August Reporting Roundup: Straw-Grasping Edition

It’s time once again for the monthly reporting roundup, where you can read my wry commentary about the news instead of subjecting yourself to boring rehashes of the NWMLS press release (or in addition to, if that’s what floats your boat).

First up, let’s have a look at the source material from the NWMLS itself. Here’s their press release: "Value-Hunters" seizing opportunities to buy more affordable homes around Western and Central Washington

Value is what’s selling in the current housing market, according to members of Northwest Multiple Listing Service. Commenting on the MLS report summarizing August activity, directors agree conditions continue to favor buyers, although one industry official cautioned a looming change in mortgage insurance premiums could erode purchasing power.

Members reported 6,037 pending sales last month, the highest volume of mutually accepted offers since April when buyers scrambled to beat a tax incentive deadline. Last month’s volume was down nearly 20 percent from the same month a year ago when members reported 7,539 pending sales, but the total was up 8.4 percent from the number of transactions (5,571) notched during July.

“It is solidly a buyer’s market,” observed NWMLS director OB Jacobi, general manager of Windermere Real Estate Company. “The market is good for sellers who price their homes correctly,” he stated. “Homes that are priced right from the start, at every price range, are selling quickly and for very close to asking price. In this market, it’s critical to price a home well from day one. If sellers plan to start high and gradually go lower, they’ll price themselves out of the market.”

Prospective purchasers may not be aware of a forthcoming change in annual mortgage insurance premiums, a change that can reduce purchasing power, emphasized J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.

“Buyers may not be aware of plans by the Federal Housing Association to raise its annual mortgage insurance premiums by 3 percent on October 4. With FHA loans accounting for about half of all home loans, the change will affect a significant number of borrowers, Scott remarked. “When you do the math on a $300,000 loan, the increase equates to an extra $81 a month or nearly $1,000 annually.” Conversely, he explained, “this effectively represents a 3 percent loss in purchasing power, which for your typical FHA borrower can make a big difference when trying to buy a home.”

Apparently Lennox thinks that if he just keeps repeating the “purchasing power” line, eventually somebody will buy it.

So did the reporters buy it this month, or did they actually look deeper than the marketing print spoon-fed to them by the NWMLS? Read on to find out!

Eric Pryne, Seattle Times: Home sales fall after tax credits expire

King County home sales fell in August for the second straight month, providing more evidence — if anyone still needs it — that the market has cooled since popular tax credits ended.

The month’s sales total was the lowest for any summer month in at least five years.

…the increase [in the median price]was due primarily to sales in the city of Seattle, where the median price rose 5 percent, to $420,000.

Prices fell in all other parts of King County. Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, said he expects prices will continue to drop in coming months in response to declining demand.

Actually I would still argue that the increase in the median price has mostly to do with the fact that most of the low-end buyers made their purchases early in the year when the government was handing out $8,000 checks for jumping into debt. The geographic phenomenon is mostly a symptom of this, not the underlying driving factor behind the change in the median price.

Gerry Spratt, Seattle P-I: Seattle housing market hitting the skids

The Seattle housing market’s slow-motion skid is speeding up.

Pending sales of single-family homes in Seattle were down more than 32 percent in August from a year ago, the fourth straight double-digit drop, according to the latest statistics from the Northwest Multiple Listing Service. Pending sales are considered the best measure of recent market activity.

…if you haven’t been paying any attention over the last two years, that is.

Closed sales were also off sharply, falling 26.37 percent from 2009 – the third straight year-over-year drop and the third straight monthly drop.

There isn’t much to this piece that isn’t just a straight re-write of the NWMLS press release. I suppose I shouldn’t be surprised, since word has it that the powers that be over at the P-I have pretty much entirely given up on SeattlePI.com actually being a news website. Apparently real news doesn’t bring in as many clicks as photo galleries of cute animals and hot celebrities.

Mike Benbow, Everett Herald: County home sales decrease

Homes continued to be a tough sell in Snohomish County last month despite a continued drop in prices.

Home sales in the county dropped by nearly 19 percent in August compared to a year ago, according to statistics released Friday by the Northwest Multiple Listing Service.

There were 642 homes sold in the county last month compared to 791 sold in August 2009.

Prices also fell, with the combined median price for single-family homes and condominums set at $260,000, a nearly 9 percent drop from the $285,000 figure of a year ago.

Locally, listing service board member Darin Stenvers, the managing director of John L. Scott in Bellingham, said he expects a slow recovery in the market.

“I believe we are going to see this same type of market through the end of the year and into first quarter 2011,” he said.

Location and price were big factors for sales in Snohomish County. With a few exceptions, sales dropped hardest in areas with the highest prices and a closer proximity to King County.

Those last three quoted paragraphs are actually interesting. We’ve got an agent on record predicting a continued slog, and some useful insights into which parts of the county are being hit the hardest. Nice.

C.R. Roberts, Tacoma News Tribune: New home listings slow

Fewer new real estate listings hit the Pierce County market last month than arrived in August last year, and the average price of active listings was considerably lower.

Still, the average price of properties that closed last month topped the figure from a year ago.

The Northwest Multiple Listing Service on Friday released figures concerning real estate activity in August in Pierce County.

Michael Robinson, co-owner and managing broker with Windermere Professional Partners in Tacoma, said Friday that he does find some encouragement in the numbers.

“August is tough. I’ve been predicting that August is tough,” he said.

Still, he found the total residential and condominium sales that have closed went from 5,125 a year ago to 5,541. “I think that’s the story,” he said.

Never mind that sales have been in the absolute gutter for the last two months. Let’s compare the year-to-date total with the second-worst year on record. That will make things look good.

