- The @SeattleTimes tries to explain why property taxes go up when home values decline. http://is.gd/Do1WYn #
- Extreme housing affordability: Living in a rowboat under the 520 bridge. http://is.gd/Ik35Rk on @SeattleTimes via @CurbedSeattle #
- via @SeattleTimes – "Mastro agrees to $7.1 million judgment" http://is.gd/ysW25c #
- Nice homes selling fast does not necessarily mean "the market is recovering." http://goo.gl/AxHsx #
- http://goo.gl/gCcnU @Zillow's @StanHumphries talks about when he expects the bottom, and how flat things will be afterward. #
- I don't think it's really fair to call it a "Rental Analysis" when you only count MLS-listed rentals… http://goo.gl/faMBH #
- via @seattlepi's @vanessaho "Taller buildings, more housing headed for Pioneer Square, Chinatown" http://goo.gl/ObR58 #
- Legal hurdle for 3,000-unit condo complex planned for Point Wells in SW Snohomish County. http://goo.gl/0jLsf #
- RT @realestatepi: More renters 'severely burdened' in Seattle, but nation worse off http://goo.gl/MUORv #
- RT @urbnlivn: New Urbnlivn post: Two Apartment Projects Breaking Ground http://goo.gl/9TQ3S #
- Interesting observations from @GlennKelman RT @RedfinSeattle “Everything Changed in the Past Six Weeks”: http://goo.gl/5UZOC #
- via @PSBJ – "Tips for a troubled market" http://goo.gl/qrhg3 (by @WaLawRealty's Marc Holmes) #
- Major debt restructure complete at Four Seasons Hotel & Condo in Seattle – http://goo.gl/GvxlF via @realestatepi #
- Sweet, Seattle Bubble has 5 of the top 20 @Tableau vizes again in Q1: http://goo.gl/3BfAT (plus that Case-Shiller Map was mine too) #
- Nice article in this week's @PSBJ about the growing problem of HOA delinquencies. http://goo.gl/pyZ9a #
- Har har – Everett gas station 'offers' home refinancing to pay for gas http://goo.gl/Oknw7 via @KING5Seattle #
- Distressed homes/lots in 11 in-process new construction communities around Seattle acquired by a national builder http://goo.gl/ndn9E #
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“Seattle Times tries to explain” is being generous. That’s a very poorly written article.
Tim! Congrats on the multiple kudos from Tableau!
Typically, I think Stan Humphries has a good handle on understanding housing market economics, so I’m pretty certain he realizes house prices are partly a function of what people can afford to pay. When mortgage rates go up, Stan correctly points out less people will be able to afford houses at current prices. Thus, his article seems to indicate he assumes this means these people have been priced out of the market forever, as house prices continue to increase forever in the higher mortgage rate environment. But I’m pretty certain Stan realizes when less people buy homes, it exerts downward price pressure on the market. Thus, what he is really saying in the following article is he believe mortgage rates will rise at the same time unemployment decreases and wages go up.
http://www.zillow.com/blog/research/2011/02/23/to-wait-or-not-to-wait-financing-versus-purchase-costs/
Increasing mortgage rates don’t necessarily mean people will have to pay more per month for houses. What matters is, how much money in the economy is chasing the available homes for sale. What this means is, people need to stop fixating on interest rates as the catch-all factor of whether housing affordability will go up or down. It’s also important to factor in jobs and lending standards. Of course supply side is important as well, so one should factor in available inventory, looming shadow foreclosures, shadow listings, pent-up buyer demand, etc.
I hear people worried about all of the stuff that matters a little, but is, when taken in isolation, nothing more than the small picture. For instance, people are worried that inflation will take off, and house prices will shoot up to the point where they can’t afford them.
But, inflation doesn’t matter nearly as much as the relationship between incomes and inflation. If wages are not rising, and inflation continues to increase, it means people must spend more on fuel, food, etc, and they have less money to spend on rising house prices. Since people will go to work and eat before they trade up to larger better houses, house prices take a much larger hit in this scenario than fuel and food.
I’m not necessarily claiming we will experience stagflation (actually we already are to some degree, but it is probably temporary). I’m claiming, what really matters is the amount of money people possess, earn, and can borrow in relationship to the prices of homes they desire to buy. If more money flows into consumers’ hands, this money will typically chase houses and put upward pressure on prices. If mortgage rates simultaneously go up, then people can afford to pay the same amount for houses and more for the loans on the houses, meaning, their overall monthly payment will increase even if house prices stay flat (Stan’s scenario). But if more money does not flow into consumers’ hands, and mortgage rates go up, it puts downward pressure on house prices. Thus, barring another money source, such as through relaxed lending standards, house prices will most likely go down in this scenario to offset the increase in mortgage rates allowing the overall payment remains the same.
Personally, I’m not watching mortgage rates all the closely, as I see them as a relatively non-important factor. If wages go up, and rates stay the same, then house prices will go up to offset the lower rates. What I am watching, however, is the very iffy job market and trending direction of increased tightening of lending standards.
RE: Jonness @ 3 – Good balanced post. I would only add that I think a lot of the inflation we’ve been seeing is the result of energy prices and diverting farmland to energy production. Bernanke apparently said in his press conference there was little the Fed could do about that. Ignoring value of the dollar type issues, I would agree.
Thanks for putting more of these on goo.gl Tim.