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).
To kick things off, here’s an excerpt from the NWMLS press release:
Northwest Multiple Listing Service members reported solid gains in pending sales (up almost 21 percent from a year ago), consistent demand in many price ranges, a shortage of homes in a few categories, and some resurgence of move-up buyers.
Despite those encouraging indicators, prices were down almost 11 percent area-wide compared to a year ago and brokers say there is persistent “hesitancy” in the market.
“fire sale” by Flickr user zimway2k
“All the pieces (for a recovery) exist — low interest rates, lots of choices, increasing loan availability as well as purchasing programs, yet as a whole the housing market has stalled in many places,” said Northwest MLS director Frank Wilson.
“What is holding back the housing market has little to do with houses,” Wilson stated, pointing to uncertainty in the stock market and volatile global economies, along with a more complicated, prolonged transaction process and lack of job creation.
Pricing data should be viewed with some misgivings, said Joe Spencer, president and COO of John L. Scott Real Estate. “Headlines stating home values have fallen by double digits compared to last year don’t always reflect what is really happening,” he explained, noting factors that can influence prices.
“Not every home has dropped 15 percent in value,” Spencer insists. He attributes much of the decline to a combination of factors, including shifting demographics and the influence of distressed properties, which he said may be as high as 40 percent in some areas. More investors and first-time buyers are purchasing in the more affordable price ranges, which results in a downward shift of median prices, Spencer explained. Also, he noted, distortions caused by REO (bank- or other lender-owned) and foreclosed properties contribute to price depressions.
“When you adjust for these conditions and compare ‘standard resale homes’ the change in home values is much less drastic,” Spencer emphasizes. He believes a more accurate reflection of price declines for the Seattle area is around 6 percent, citing research by CoreLogic, Wells Fargo Securities and other analysts.
You know it’s bad when even Joe “The Perfect Buyer’s Market” Spencer‘s ultra-massaged data shows price declines of six percent.
Read on for my take on this month’s local news reports.
Eric Pryne, Seattle Times: Puzzling plunge: 15% year-over-year drop in county home prices
King County home prices tumbled to a new post-boom low in October, and no one is sure exactly why.
As real-estate insiders offered a host of possible explanations for the drop Thursday, they also debated whether it’s a harbinger of a new, long-term decline — or a one-time statistical blip.
Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, said he expects prices will continue to slip for another year.
“There’s little pressure on buyers to be active, especially with interest rates not expected to rise for some time,” he said. Mortgage rates have been at historic lows — even dipping below 4 percent for a 30-year term — for much of this year.
But Tim Ellis, who writes the real-estate blog Seattlebubble.com, said he’s not making too much of the October numbers.
“One month does not a trend make,” he said. “I’m inclined to take a wait-and-see approach.”
Wait, did I just read that right? Glenn Crellin and I disagree, but he’s the more bearish one? Welcome to bizarro world. Later in the article, Eric gets to what I think is really going on:
Ellis said that while Redfin’s research also shows a big year-over-year drop in the median sales price last month, the price per square foot fell much more modestly.
That suggests “for whatever reason, people bought smaller houses,” he said.
The geographic mix also shifted. Listing-service statistics show King County’s lowest-priced areas — Southwest, Southeast and North King County — saw the biggest increases in sales last month. They also experienced the biggest price drops, and that brought the countywide number down.
Aubrey Cohen, Seattle P-I: King County’s median home price dips below $300,000
The median sales price of a King County home just dipped below $300,000 for the first time since September 2005.
The median price was $287,500, including houses and condos, in October, the Northwest Multiple Listing Service reported Thursday. That’s down 7.3 percent from September, 17.9 percent from October 2010 and 32.4 percent from a peak of $425,000 in July 2007.
Crellin said the drop in the conforming loan limit was a factor, but “maybe a little overstated,” by Jacobi. He saw a bigger role for sales of distressed homes and cash purchases by investors, adding that sellers may accept a lower offer that’s cash, because they know that financing won’t be an issue.
Also, sellers of more-expensive homes are starting to cut their prices, Crellin added. “It’s the combination of all these things hitting at once.”
I think Crellin is spot on here, actually. I seriously doubt that the lower conforming limits were the primary explanation for this one-month drop. The mix of sales is just shifting toward the cheaper homes. It’s so odd—when something is less expensive, more people want it. Who could have guessed.
Mike Benbow, Everett Herald: Home sales increase by 43 percent
Home sales in Snohomish County were solid in October, but prices continued to drop significantly from a year ago, the Northwest Multiple Listing Service reported Thursday.
There were 828 homes sold in the county last month, a 43 percent increase from the same time last year. The county’s percentage increase in sales was the highest for the listing service territory, which covers most of Western Washington.
The strong sales and strong pending sales, which rose 29 percent last month, were a good sign for the housing market. But other indicators showed the local market is anything but healthy.
Median home prices in the county, for example, dropped nearly 15 percent in comparison to October 2010. That sent the combined median home price for single-family homes and condominiums to $221,142, a drop from $260,000 a year ago.
Not much meat in this month’s article from the Herald.
Rolf Boone, Tacoma News Tribune: Pierce County home prices continue decline
The median price of a Pierce County home continued its runaway descent in October, falling more than 16 percent in the year-over-year period, according to Northwest Multiple Listing Service data released Thursday.
October’s price decline was the sixth consecutive month in which median prices have fallen by at least double digits on a year-over-year basis.
Tacoma-Pierce County Association of Realtors President Mike Larson said one reason prices continue to fall is the large number of homes still for sale in the county. More than 5,000 homes were for sale last month, which means a prospective buyer can make a low offer for one house, and if it isn’t accepted, that buyer can just move on to the next house, he said.
Wait, he’s saying that inventory is high? I haven’t looked closely at Pierce County recently, but I highly doubt that inventory there is all that high compared to historic levels.
Rolf Boone, The Olympian: Thurston home sales rise 7 percent in October
Thurston County home sales finally broke out of an extended rut in October, rising 7 percent last month after several months in which sales were flat, according to Northwest Multiple Listing Service data released today.
Home sales rose 6.99 percent to 245 units from 229 units in October 2010, the combined single-family residence and condominium data show.
Super-short blurb in the Olympian online this month, with a tease to “see Friday’s Olympian” for the real story. Looks like this is all we get online.
(Eric Pryne, Seattle Times, 11.03.2011)
(Aubrey Cohen, Seattle P-I, 11.03.2011)
(Mike Benbow, Everett Herald, 11.03.2011)
(Rolf Boone, Tacoma News Tribune, 11.04.2011)
(Rolf Boone, The Olympian, 11.03.2011)