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A Dose of Reality from the Everett Herald

I picked up this article off of The Housing Bubble this morning and thought it was worthy of a blog post.  This is probably the least rosy depiction of the local real estate market I have seen from any of our local MSM outlets in the past few years.

Selling a house? What to do now
With plenty of homes on the market, sellers must slash prices and dress up their properties.

By Debra Smith
Herald Writer

Real estate agent Teresa Sifferman ticks off the virtues of an Everett home she is trying to sell: the cathedral entryway, the chef’s kitchen, the big yard, the designer colors, the coffered ceilings in the formal dining room.

A year ago, this squeaky-clean home probably would have garnered multiple offers and a quick sale at the original $469,000 asking price.

Now it’s a different story.

The home has lingered on the market for more than two months, even after the real estate agent dropped the asking price three times, a reduction of $40,000.

Sifferman, who ran an advertising agency for 15 years, is trying every trick in her marketing repertoire to get some potential buyers in the door, including holding open houses with doughnuts, coffee and root beer floats before and after school to entice parents driving by.

She’s generated interest, but no offers so far.

“Sellers are getting panicky, slashing prices and taking lower offers — that’s what I’m seeing in Snohomish County,” said Sifferman, an agent at Prudential MacPherson’s Real Estate in Lynnwood. “At our weekly sales meetings agents are saying open houses are dead, buyers aren’t showing up.”

Welcome to a buyer’s market in Snohomish County, a place with ample choices and more negotiating clout for buyers and a reality check for sellers expecting quick, easy sales at top prices.

“Two and three years ago, the sales prices used to be the starting point. Now it’s the ending point,” said Nathan Gorton, executive officer for the Snohomish County-Camano Association of Realtors.

The change in the market isn’t a meltdown — it’s a return to normalcy after a blistering hot market, he said. In Snohomish County, home values are still going up, just not at double-digit rates. The median priced home and condominiums in the county gained 3 percent to 6 percent from this same time last year, he said.

Single-family homes alone gained about 2.6 percent in value in the county from this September to last, while condominiums appreciated about 9 percent, according to the Northwest Multiple Listing Service, which keeps sales data.

Inventory has swelled from this time last year — it’s up more than 50 percent countywide and 71 percent in Everett and Mukilteo, according to statistics from the Northwest Multiple Listing Service.

Inventory is up partly because a boom in new construction outstripped demand, Gorton said. And even though Washington ranks 49th of the 50 states in foreclosures, buyers are still skittish.

“The subprime mortgage crisis didn’t really affect us directly but it affected us psychologically,” he said. “Buyers are sitting on the sidelines worried about subprime problems.”

Homes are sitting on the market longer and sellers are hiring professional stagers.

Jan Sewell, a professional stager based in Seattle, said she is booked six weeks in advance and she is so busy right now her 15,000-square-foot warehouse is nearly empty of furniture and accessories.

“We’re doing as much as I can,” she said. “I’m so busy, I’m running out of inventory.”

click here to see the rest of the article…

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31 comments:

  1. 1
    Lake Hills Renter says:

    I still reject the notion that 5%-10% off a 75%-100% runup is a “buyers market”.

  2. 2
    TJ_98370 says:

    “The subprime mortgage crisis didn’t really affect us directly but it affected us psychologically,” he said. “Buyers are sitting on the sidelines worried about subprime problems.”

    – Is it just me, or does this statement make no sense. I would think the sellers would be worried about subprime problems and tightened lending standards.

  3. 3
    Markor says:

    If someone is buying *now*, they have reason to worry about subprime problems that could lower prices.

  4. 4
    Orion says:

    Root beer floats? Hot diggity dog! Sign me up for one o’ them “No down, no doc, neg-am ARMs” before the ice cream melts. What’s that? I can’t get one no more? Well how am I supposed to live a life of luxury while lounging by the pool? Just like they showed me on the late night teevee.

  5. 5
    TJ_98370 says:

    Got it –

    Thanx Markor.

  6. 6
    S-Crow says:

    I agree TJ. Makes no sense. I think I understand what he’s saying, but the actual statement makes no sense. Buyers are not wondering “about sub-prime.” Buyers that are in the market are wondering about how to secure financing within today’s environment.

