It’s All A Big Tangled Mess
The Vashon-Maury Island Beachcomber reports from Washington. “As Davina Dilley knows all too well, Vashon — like many other parts of the country — has seen a shift in the world of real estate: It’s now, she says, a buyers’ market. Davina and her husband put their house on the market last summer, hoping it might get snatched up quickly. At $539,000, the well-kept, 1,600-square-foot house — with a beautifully landscaped yard and woodsy, park-like setting — seemed priced right, Davina Dilley said.”
“Eight months later and after only a few nibbles, the Dilleys have lowered their price twice and are now asking $415,000 for their three-bedroom home on a wooded lane near Morgan Hill.”
“It’s a huge drop from their initial asking price, and yet the Dilleys aren’t too troubled by the adjustments they’ve had to make — in part because the same thing is happening in West Seattle, where they want to buy their next home.”
“‘As a seller, you think, ‘Oh, the price went down,’ said Davina Dilley. ‘But on the other hand, we need to buy a house; so we’re glad the prices have gone down. Everything has dropped to a less inflated price, and everything is more reasonable.’”
“The numbers tell part of the story. As of the end of March, there were 82 houses on the market — a much bigger supply of homes than at the end of March in 2007, when buyers could choose from 47 houses.”
“At the same time, some agents said, buyers are holding off, waiting for the market to reach its low point before making an offer. As a result, only 12 house sales closed in the first quarter of this year, compared with 27 closings in the first quarter last year.”
“The average selling price is also lower. This year, those 12 houses that closed in the first quarter fetched a median price of $394,000; last year, the median price for the first quarter was $485,000, according to the Northwest MLS.”
“Agents agreed the situation on Vashon is far different than it was a year ago, when there were fewer houses on the market and buyers had a great sense of urgency. ‘There isn’t that sense of scarcity that there was a few years ago,’ said Jean Bosch, with John L. Scott.”
“‘For sellers,’ said Marie Browne of Keller Williams, ‘it’s a price war and a beauty contest.’”
“Agents said some people who are trying to move to Vashon are coming from parts of the country where housing sales have tanked — and as a result, Vashon sellers find themselves caught up, if only tangentially, in the national crisis.”
“‘We’ve had a number of contingency sales that failed because people couldn’t sell their homes in other parts of the country,’ said agent Emma Amiad. ‘Our market continues to be fairly strong, but it hurts us because someone can’t sell in Texas, California or Maryland.’”
“Bosch said she worked with one couple who bought a home on Vashon while trying to sell their house in another part of King County. That house in King County hasn’t sold, however, and the couple finally decided to put their new Vashon home on the market and return to the home they were trying to sell.”
“‘The desire to be on Vashon is still pretty strong, but people just can’t get here,’ Bosch said. ‘It’s all a big tangled mess.’”
The Whidbey News Times from Washington. “When it comes to housing on Whidbey, it’s definitely a buyer’s market. Prices are down, inventory is up and interest rates are low. The problem is, not a lot of people are buying, at least not as many as in previous years.”
“Northwest MLS reports 85 pending house sales in March of 2008, down from 120 a year ago. That’s a decrease of 29 percent. Total listings are up 30 percent to 1,076 — which is nearly as many as Skagit County.”
“Gregor S. Strohm, ASA, a respected real estate appraiser in Oak Harbor, cites three reasons for the lackluster sales of homes, all of which are related to the credit crisis. First of all, there’s the confidence issue. People are worried that the nation may be in a recession and are cautious about spending money. They are aware that the housing market is at the center of the financial sinkhole.”
“‘People are nervous,’ he said. ‘They want to feel their property is going to be worth more in the near future.’”
“In a related reason, Strohm said, potential buyers may simply be waiting for the prices to hit bottom. The value of homes continues to drop. The median price of Island County houses sold in March, as compared to a year ago, dipped by 10 percent, from $290,000 to $261,000. As a result, he said ‘trade-up buyers’ are largely absent from the market.”
“Lastly, Strohm pointed out that it’s more difficult to get financing in the wake of the credit fiasco. The so-called ‘liar loans,’ or mortgages handed out without verifying income, are gone, as he said they should be.”
“Joe Niemer, the chief credit officer at Whidbey Island Bank, agrees that lending institutions have tightened up requirements. A few people who would have been able to get a mortgage a couple of years ago may have trouble now. ‘You have to have a real job with real income to qualify,’ he said. ‘But people with a work history and good credit shouldn’t have a problem.’”
“Brian Gentry of Landed Gentry said things are looking up for building on the island. Nonetheless, he said it’s a great time to get a good deal on a new home because some builders have extra inventory.”
