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.
Elizabeth Rhodes, Seattle Times:
Let the buyer rejoice: Home sales, prices fall
Reflecting mortgage-market turmoil and buyer uncertainty, the median selling price of King County houses has fallen two months in a row. It’s now back to where it was last spring — a sign that prices are softening as the number of for-sale homes continues to build.
King County’s median single-family home price last month was $450,000. That’s less than March’s $457,500 median and almost $32,000 less than this year’s high of $481,750, set in July…
More striking, however, is the pronounced oversupply of for-sale houses. Every month since May, the year-over-year supply has increased 40 percent or more from the same month in 2006.
Meanwhile, sales are lagging. Offers were accepted last month on 1,541 King County houses — a 32 percent drop from the numbers in September 2006. Likewise, the county’s condominium offerings were up (a startling 74.2 percent, including new condos), while pending sales were down 26.7 percent.
Despite this, King County’s prices are up over the past year. House prices were up 5.9 percent last month, and condos up 14.8 percent, compared with a year earlier.
Today’s down market has different dynamics. One factor is house prices that overshot wages, pricing out a significant number of buyers.
Another is the severe turmoil in the mortgage markets, which has locked out buyers with no down payments and spotty credit, and has made it more difficult for those seeking mortgages over the so-called jumbo-loan threshold of $417,000.
The latter issue, in fact, may have played a role in September’s median-price rollback by limiting sales of high-end homes. That would have the effect of lowering the median price.
To her credit, Ms. Rhodes did actually mention the serious slump in sales, and how the change in sales is likely affecting the median price. Of course, the huge drop in sales was given merely a passing mention, while most of the article obsesses over the median price. Pretty much business as usual at the Times.
I think this was my favorite quote from the article, from Windermere agent Paul Stickney:
“I realized there’s way too much inventory, or people are expecting there’s way too much inventory,” the agent said. So he doesn’t blame buyers for taking a wait-and-see approach. Since 2000, home prices have increased far faster than wages.
“Now I think there’s some correction to get those two things back in sync,” Stickney said.
I’m not sure Mr. Stickney realizes what he is implying here. For home prices and wages to get “back in sync,” there’s going to be a lot more price reductions than we’ve seen so far…
Aubrey Cohen, Seattle P-I:
Seattle home prices slip from last year
The median price of homes in Seattle dropped last month from a year earlier for the first time since at least 2002, according to statistics released Friday by the Northwest Multiple Listing Service.
It’s just a $50 dip — 0.01 percent — to $399,950, but the numbers here finally follow the trend of the national real estate market, which has been slowing for months.
One month of lower prices doesn’t mean much, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.
“I think it is suggestive that there is some real softness in the (Seattle) market,” he said. “But at the same time, I think we’ve got a more resilient housing market than in many parts of the country.”
Matthew Gardner, a Seattle land-use economist who works with developers, does not put much weight on the Seattle median-home price, particularly because it excludes most sales of new condos, he said Friday.
Real estate professionals said some potential buyers are jittery, while some sellers have unrealistic expectations for prices.
“I think the media has kind of scared them,” said Kari Scott, an agent with John L. Scott Real Estate, referring to stories about the slowing market, particularly nationally.
Patrick Klimczyk, who moved to Seattle from the Skagit Valley six weeks ago, said he worries that he might buy just before prices start dropping, or that prices could continue to climb out of his reach if he waits.
“It’s a crapshoot,” he said.
Klimczyk said he put in offers below asking price on two homes in the past month.
“The owners would not accept my offers or meet me halfway,” he said, adding that they subsequently lowered their prices, by which time he had lost interest.
Yeah, “the media” has scared buyers out of the housing market. That’s the ticket. Not the actual reality of a slowing market, and declining prices… the media. Also I love how suddenly when the median starts declining, Crellin and Gardner jump on the “the median is meaningless” bandwagon. Welcome aboard boys. Enjoy the ride down.
Devona Wells, Tacoma News Tribune:
Home prices take rare tumble
Pierce County home prices dropped in September for the first time in years – the only Puget Sound-area county to see such a decline – as sales activity continued to ramp down.
The median home price, including houses and condominiums, declined 2.4 percent year-over-year, from $276,670 in September 2006 to $269,925 last month, according to figures released Friday by the Northwest Multiple Listing Service. Median means half sold for more and half for less.
Historical data show monthly Pierce County price increases since at least November 2003.
Sales activity also lagged, with 40.5 percent fewer homes sold in September compared to the same month last year.
The price drop and sales slowdown accompany a growing array of incentives for buyers and their agents, including cars, discounted closing costs and furniture shopping sprees.
Agents on Friday, however, largely portrayed Pierce County’s one-month price decline as more anomaly than trend and what’s to be expected in a market normalizing after the boom years of 2004 and 2005.
Ms. Wells did a fairly good job of simply reporting the not-so-pleasant facts about Pierce County’s market. I kind of like the way she presents the stark data, then discusses the denial that agents are experiencing. “Normalizing.” Heh.
Mike Benbow, Everett Herald:
Home sales down 31 percent in Snohomish County
A day after Forbes magazine declared the housing market in the Seattle area the most stable in the nation, local statistics showed that home sales in Snohomish County had dropped 31 percent from a year ago.
Is there a conflict here?
No, say the magazine and local housing officials.
“It looks like the market has kind of taken a deep breath and just corrected itself a little bit,” said Nathan Gorton of the Snohomish County Camano Board of Realtors.
As for price appreciation over the past year, Gorton said 4 percent is nothing to sneeze at. “I’m fine with 4 percent,” he said. “I hope to see single digits right now. It’s a good time to be a buyer right now.”
Gorton was glad to see the Forbes piece because he thinks there’s a lot of confusion of the local market because of all the national stories about a mortgage meltdown in much of the country.
“I talk to a lot of buyers’ agents whose customers are saying they just want to sit back right now because they don’t think it’s a good time to buy a home,” he said. “They think, ‘Oh my gosh, the market is falling apart.’ Nothing could be further from the truth.”
Oh, I don’t know. I can come up with something that’s further from the truth… how about “it’s a good time to be a buyer right now.”
The little blurb is all I could locate from the Olympian. If anyone has a link to the usual full write-up, let me know and I’ll add it.
It will be interesting to watch the increasingly ridiculous gyrations of local real estate salespeople as the market continues its downward path, and they come up with more and more outrageous statements that fly in the face of reality. It looks like the bubble deflation show has finally rolled into town.
(Elizabeth Rhodes, Seattle Times, 10.05.2007)
(Elizabeth Rhodes, Seattle Times, 10.06.2007)
(Aubrey Cohen, Seattle P-I, 10.05.2007)
(Devona Wells, Tacoma News Tribune, 10.06.2007)
(Mike Benbow, Everett Herald, 10.06.2007)
(Rolf Boone, Olympian, 10.05.2007)