Rolf Boone, The Olympian: Home sales plunge from ’09

Lingering concerns about the economy and the lack of a federal tax incentive program sent Thurston County home sales spiraling downward in August, falling 26 percent from August 2009, according to the Northwest Multiple Listing Service.

South Sound real estate professionals attributed the downturn in home sales to the expiration of a federal tax incentive program in April and to insecurity among prospective buyers about the economy and their jobs.

“Those are the overriding factors,” said Windermere real estate agent Steve Garrett about the effect of consumer confidence on home sales.

Still, Crandell chalked up the downturn in sales to a “climate of fear.”

“I don’t know if it’s rational or not, but employment is leading the bull by the nose,” he said, adding that the erratic nature of the stock market in recent weeks likely hasn’t helped consumer confidence either.

Those silly irrational buyers, hesitating to buy a home just because they don’t have jobs. What are they thinking? Don’t they know that home prices only ever go up and it’s always a great time to buy?

Another month, another mixed batch of reporting. As we have come to expect, we got another good showing from Mr. Pryne at the Times, with some surprise insight thrown in from Mr. Benbow at the Herald.

(Eric Pryne, Seattle Times, 09.03.2010)
(Gerry Spratt, Seattle P-I, 09.03.2010)
(Mike Benbow, Everett Herald, 09.04.2010)
(C.R. Roberts, Tacoma News Tribune, 09.04.2010)
(Rolf Boone, The Olympian, 09.04.2010)

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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.

11 comments:

  1. 1
    patient says:

    “this effectively represents a 3 percent loss in purchasing power, which for your typical FHA borrower can make a big difference when trying to buy a home.”

    Thanks Lennox, that’s great news. Decreased purchasing powers translates into lower prices. Another reason to wait to buy.

  2. 2
    One Eyed Man says:

    Correct me if I’m wrong, but did the APR just go up (effectively and probably also technically) by .3% on all FHA loans? And isn’t that .3% a “non-deductible” item being as its an insurance premium similar to PMI and not interest?

  3. 3

    RE: patient @ 1

    I’d Add

    It sounds like the $8000 tax credt Ponzi Scheme, buy now before the governnment tax credit goes away or in this case, before the FHA raises mortgage insurance $1000/yr on a $300K home.

    Give me a break, since when is a $8000 tax credit [IMO, it was added on with price increases anyway, like CFCs] or a $1000/yr mortgage insurance savings, gonna make buyers sign papers on $300K homes ASAP, likely devaluing many times that amount by 2011 anyway. Do they think we’re all morons?

  4. 4
    Condoseeker says:

    Here is a thoughtful article in today’s NYT –

    http://www.nytimes.com/2010/09/08/business/economy/08leonhardt.html?emc=eta1

  5. 5
    faux says:

    RE: softwarengineer @ 3

    “Do they think we’re all morons?”

    Why, yes, they do… either that, or THEY are all morons.

  6. 6
    Chris says:

    I makes you wonder if they think everyone is stupid or just enough. I wonder what happened after the Great Depression and banks as an institution had blown their credibility completely. There are anecdotal stories of people never putting money in banks again, but I just don’t know.

    Maybe we should talk to Suzanne. I heard she researched this. http://www.youtube.com/watch?v=Ubsd-tWYmZw (a blast from Seattlebubble past).

    My favorite comment from that video:
    Adam: That’s not the point

    Eve: What is the point? What! I love that tree, plus the apples

    Adam: We can die

    Eve: No we won’t. The serpent researched it.

    Serpent: This apple is special Adam, you guys can do this

    Eve: We can do this

    Adam: OK

    Eve: Are you kidding me? This is awesome!

    Serpent: Oh that’s great! Now let me get to work…

  7. 7
    CCG says:

    “It is solidly a buyer’s market,” observed NWMLS director OB Jacobi, general manager of Windermere Real Estate Company.

    It’s solidly the government’s market, and no one else’s.

  8. 8
    Racket says:

    It’s really nobody’s market. Buyers are scared, sellers are trying to dump, the .gov is bleeding cash.

    Who’s really winning in this. It seems like some people are just losing less.

  9. 9
    ray pepper says:

    Just came back from Reno Nevada where I closed on my 63k home. I asked Escrow closer what % of her business is REO and she told me 75%. WOW…

    The inventory continues to stand although the cheapies are selling. Spoke with a few investors who were working on their purchases outside Carson City and they both boasted how they ” just mail the check to the bank”. “Forget the real estate agent– we just mail the check to the bank and we write a letter-take it or leave it..AS IS…” They have now closed on 4 the last year and expect many many more. They never spend more then 80k and these homes were about 290-310k at peak. All rent for about 800-1000.

    Are they GEMS? I think so…..The cost to build these 1500 sq footers are about 120k conservatively, so buying them at 50% to that mark works well for me. I cannot find these numbers in Washington or Oregon so I just keep looking South.

  10. 10
    David Losh says:

    RE: ray pepper @ 9

    “Forget the real estate agent– we just mail the check to the bank and we write a letter-take it or leave it..AS IS…” They have now closed on 4 the last year and expect many many more.

    The things about this statement is, that it is very true. You don’t need no stinking Real Estate agent, or attorney, to buy, or sell, a house. You can walk up to any house in the world, and say you’ll buy it. If you want to write something down, fine, or the two parties can go to escrow, and tell them what you all want to do.

    You don’t need an agent. You don’t need to call redfin when you find the house you want. You don’t have to call any agent at all, you can talk to the seller, or the seller can talk to the buyer.

    Agency is a way to collect a commission.

  11. 11

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