“‘A lot of builders are trying to sell what they have before they build more,’ he said.”
The Seattle Times from Washington. “For much of 2007, as the rest of the country sank deeper and deeper into the housing slump, Western Washington and the rest of the Northwest seemed immune to the gloom. But economically, no region is an island, and in recent months the local housing markets have slowed dramatically.”
“With sales down, inventories piling up and homes sitting on the market longer, two groups feeling the pain are developers and the banks that fund them. Indeed, looking at regional banks is a good way to gauge the local fallout from the housing crunch.”
“Everett-based Cascade Financial, parent of Cascade Bank, lent $11.2 million to ‘a well established Pierce County-based residential real-estate builder’ to buy 46 lots and build 12 homes. But ’sales in this development have not materialized as originally projected,’ the bank said. A $5.6 million balance remains on that loan.”
“‘A well-established Snohomish County-based real estate developer,’ took out three loans totaling $11.6 million to buy two tracts totaling 466 acres, with the intention of building homes on them.”
“After the developer fell behind on the loans, he agreed to sell them; the sales have yet to close and the loans have been classed as nonperforming.”
“Sterling Financial of Spokane, has said it will set aside $35 million to $40 million for future loan losses. The higher provision reflects slower home sales, particularly in Boise, Idaho; Bend, Ore.; and Southern California.”
“‘The subprime-related credit crunch is affecting builders and developers disproportionately in some of Sterling’s smaller markets,’ CEO Harold Gilkey said. Slower sales of properties ‘are beginning to affect the liquidity reserves of some borrowers in our core markets.’”
The Oregonian. “Clark County has been a hotbed of population growth and the residential construction it brings for about a decade, aiming to serve buyers wanting room to stretch that might not be available in Portland. In fact, the county has been among the fastest growing in Washington.”
“Now the county, much like the rest of the region, appears poised for a slowdown. Residential construction is down, with perhaps a 20-year low in the number of housing permits issued last year. some aspects of the county’s growth — housing construction, in particular — couldn’t keep its previous pace forever.”
“‘For a whole bunch of years, we were saying, ‘Well, construction is going to slow down this year,’ said Scott Bailey, southwest regional economist for the Washington Employment Security Department. ‘Well, we’re finally right.’”
“Portland-area homeowners saw their values bloom from 2004 to 2006. For 22 straight months, the region reported double-digit growth in annual home prices. Now prices are flat at best, and declining in some places.”
“Real estate agent Debbie Thomas has sold Pearl District condos since the 1990s, starting with the Chown Pella lofts. ‘I’ve seen things go shhhh,’ she says, raising her hand upward. Sales were so hot from about 2001 to 2006, real estate insiders joked that brokers never had to sell. Like waiters, they just took orders.”
“For the first time, Thomas has to sell through a downswing. ‘It’s not taking orders any more,’ she said.”
“During the boom, she said, developers didn’t bother with model units because so much of the building sold out when construction finished. And if she threw a wine-tasting, it was to celebrate the successful sales. ‘Now, it’s very much a sales tool to keep the velocity,’ she said.”
“But Thomas thinks downtown living will remain popular among empty-nesters and young people. ‘I’m probably one of the only people,’ she said, ‘who think we have a year to weather this — or less.’”
“Brian D’Ambrosio from West Linn, owed mortgage, land development, home-building, and property management companies. He had made a mint in real estate. But he sold everything, thinking the market was going to turn.”
“Now, he’s back. D’Ambrosio got a deal on Happy Valley land last year. He paid $135,000 per lot for about 101 lots on a ridge above Southeast Sunnyside Road. During the boom, lots in the same subdivision sold for $220,000, he said.”
“D’Ambrosio and partner Randy Robinson of Robinson Construction have started 10 homes in the Sunrise Heights subdivision. With a chilly housing market, D’Ambrosio keeps building but said he’s changed his business plan a bit.”
“His Sunrise Heights homes cover as much as 2,225 square feet and feature a covered patio and an outdoor stone barbecue and fireplace. ‘Think you would have done that two years ago?’ Larry Strutz, D’Ambrosio’s sales guy, asked about the outdoor features.”
“‘No. We would have built as fast as we could,’ D’Ambrosio said.”
“Those homes, he said, would have gone for $550,000 in the boom without the outdoor bonuses. Today, they top out at $418,000, a 24 percent difference.”
“As new housing starts have slowed to a trickle nationwide, sawmills and secondary wood products companies across Oregon have curtailed operations or cut workers.”
