, Mar
8200, 455K, Apr
9100, 450K, May
9200, 440K, Jun
9300, 435K, Jul
9900, 430K, Aug
10500, 410K, Sep
10500, 395K, Oct
9000, 390K, Nov
8500, 390K, Dec

I probably will be way off, but I thought I'd take a shot!

I urge others to do the same. Ardell? Rhonda?

[rentalbliss]

[The Tim]

[downpayment]

[biliruben]

[Matthew]

[T, V & Mr. B.]

[biliruben]

[refractedthought]

Because the subprime market is imploding a lot faster than I thought it would, I'm actually inclined to say we could see some dramatic results fairly soon. Tightening of lending standards affects everyone, so that six-month lag might disappear overnight (not literally, but you get the idea).

I'm going to second the prediction that March will be Seattle's last boom month. After that, sales are gonna get pretty anemic and must-sell inventory will skyrocket.

[JD@Preview]

It's going to slow down for a variety of reasons; we've price entry level housing out of the reach of first time buyers and if that first domino doesn't fall neither do the ones further up the chain. Expect this to be exascerbated by the tightening of creative financing. Sellers who bought in the last 2 years expecting exorbitant appreciation may find themselves upside down if their fortunes turn. I expect to see a lot of short sales as long as deficiency judgements don't become legal in WA. Sellers not in distress I expect to try turning their property at a price consistent with the growth they saw when they first bought. They'll be aided in this fantasy by inexperienced agents who only know how to do business in a boom market. The result will be more price reductions, more time on market, more cancellations and more expirations. Prices will come down (or at least not rise very quickly) because the law of supply and demand doesn't account for the "sticky pricing" phenomena in real estate. Unlike with widgets, sellers just take the property off the market.