It’s way past time 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:
Housing market slowdown expected
But prices in most areas are still rising
Scarce inventory, new rules for mortgage closings and affordability concerns will likely slow home sales around Western Washington during the remaining months of 2015 and into early 2016, according to spokespersons from Northwest Multiple Listing Service.
The latest statistics from the MLS show a double-digit drop in inventory, a double-digit jump in closed sales, and a near double-digit increase in prices from a year ago, prompting one industry leader to say the trends aren’t sustainable. “We simply can’t sustain double-digit increases in sales when inventory levels continue to drop every month,” remarked OB Jacobi, president of Windermere Real Estate. “We’re on the cusp of a housing market slowdown,” he predicts.
I think this is the first time I have ever seen the NWMLS press release quoting their agents with anything other than a “rah rah hot market” sentiment. It’s very odd.
Read on for my take on this month’s local news reports.
After the most brisk summer selling season in a decade, the Seattle area’s home prices showed signs of easing in September.
Potential buyers may welcome a cooling, but it’s grim news for the large slice of the region’s homeowners whose mortgage debt remains greater than their home’s value.
Although home prices have rebounded strongly since the Great Recession, more than 33,500 King County homes had negative equity at the end of June, or 9 percent of homes with a mortgage, according to Seattle-based Zillow, the real-estate website.
Owners in that position have little financial incentive to list their properties for sale, reducing the potential inventory available to first-time buyers. And lower-value homes account for a disproportionate share of these so-called underwater homes.
“It’s causing a lot of friction at the bottom of the market, which then ripples through to the entire market,” said Zillow Chief Economist Svenja Gudell. “For some of these homeowners, they may pay off their mortgages before they resurface.”
With as much as home prices have increased in the last three years, I really doubt that underwater mortgages are having much of an effect on the market anymore.
Note that these estimates for how many people are underwater are based on Zillow’s notoriously inaccurate automated home price estimates. For example, in my neighborhood, one home that sold for $285,000 last month had a “Zestimate” of $191,000. I put very little stock in these “underwater” guesses in this hot market.
Puget Sound Business Journal
September revealed double-digit drops in inventory along with a double-digit jump in closed sales.
This trend isn’t sustainable, said Windermere Real Estate President OB Jacobi, who predicts that the area is “on the cusp of a housing market slowdown.”
Another factor that will slow things down is the new banking and closing disclosure requirements that will extend closing times.
I wish the article had gone into more detail about the new disclosure requirements. That is something I will be looking into.
Tacoma News Tribune / The Olympian
After a cooler August, the South Sound housing market heated up in September as single-family residence sales once again jumped by a double-digit margin, according to Northwest Multiple Listing Service data released Monday.
And median prices weren’t too far behind, rising 10.3 percent in Pierce County and 7.5 percent in Thurston County from September 2014, the data show.
Given the limited supply of homes on the market, buyers need to be decisive, write competitive offers and be prequalified by a lender to purchase, said Francine Viola, a longtime broker with Coldwell Banker Evergreen Olympic Realty in Olympia, who was showing an open house in the Campus Highlands area of Lacey on Sunday.
But that’s not to say that sellers can sit back and wait for the offers to roll in, she said. They still need to price their residence correctly and be prepared to negotiate.
“This is not Seattle,” she said about the Thurston County housing market, where some buy with cash but many still finance their purchase.
Or, maybe buyers need to sit the market out for a while instead of contributing to the frenzy, making things even worse? Nah, crazy idea.
Since this post is so late, here’s a bonus article from the New York Times last week:
New York Times
Nick Wingfield: Seattle, in Midst of Tech Boom, Tries to Keep Its Soul
SEATTLE — For years, business leaders here have closely studied the San Francisco region, seeking to emulate the way it churns out so many leading technology companies.
In large measure, those efforts worked. But now, leaders in Seattle are looking to the Bay Area as a different sort of model: a cautionary tale.
The giant sums of money spinning around San Francisco in recent years, fueled by a booming tech sector, have generated hordes of 20-something millionaires and thousands more with six-figure salaries. While that wealth has created a widely envied economy, housing costs have skyrocketed, and the region’s economic divisions have deepened. The median rent for a one-bedroom apartment in San Francisco is $3,530 a month, the highest in the country.
“Seattle has wanted to be San Francisco for so long,” said Knute Berger, a longtime chronicler of life in Seattle. “Now it’s figuring out maybe that it isn’t what we want to be.”
Great article with some outside perspective on Seattle’s boom. I definitely recommend reading the whole thing if you haven’t already.