"This doesn’t mean that a ‘bubble’ has burst"

Ms. Rhodes follows up yesterday’s admission that the Seattle market is actually (gasp) slowing, with a softened article full of reassurances that the market from here will surely be “steady.” She kicks off the article with a paragraph that just cracks me up.

At the beginning of the year, local housing experts predicted the Puget Sound area’s super-heated real-estate market would slow. What they couldn’t predict was exactly when or how much.

It’s now, and the drop-off has been marked.

Hmm, that’s interesting. Does anyone here recall any articles by Ms. Rhodes about the predictions of these “local housing experts”? Let’s see, what was Ms. Rhodes saying about the housing market earlier this year?

It’s also keeping King County prices climbing, putting to rest any notion that ours is a “bubble market” where prices will stall or even fall.
Elizabeth Rhodes, 04.30.2006

Oh yes, that’s right… Ours is not a market “where prices will stall.” It seems that she’s singing a slightly different tune now.

And, after rising for seven consecutive months, King County’s median single-family home price hasn’t risen since June. In fact it declined $10,000 from August to September, to $425,000. Month-to-month declines are not unusual — it happened four times in 2005 — but four months without an increase is a signal of a trend.

Plus, inventory is building and homes are selling more slowly.

Granted, it’s only a slightly different tune. There’s still a huge helping of everything is fine, nothing is ruined-style reporting.

“This doesn’t mean that a ‘bubble’ has burst and property values are declining,” said Redmond appraiser Alan Pope. “It means we’re moving to a more-normal market where buyers have more choices. If buyers have more choices, they’re less likely to pay in excess of the list price to obtain a property.”

Bill Riss, Coldwell Banker Bain’s CEO, said we are starting to see signs of a slower market. A real-estate veteran who has been through many housing cycles, Riss says he’s not upset by the cooling because “there’s nothing to push it dramatically down.”

“All the mechanics are in place to have a steady market,” he said.

Those mechanics include strong local job growth, which feeds housing demand, and moderating mortgage rates.

There’s nothing to push prices down? What about the turning of mass psychology against housing? What about the fact that the median home price in the county comes in at about seven times the median household income? What about the rapidly increasing inventory? What about the California equity river drying up? What about boatloads of resetting ARMs?

Yeah, we’re all set for “a steady market.”

King County houses and condominiums combined have appreciated 8.6 percent in the past year, below the regional average.

In the central Puget Sound region, Pierce County reported the highest annual price increase — 12.9 percent — followed by Snohomish County’s 10.4 percent. Kitsap County’s annual appreciation came in at less than 1 percent.

While it’s true that Kitsap’s “appreciation” of -0.33% (yes that’s negative zero-point-three-three percent) is “less than 1 percent” that kind of word-twisting makes it seem as though Ms. Rhodes just can’t quite bring herself to admit in print the fact that home prices in a nearby county have actually decreased year-over-year.

Pauling says the slowdown is a relief for buyers.

“We have more inventory than we’ve had in the past, so buyers can pursue the home that meets their needs without having to make a decision based on fear that someone else is going to get their house,” Pauling said. “They can actually make a thoughtful decision.”

Compared with a year earlier, September buyers had 32 percent more properties to choose from in King County — some 9,890 properties compared with 7,496 in September 2005.

Oh, I get it. So now suddenly we’re on the side of the buyers. That’s cute. After months and months and months of “rah-rah double-digit appreciation” reporting, I’m finding the sudden concern for buyers hard to swallow.

At leaset she’s finally admitting that the market has slowed. She’s only about five months too late.

(Elizabeth Rhodes, Seattle Times, 10.07.2006)

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.


  1. 1
    S Crow says:

    The psychology of real estate, Snohomish Style:

    I lost the game of “Stratego” to my daughter about an hour ago. So, feeling sorry for myself, I wanted to drown myself in a nice bowl of ice-cream, which also sounded good to my boys. My wife sent me to the store for ice cream and some ‘David’s Sunflower Seeds.’

    As I check out at the store, the Seattle PI paper is face up along with my goodies. The headline say’s, “Seattle housing market slows.” The checker glances at it and comments on it, not knowing I’m in the business. She says, “don’t believe it!” I say, “hmmm, really?” Just then the gal next to me say’s, “yeah, I’m in the business (presume agent) & that’s bunk, Boeing just signed two contracts (I have no idead what she is referring to) and 400,000 people are moving to the area! There’s building going on everywhere and I can’t hardly get through Monroe these days.”

    At this point, I’m so stunned at what I just heard, all I can do is meekly respond as I leave the counter, “400,000? Gosh, that’s like four cities of Everett.” I dont’ look back , because I’m afraid that I might see myself getting the Bird. I walk out the store thinking “did I just hear what I think I heard?”