    The credit crisis did affect the market and has had a material impact. The credit crisis is a by-product of the lending environment. It’s all connected. Speaking for myself, the change in standards has slowed refinancing transactions our office handles. The pool of credit worthy borrowers has improved and those with less than stellar credit are finding it more difficult to obtain financing either to purchase or refinance.

    The idea of “normal market” is somewhat based upon one’s own perception. To some, today’s “normalcy” is putting people out of business, forcing BK’s and other problems. Many builders certainly wouldn’t characterize this “normal market” as fun. Would the people sending me resume’s from title companies consider their current employment situation as “normal.” Again, it’s about your perception.

  7. 7
    christiangustafson says:

    $469K is a lot of money. It really is. It’s going to take some time to get prices down to sensible levels. My mother-in-law lives in South Everett, near Mulkiteo, and there are for-sale signs everywhere.

    The only good news out there? That WaMu is collapsing! HAHAHAHAHA got puts?

  8. 8
    BellevueRenter says:

    Gotta love this article from WSJ last week:
    http://www.realestatejournal.com/buysell/tactics/20071031-munoz.html
    Feature was a realtor lady from Seattle:

    Some Realtors, too, swear by the practice. Ardell DellaLoggia, a Seattle-area Realtor, buried a statue beneath the “For Sale” sign on a property that she thought was overpriced. She didn’t tell the owner until after it had sold. “He was an atheist,” she explains. “But he thanked me.”

  9. 9
    Brian says:

    I would never say that a major local company “collapsing” was good news. Note that the company has shrunk from 60,000 jobs to 50,000 jobs in the last year and a half. If those numbers shrink further, many of the positions will be based here in Washington. If the economy slows enough up here due to lay-offs and a large enough spending slow down no one wins.

  10. 10
    NostraDamnUs says:

    Can someone explain to me the direct relationship between the subprime woes that afflict the housing market and the fact that some bozo can not afford a house he thinks he should be able to so he or she or they are going to wait until doomsday hits and houses are given away for free because they’ve never seen a down cycle in a real estate market so they think hell is breaking loose now?

    Please. My mind’s too small to comprehend the direct relationship between these two things… Someone, especially some of you that have crystal balls and a yearning for the unreal….explain it to me in terms a 5 year old can dig.

  11. 11

    The subprime loans were partly responsible for the price increases in the 1st place, by allowing people who weren’t able to buy homes previously suddenly in the housing market, increasing demand for houses. A lot of these people should never have been given loans, but too many real estate agents and loan officers just saw dollar signs. Lenders threatened appraisers to meet a certain value, and that further falsely inflated values and sales prices. So this downturn feels a little different to me, in that it was more fed by fraud or something resembling fraud.
    I don’t have a crystal ball, but it’s understandable why buyers would be waiting on the sidelines now. Prices around here haven’t dropped much, as many sellers are just as delusional as the buyers. The sellers are convinced that their houses should be worth the same or more than they were a year ago, and are refusing (so far) to lower prices,and a number of agents are not recommending price drops because then it will appear as though prices are dropping and thus not a good time to buy til the freefall ends. Buyers are convinced that this is the debacle of the century and want half price houses. It’s a classic standoff. At this point I can only predict that the inventory of unsold houses will continue to grow.

  12. 12

    “said Nathan Gorton, executive officer for the Snohomish County-Camano Association of Realtors.”

    This is Slade Gorton’s nephew. I sat next to him at an auction a couple of years ago. Nice guy; very young and exhuberant.

    Snohomish and Pierce County stats might show further weakening before King.

  13. 13
    NostraDamnUs says:

    Ah… so it’s greed that’s at fault.

    Well let’s see how much greed can either side take.

    Which one do you think lasts longer – the greed for paying less or freeloading or the greed for getting more?

    I could tell you what I think, but who gives a rat’s ass about what I think. Time and time again, only one thing happens in situations like this, and there’s a fat chance anything different is about to happen here as well- prices will fall and expectations of freeloading will be vanquished – and a middleground will be established – which for a 3 million metro area lies somewhere close to 6 months from now, at best, a year down the road at worst.

