For those of you not familiar with Steve Tytler, he is a columnist for the Everett Herald (and also the owner of a mortgage company) who has been pretty much the most reasonable voice in the local media on the housing market. Despite our difference of opinion on just how things will play out, I find his views to be much more reasonable than, say, Elizabeth Rhodes.
However, we do still have our differences. Mr. Tytler’s latest article highlights a few of them:
What’s going to happen with home prices? … In a few words, I think they’re going to stay flat for the next few years.
At least his view is more realistic than the one most other local real estate insiders are publicizing. But why would home prices just “stay flat” for merely a “few years,” after experiencing such a prolonged period of above-average appreciation? Because that’s how it’s always worked before, according to Steve.
If you look at home prices over the past 40 years, there is a very predictable cycle: Home prices increase rapidly for two or three years, are followed by a slight price drop and then stay flat for the next few years. If you looked at home prices on a graph, you would see a pattern that looks like a staircase: Up, flat, up, flat and so on. … I think we are now in the correction phase and the beginning of a flat market. Home prices may drop an average of 10 to 20 percent during the correction, but keep in mind I am talking about dropping from the very peak of housing boom prices.
Now wait a minute. First he said “flat,” now he’s saying “prices may drop an average of 10 to 20 percent.” That doesn’t sound very flat to me. I find his comment to be especially odd in light of one of the things he said to me during our email exchange back in May:
I do NOT expect to see 20%+ price drops as we have seen in other previously housing markets around the country.
Hmm, interesting. So in five short months, Steve seems to have gone from “there will be no 20% price drops” to “there may be an average of 20% price drop.” Keep in mind that if price drops are averaging 20%, some homes are dropping in price by far more (and conversely of course, some by far less).
This column also marks the first time (to my knowledge) that any local newspaper has mentioned this blog by name:
I don’t buy into the “gloom and doom” scenarios being promoted by blogs such as seattlebubble.com, which has been predicting the imminent collapse of the local real estate market for a long time. While I give it credit for pointing out that many people in the Seattle media were overly optimistic about the Puget Sound real estate market during the boom, I think the bubble bloggers tend to be overly pessimistic.
It would appear that when Steve talks about promoting “doom and gloom scenarios” he’s either referring to specific commenters on this blog, or other blogs (he did say “such as”), because as I mentioned to Steve in our first email exchange, “I’ve never personally predicted a ‘major housing crash’ for Seattle.” If anyone disagrees with that statement, I encourage you to browse through the archives and find the posts that show otherwise. Steve has yet to point out any specific predictions made by this site that would qualify as “doom and gloom,” nor has anyone else.
In fact, the predictions I have posted on Seattle Bubble regarding what would happen to date have so far been fairly close to Steve’s. In his column he said:
I have noticed a fairly predictable cycle in the Puget Sound real estate market that has enabled me to be relatively accurate in guessing what is going to happen one or two years down the road. For example, in late 2005, I wrote that the housing market was peaking, meaning that it would soon start cooling off. That was at a time when the news was full of stories about how hot the housing market was and how fast home prices were rising.
Few, if any, people at that time were thinking that the party would soon come to an end.
Except of course for this blog, which was started in late 2005, when I said the following:
There has to be a slow-down sometime, and I think it’s coming fairly soon (within the next 3-5 years). I don’t know if it will take the form of a leveling off of values, or a slow decrease, or a sudden decrease (bubble bursting), but I know it is coming.
In December 2006, I wrote a column in which I said that the booming housing market had finally slowed down as I had previously predicted, and I said that there would probably be little, if any, home price appreciation in 2007 because the number of homes on the market would increase and turn a seller’s market into a buyer’s market. … Again, that prediction proved to be correct.
…we could see a true buyer’s market (6+ MOS) in King County by next November. I’m not necessarily predicting that, but it’s definitely the direction the numbers are headed. (12.07.2006)
With inventory already increasing over 20% YOY, it will be hard to increase the pace, but certainly possible. I expect to see active listings at least 15% over 2006 levels for the first half of the year. During the same time, I expect sales will decline at least 5-10% from 2006, dropping back to levels last seen in 2002 or 2003. … I guess that the King County “residential” median price at the end of this year will be between five percent down ($418,000) and three percent up ($453,200). (01.11.2007)
So where’s the doom and gloom? It sounds like so far my predictions here have lined up pretty closely with Mr. Tytler’s (and with reality). In the past I have invited Mr. Tytler to make a guest post on this blog further explaining his viewpoint, but he unfortunately turned me down. Does anybody else have any idea what he’s talking about? I appreciate the blog being mentioned in the dead tree press, but it seems that Mr. Tytler is mischaracterizing the type of content that is posted here.
(Steve Tytler, Everett Herald, 10.07.2007)
Update: Steve Tytler has responded in the comments. Be sure to check it out. I appreciate his willingness to engage in the discussion. Thanks, Steve!