“Bright Wood sells window and door components and trim pieces across North America. Its customers sell to builders or home supply stores. Stovall estimates his customers’ volumes are down 20 percent to 30 percent from early 2007.”
“‘There’s just no market,”‘ said CEO Dallas Stovall. ‘Nobody is building anything.’”
“A few hours after Toni Martinez started her shift at Bright Wood’s plant 13 in Madras her supervisor pulled her aside. ‘I said, ‘Am I getting laid off?’ recalled Martinez. She was, as have hundreds of others in recent months at Bright Wood, central Oregon’s third largest private employer.”
“‘There’s just so much panic in the housing market, someone way down the totem pole like me has to pay part of the price,’ said Martinez.”
“She doesn’t anticipate being able to find anything that pays as well as her $12 an hour Bright Wood job, which allowed her to buy a house for the first time. She’s considering going back to property management. Anything to pay the bills, she said.”
“‘Everybody’s scared,’ she said, ‘because if you’re like me, you have a house and car payment and you start thinking, ‘What are you going to do?’”
The Mail Tribune from Oregon. “Not long ago, finding a home for under $200,000 was almost impossible in Jackson County. The tide has turned and some house prices are hovering around $100,000 or less, though that won’t buy a dream home.”
“‘You wouldn’t have seen this two years ago,’ said broker Sandra Schell. ‘Things have changed.’”
“Schell said the catch with most of these houses is a generally undesirable location or something that needs work. With others, you’re just getting the structure but not the land, which is leased.”
“But for buyers, she said, there are plenty of deals out there. ‘Anybody who has money should be picking up properties right and left,’ she said.”
“Roy Wright, a local real estate appraiser, said five urban homes have sold for under $100,000 since the beginning of the year. ‘There’s no way of telling, but they were probably all foreclosures,’ he said.”
“On Monday, Wright said there were 13 houses listed in Jackson County that are selling for under $100,000. At $125,000 or less, there were 31, he said. For instance, in west Medford, a 920-square-foot house on a .17-acre lot is selling for $106,900.”
“The median price for houses in urban areas in Jackson County was $235,000 in March.”
“On Broad Street in Butte Falls, there is a 1,056-square-foot house built in 1912 with two bedrooms and one bathroom that is going for $99,900. The house comes with a bit of land — .15 acres — unlike some in the sub-$100,000 price range.”
“Broker Pat Saunders said the catch with this house is that it is a so-called ’short sale.’”
“Two banks have different loans on the property, so a potential home buyer would have to negotiate the sale, a process that could take four months rather than the typical one-month escrow, she said. At some point, the bank will have an appraisal done on the house once offers are made, but the appraisal won’t necessarily determine the final price. With so many houses on the market, and so many in foreclosure, the banks are willing to come down.”
“‘They normally come down to get rid of it rather than go into foreclosure,’ said Saunders.”
The Bend Bulletin from Oregon. “Struggling with bank debts, the 35-year-old builder of five high-profile homes constructed at the peak of the housing boom adjacent to Newport Avenue Market is now selling them at a loss.”
“‘We built too nice of homes that weren’t supported by the market,’ said Cary Martinez. ‘There was a certain amount of excess that if we were really trying to make money, we wouldn’t have done it that way. We were more concerned with the impact of our project on the earth.’”
“Martinez originally listed them for sale last summer for more than $800,000, he said. Each of the skinny, 2,000-square-foot, three-bedroom homes has its own hue, and all are geared toward luxurious, green living, Martinez said.”
“Martinez and his partner, Barry Seaton, started construction in 2005. The median price for homes in Bend was climbing toward the $351,900 mark that it would hit in 2006, although Martinez said signs of a slowing housing market had started to appear.”
“‘We could have made money on this project if we weren’t so passionate,’ he said. ‘Forget about the $7,000 refrigerator and some of the finishes. We lost the idea of what it takes to keep this idea moving forward — profit.’”
“When none of the homes sold, and Seaton and Martinez were unable to make the payments on the homes, they received pre-foreclosure notices late last year on all five homes.”
“To avoid foreclosure, the owners decided to enter into a short-sale agreement with each separate bank to which they owe money. Martinez said they owe, on average, between $575,000 and $600,000 on each of the remaining homes, along with attorney fees.”
“‘We’re getting rid of all our inventory,’ he said. ‘I’m over the real estate thing. It’s recovery time. It’s a better option to let it go, rather than handle the monthly overhead.’”
“Martinez agreed that the Newport Avenue homes could have been built at a lower cost and still been green. ‘I would never build like that again, ever,’ he said. ‘Especially on a spec level.’”