    50% off? No, make that 90% off… better yet _FREE_. Yes, someone BUSTS their ass, invests their money, effort and life, so that some tightassed techie without a lick of sense about what constitutes value, can buy a house for 1/10th of the price today…

    As I said previously, keep holding the breath and the diapers on… so when it hits home, both parties (buyers and sellers) will piss their pants from the overwhelming joy of having made 100% on their home and the buyers getting a free one in a span of 6 months to a year…

    For Christ’s sake …

  14. 14
    johnnybigspenda says:

    its a pendulum…. prices went to far in one direction… now its reversing…. waiting to see how far it will swing on the way back down… likely a bit too far… all the deal hounds now get to guess when that absolute bottom will be… my guess: just when you think it will never get any better and that buying a house is a bad idea. Sounds like now?

    Actually to continue with that stream of conciousness… evidence of lower prices will continue to come out for months after ‘the bottom’. So you will say that the bottom hasn’t hit… I say that we saw ‘record highs’ well after the actual peak.

    Sane people aren’t buying houses right now…. especially not more expensive ones than they already have… and the upgraders make up the bulk of the market… therefore, if the average person doesn’t believe that its a good time to buy… refer to paragraph 1 above?

  15. 15
    synthetik says:

    >$469K is a lot of money

    after this is all said and done, I no longer think we’ll see 50-80% price reductions. Sure, in real terms we will but what about factoring in for inflation? If we’ve lost 10% or more off the value of DX in the last year – what does that mean for home prices? It means they’ve already dropped a heck of a lot more than you realize.

    I wouldn’t want to own any assets denominated in dollars at the moment.

  16. 16
    Lumpeninvestor says:

    I was intrigued by a RE sign that had added “price reduced $555,000”. Turns out it was this one: http://www.johnlscott.com/propertydetail.aspx?IS=1&ListingID=26484927

    A couple more reductions like that, I’d be tempted to buy it myself.

  17. 17
    Scotsman says:

    It’s a bubble. Prices will go down until the fundamentals are in balance, and the median home is once again priced at about three times median income. But you’ve got to have a greater perspective on the situation than just the last ten years. Spend some time studying this graph, think about what it’s saying about the last 100 years….

    http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif

  18. 18
    Scotsman says:

    If the chart above didn’t hit you, try this quote that pretty much nails the fundamentals of the last decade in the housing market.T then ask yourself how long the average Joe should realistically expect returns of 25+% on an “investment” that also provides shelter, etc.? Oh yeah, we’re all going to be rich- forever! How? Where does the money to pay for all this new “wealth” come from? Some bottomless pit? Your neighbor? The government? People can be so dumb about the most obvious things when the Pink Ponies are playing in the yard…

    “Feldstein said that Shiller’s analysis began with the striking fact that national indexes of real house prices and real rents moved together until 2000 and that real house prices then surged to a level 80 percent higher than equivalent rents, driven in part by a widespread popular belief that houses were an irresistible investment opportunity. How else could an average American family buy an asset appreciating at 9 percent a year , with 80 percent ( or eventually 100%) of that investment financed by a mortgage with a tax deductible interest rate of 6 percent (or a 2% “teaser” ), implying an annual rate of return on the initial equity of more than 25 percent? (In the end of almost infinity!)

  19. 19
    Old Ballard says:

    Scotsman could you create a link to the NYT articial.

  20. 20
    Buceri says:

    “Can someone explain to me the direct relationship between the subprime woes that afflict the housing market and the fact that some bozo can not afford a house he thinks he should be able to so he or she or they are going to wait until doomsday hits and houses are given away for free because they’ve never seen a down cycle in a real estate market so they think hell is breaking loose now?”

    Not really my friend –
    1990 – Owner of $80K condo wants to upgrade to $130K house. WalMart $6/hr employee can not afford $16K down payment. Owner has to stay put.
    2005 – Same owner of $275K condo wants to upgrade to $400K house. WalMart employee (now makes $7.80/hr.), buys condo with no money down.
    2007 – Loan resets, WalMart employee tries to refi and get laughed off the office. Looses house.

    Take this event and multiply it by 2 to 4 million = excess inventory.

    Anyone that file for foreclosure now it’s out of the market since can not qualify. Pool of buyers just got smaller.