    Notify Gov. Gregoire! I’m certain she’d love to know that 400,000 people are coming to the area. An economic Hail Mary! Notify Centex and DR Horton to close all communities across the South & West and focus on exercising their land options in Washington’s Pierce, King, Snohomish & Whatcom Counties.

    Sorry to be so sarcastic, but I can’t help myself.

  2. 2
    The Tim says:

    I bet she saw this article or one like it, and translated “the mayor wishes we could add 350,000 people by 2040” into “400,000 people will be moving here in the next five years.”

    People have such amazing reading comprehension skills.

  3. 3
    synthetik says:

    The MSM media will always be corrupt to one degree or another as long as it is supported by advertising.

    If the publisher of the newspaper also owns a diamond retail store is he/she going to allow an article about the upcoming movie “blood diamonds”? Or are we more likely to see a piece about how many months’ worth of salary we should spend on what is essentially gravel?

    I was playing Frisbee golf with a new friend earlier this week and asked “how does a place like this make money?” He laughed “Do you always think someone has their hand in your pocket?”

    Why, yes actually.

    I think one of the major problems with media is that most don’t SEEK out news, it finds them. “push media”. The quick sound bites on CNN, front page news or morning radio news. Most of that “news” is actually just marketing – it’s much more “fake” than the Daily Show could ever be. If people bothered to “pull” (seek out) information they might actually get some truth. Instead this stuff just goes into the collective unconscious and we form an opinion without ever having thought about it. (housing never goes down)

    That’s why this blog and others like it are so amazing. We know The Tim has absolutely nothing to gain financially from this endeavor. We know we’re being given the truth.

    Thanks Tim! ;)

  4. 4
    emailers2 says:

    Who is Ms. Rhodes? Writer, realtor? What is her background?


  5. 5
    john_law_the_II says:

    what is comical is all of this just played out, not 6 years ago like the tech boom, but less than a year ago on the national stage.

    “It means we’re moving to a more-normal market where buyers have more choices.”

    I bet if we looked that up, lereah was saying it last year.

    (We’re going through a period of adjustment. As home sellers recognize a return to more normal rates of price growth, some that have been holding out for higher prices will be more willing to negotiate terms that are acceptable to buyers but still provide them a solid return on their investment.)

    (David Lereah, NAR’s chief economist, said the number of homes on the market has been improving nicely. “The cooling from overheated sales conditions in recent months is helping to bring inventory levels up to the point where buyers have more choices than they’ve seen in the last five years,” Lereah said. “Annual price appreciation is still running at double-digit rates, but the cause of those sharp increases is going away. As the market readjusts, price appreciation should return to more normal rates of growth this year.”)

  6. 6
    EconExchange says:

    “Kitsap County’s annual appreciation came in at less than 1 percent.”

    Ummm, Actually since the prices DECLINED….doesn’t she know that appreciation didn’t come in below 1 percent? Therefore THERE WAS NO APPRECIATION. Just DEPRECIATION!

  7. 7
    synthetik says:

    >Who is Ms. Rhodes

    she’s the talking head for the Real Estate Industrial Complex here in the Seattle area.

    Just do a google search for “elizabeth rhodes” and seattle and you’ll find all the pom-pom articles you could ever want.

  8. 8
    stephen says:

    Emailers2, the RE section in the Times is an advertising section, people buying houses go there presumably to be SOLD a product. Elizabeth Rhodes is the opinion front for this RE section and her job is to put a positive spin on the local RE market. In order to do her job in a down or declining market she cherry picks facts about the market to soften any negative aspects of the market.

    Since she does her job very well she provides the folks on this board a range of comments to debunk. I doubt very seriously if she truly believes the jest of her pieces but she probably likes having $ directly deposited into her bank account every couple of weeks…

  9. 9
    synthetik says:

    10-07-2005 “home cool down? not in this market”

    02-23-2003“…the public shouldn’t conclude that King County’s real estate is a bubble that’s either burst or is about to. A bubble happens when prices climb so high that home seekers can no longer afford to buy.”

    07-07-2005 “Despite conjecture that the local housing market is a high-priced bubble ready to burst, key signs of weakening are nowhere to be seen, according to homes-sales figures released yesterday by the Northwest Multiple Listing Service.
    When a bubble bursts, prices decline; the number of homes for sale grows; and it takes longer to sell them.”

    04-07-06 “Still, he doesn’t expect buyers to give up because “the ultimate American dream is owning your own place. And people see the longer they wait, the more it costs because properties are continuing to go up in this market,” Conlan said.” (good way to end on a positive note)

    02-18-2006 “Median home prices could shoot up 30 to 40 percent over the next two years.”