    Prices will go down not because techies on this blog want free houses. Prices will come down because economists have indicated that never in the history of real estate there has been such a flow of irresponsible lending that produced such an immense run up in price. Plus builders building at record pace increasing inventory, and adding to high employment.

    Now we have excess inventory, tightening of credit, and an eminent recession (not if you watch Fox News – where economy looks as good as the war in Iraq).

    Nobody expects a free house; we expect a cheaper house, much cheaper.

  21. 21
    Wm Swanson says:

    Lumpeninvestor: Your late. That house in Woodinville is sold subject to inspection.

  22. 22
    notabull says:

    “Actually to continue with that stream of conciousness… evidence of lower prices will continue to come out for months after ‘the bottom’. So you will say that the bottom hasn’t hit… I say that we saw ‘record highs’ well after the actual peak.”

    Yep, due to the exclusive obsession with YOY prices, price changes are missed at inflection points. If prices went down every month for the next few months then YOY prices would still be higher. At some point soon (next few months) the YOY stats will be negative and all hell will break loose in the minds of sellers. I think this will happen a little before the seasonal inventory starts to pile on in the spring.

    YOY stats are great when the market is on a steady trajectory. Otherwise, they suck. Unfortunately, MOM stats are too volatile. Some kind of weighted moving average would seem more appropriate to me…

  23. 23

    HI NOSTRADARNUS

    You write convoluted [believe me a 5 year old couldn’t make logic out of your ramblings], but I catch irritation from you against us Bubble Brains.

    You also make it “fuzzy clear” that you believe in the fairy tale that the real estate bubble will soft land in 6 months, too bad you have no support from most of the rest of us educated Bubble Brains that totally disagree with with your “wishful thinking”; including the Everett Herald [which by the way, does have a much more honest and pragmatic editor, compared to the Seattle real estate rag news choices].

    We’ve just seen the very tip of the iceberg on subprime and ARM impacts [this is gonna go on for years and just worsen with time] and the quick fix of “just convert the Jumbos to fixed loans” sounds good if you have like 20% equity to suck from [remember, ya owe the difference between your artificially low short term Jumbo Loan interest payments and the catchup fixed interest “cash” is owed over several years too, before you can convert to fixed].

    Even if part of your soft landing scenario fairy tale [I should call it a miracle] comes true and the house prices don’t decrease 15-20%, just stay flat, the subprimes and ARMs are screwed. They simply don’t have the cash to convert to fixed.

  24. 24
    Alan says:

    Nostradumbass is a troll. It is highly recommended that you don’t feed trolls (espcially after midnight). Feed a troll once and it will follow you around forever. Unless he adds something useful to the discussion, I recommend treating him like background noise.

    The truthiness from my gut tells me that Nostradumbass is someone trying to make a point about anonymous posters — perhaps someone from the Seattle PI blogs?

    Gut based truthiness is probably not to be relied on.

  25. 25
    John says:

    I know a seller who is overpricing his home by at least $500,000. I feel that many people still don’t know the market is bad. But overall, the chatters about how home prices can only go up have died down. Now it is about how it is a good time to buy because of all the “free” upgrades that are thrown in.

  26. 26
    NostraDamnUs says:

    Alan – your truth is bigger than mine. Do you feel better now?

  27. 27
    Alan says:

    softwareengineer, point made.

    NostraDamnUs, Humor is always appreciated. That made me laugh.

  28. 28
    WestSideBilly says:

    Does anyone else find it odd that after several paragraphs of negative indicators – price cuts, slowing sales, high inventory, empty open houses, – the RE XO still insists prices are going up based on an arguably superfluous measure?

  29. 29
    NostraDamnUs says:

    Contrary to what you may think, I am not out here to poop the party. Matter of fact, if you want to call me a party pooper, I really want to poop it for both – buyers and sellers.

    Like someone else pointed out on this blog – get busy living or get busy dying. Please, don’t sit on the fence – your ass gets sore that way.

  30. 30
    NostraDamnUs says:

    softwareengineer- you are too uptight man..

    you need to lighten up.

  31. 31
    DashPoint says:

    “…dropped the asking price three times, a reduction of $40,000”

    Hmm…what’s wrong here? Obviously a paltry $40K doesn’t dent the market.

    If you follow the markets, there will be no soft landing…best to sell quickly.

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