    05-31-1998 “Job growth Slows, but real estate is hot as ever”

    04-07-2005 He says the healthy economy and lack of buildable land will keep prices from falling.” (end of article)

    and a very blatant marketing article for Condo “2200” by Lizzie Rhodes.

    The appeal of having everything just steps away 04-03-2005.

    I wonder how much they paid her for that?

  10. 10
    Kaleetan says:

    Why would you be upset at MS Rhodes? Is she publishing any Facts that are incorrect, or is she just giving her opinion on what is happening? Of course the PI and Times have a cozy relationship with the Real Estate Industry. Yes, the newspapers might lean toward writing more positive stories, but she hasn’t said anything that was not true.

    The newspapers primary customers are home-owners.

  11. 11
    emcityjill says:

    Sooo true. I rent, and have never actually picked up a newspaper. Which is precluded by the fact that I can’t read. Which might correlate with the fact that I rent. (insert sarcasm here)


    Hey! I’m back from Spain! Interesting how things can suddenly change in just a few weeks. Where’s Meshugy in all this down market madness? Crunching numbers in desperate hope that it aint so?

    More on topic: if buyers have a lot more choices, then why would they be compelled to pay above asking for a certain property? Isn’t that counterintuitive?

    On another note: RE Investor Eric is pretty desperately trying to unload his QA property…it’s the least expensive house in the area, and it’s a d-u-m-p. You can Zip it.

  12. 12
    synthetik says:

    The media lies to us by presenting half truths, using different words or twisting meanings.

    wake up.

  13. 13
    Grivetti says:

    Is she publishing any Facts that are incorrect, or is she just giving her opinion on what is happening?

    No, she publishes no real facts at all except monthly inventory/median.

    Instead she’ll say things like, “Empty nesters and young professionals are driving the hot-hot downtown condo market”, which is about as valid as saying, “Xenu’s unleased the thetans from Mt. Ranier to drive up the downtown condo market” if you have no demographic/financing data to back it up, but instead we get speculative musings masquarading as facts.

    This is all the same bubble specter we get when shills like Liz Rhodes say “the robust local economy should keep the housing market sizzlin'”, again, a statement with no fact or statistical analysis to back it up. And people wonder why more and more individuals are getting their news from Blogs.

    Go Tim, Go!

  14. 14
    Kaleetan says:

    “Instead she’ll say things like, “Empty nesters and young professionals are driving the hot-hot downtown condo market”

    What has been driving the redhot downtown condo market?

    Are retiring boomers not moving downtown?

    No Young professionals live in belltown?

    Something must be driving the market downthere. That statement sounds pretty true.

  15. 15
    Crashcadia says:

    Once this asset bubble plays out, the disillusioned masses that are taken to slaughter without a clue, will cancel their newspaper subscriptions for lack of funds.

    The rest of us, who are in the know, will simply get fleeced and will cancel our newspaper subscriptions out of disgust.

    Newspapers are brain dead and have been for some time. They have been kept on life support by plugs for the REIC and other consumer driven industries. The plug is about to get pulled.

  16. 16
    Grivetti says:

    Are retiring boomers not moving downtown?

    No Young professionals live in belltown?

    Something must be driving the market downthere. That statement sounds pretty true.

    I dunno? I’m sure there are, but ‘pretty true’ is an oximoron so I ain’t buying none of it…

    There’s no data to provided to the consumer to determine what’s driving the market, there’s never been a breakout of numbers. Could be specuvestors in some smokey convention center off the Jersey Turnpike fronting the cash for all anyone knows.

    What’s driving the markets the end of the road for the housing bubble, the condo ‘boom’ is the swan songs of housing bubbles, the last dying gasp and there’s a plethera of examples around the country to prove it…

  17. 17
    synthetik says:

    >Something must be driving the market downthere.

    Take a look at every major city in the USA. The trend has been way up toward downtown living. It’s chic, it’s hip, it’s where the best crack can be found…

    [b]crashcadia[/b] the elder said… “Newspapers are brain dead and have been for some time. They have been kept on life support by plugs for the REIC and other consumer driven industries. The plug is about to get pulled.”

    that is SO true. you are SO money!

  18. 18
    MisterBubble says:

    What has been driving the redhot downtown condo market?

    I don’t grant your premise. The downtown condo market is no more or less “redhot” than any other housing market in Seattle.

    Loose credit is driving those markets, and there’s no reason to believe that it isn’t driving this one.

    Are retiring boomers not moving downtown?


    No Young professionals live in belltown?

    Sure they do.

    Something must be driving the market downthere.

    No kidding.

    That statement sounds pretty true.

    Because it’s a truism. Funny how that works….

  19. 19

    […] new, right? It’s pretty much more of the same—what we’re used to reading whenever the local rags start talking about real estate in the greater […]

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