Some People Just Keep Going On Their Dreams
A report from the Idaho Statesman. “The federal takeover of Fannie Mae and Freddie Mac produced hopes among Treasure Valley real estate agents Monday for lower mortgage interest rates and fewer foreclosures. But bankers were cautious. Eugenio Aleman, a Wells Fargo economist, issued an analysis saying ‘the biggest reason for this intervention is the Federal Reserve’s obsession with preventing home prices from falling. And the only way that is going to happen, according to their argument, is for mortgage interest rates to come down. And I think that this is the mistake the Federal Reserve, the U.S. Treasury, and markets are making.’”
“‘Even if mortgage interest rates decline,’ Aleman wrote, ‘which is a big if in the medium and long term, the mortgage market will remain tight just because credit standards were too loose during the last two decades and the economy is deteriorating, with the rate of unemployment increasing and now prime mortgage loans also at risk. Thus, even if the measure helps interest rate spreads, credit will remain tight for the foreseeable future.’”
“IdahoDataProviders president Charlie Nate said Monday that in the last 30 days the number of homes listed on the MLS as short sales has increased 9 percent to 1,095.”
“‘The recent takeover of Fannie Mae and Freddie Mac by the government should stabilize the housing market in the short run,’ Nate said. ‘However, if the loan standards are not relaxed by the entities (lenders), home loans for borrowers will continue to be scarce, and the housing market will continue to deteriorate.’”
“A record 304 properties were served with an initial notice of default in Ada County in August, a 171 percent increase over the same month last year. Canyon County recorded 179 notices of default, 77 percent higher than August 2007.”
“The increasing number of short sales is driving down median home prices, too. Median prices have fallen 4 percent in Ada County and 6 percent in Canyon County since the start of the year, according to the Intermountain MLS.”
“Idaho job growth sank by almost a full percentage point during the second quarter of the year, according to a government report released Tuesday. In absolute numbers, that meant that about 1,300 fewer people were working in Idaho during the second quarter, said Boise economist John Church.”
“‘Anyway you cut it, that’s a lot of people out of work,’ Church said.”
“Idaho Department of Labor spokesman Bob Fick said the state saw employment declines during six of the first eight months of 2008, including the last four months. One big reason is the normal spike in second-quarter construction jobs never materialized this year because of the housing slump.”
“‘We’re down thousands of construction jobs from a year ago,’ Fick said. ‘It’s something like 4,500 jobs.’”
The South County Spotlight from Oregon. “Boise Cascade announced this afternoon that it is permanently closing its veneer plant in St. Helens. The ongoing slide in the wood market, a direct effect of diminished demand for new housing construction, hit home at the veneer plant last February, when a swing shift was dropped and a number of full-time jobs were lost.”
“Since then, the plant has undergone several weeklong and half-week layoffs, trends that finally culminated in Wednesday’s permanent closure. Bob Smith, the human resources manager for Boise Cascade’s Western Oregon Region, pointed to a reduction in housing starts from 2 million in 2005 to roughly 900,000 in 2008.”
“‘In that period of time, that’s how dramatic it’s been in the reduction of housing starts,’ he said.”
The Estacada News from Oregon. “Despite grim reports on the state of the nation’s housing and lending markets, some industry members believe that things are not all that bad in Estacada. Yet, online market data providers show the city’s sale prices considerably lower today than at this time last year. Although numbers vary slightly from one source to the next, each illustrates a consistent and significant decline.”
“During the summer of 2007, the average sale price of an Estacada home peaked near $310,000. Since then, the average price has fallen 30 percent to $220,000.”
“Phyllis Brinkley, an East County realtor of 35 years, said the price decline is indicative of the market normalizing. ‘Prices are not falling out of the sky, but they are adjusting a little,’ she said. ‘I think we are more fortunate than some of the other areas.’”
“Brykley said price drops are caused by decreases in demand and increases in foreclosures. For Metro Portland, RMLS states that ‘activity continues to decrease compared to this same month a year ago. Pending sales decreased 22.3 percent, while closed sales were down 30.2 percent. Home sales declined 32 percent in Estacada during the same period.”
“Eagle Creek and Estacada have had two foreclosures and 11 short sales during the last nine months, said Adam Durham, a loan officer at Globill Inc. ‘Out of those 11, eight are new construction. I think it’s amazing, statistically.’”
The Yakima Herald from Washington. “Developers of The Vineyards Resort began the first phase of construction that will include the 18-hole golf course, clubhouse and pro shop, the roads and utility lines and preparing the first 230 home sites. The Vineyards will be the second destination resort in this area after the much larger Suncadia near Cle Elum, a 6,400-acre mountain development that plans 3,000 housing units.”
“The groundbreaking for The Vineyards occurred on a knoll that will be the site of a Tuscan-themed retail center. A 100-room condominium hotel is also part of the project.”
“Rich Barnes, co-managing partner for the Vineyards project, said the price of home sites will increase once the public lot sales begin. Some lots could attract prices up to $1 million, he said.”
“Barnes said while the rest of the country is struggling with a declining home market, the Northwest continues to be a bright spot. ‘The Pacific Northwest is still very exciting to everyone in the rest of the United States,’ he said. ‘Yakima has the same situation. All the dynamics that make this a quality resort community are still here.’”
The Olympian from Washington. “South Sound home sales stayed cool in August yet prices largely have remained stable, the Northwest MLS reported. On a year-over-year basis in August, sales of single-family residences and condominiums stumbled, falling nearly 31 percent to 303 units from 439 units, the data show.”
“Since January, median home prices have fallen about 5 percent compared with a year-over-year price drop of nearly 8 percent in August. Last month, median prices fell 7.81 percent to $248,000 from $269,000 in August 2007, the data show.”
“South Sound real estate professionals say it is a great time to buy. ‘I cannot stress enough what an amazing opportunity exists right now for move-up buyers,’ said J. Lennox Scott, CEO of John L. Scott Real Estate. ‘The price gap between the more-affordable price ranges and higher price ranges has narrowed, which means these buyers can afford to ‘price jump’ into a new home at a premium value.’”
‘South Sound real estate agent Bill Nieland added that mortgage interest rates remain low. ‘This is a great market,’ he said. ‘I’m more enthused today than I have been in years.’”
“Nieland also questions whether the MLS sales data truly reflects the pace of sales in South Sound. ‘Nobody can convince me that (home) sales are down,’ Nieland said.”
The Seattle Times from Washington. “The median selling price of houses in King County dipped last month to its lowest level since April 2006, according to the Northwest MLS. The broker-owned service said the median price of single-family homes sold in the county in August fell to less than $424,000, down more than $53,000 from August 2007.”
“The 11 percent decline was the first double-digit year-over-year drop for King County since the subprime-mortgage crisis turned the market on its head.”
“Real-estate brokers said the August numbers reflect more willingness on the part of more, but hardly all, sellers to ask less for their houses to increase the odds they will find buyers.”
“‘Houses that are priced right still sell in 15 or 20 days,’ said Jerry Howard, managing broker at the John L. Scott office in West Seattle. But there’s still resistance, he said, especially among owners of higher-end homes: ‘Some people just keep going on their dreams.’”
“Matt Deasy, general manager of real-estate giant Windermere’s Eastside operations, said the big year-over-year decline in median house prices shouldn’t surprise anyone. ‘Last August was probably the peak,’ he said. ‘The marketplace was very different then. That was before the lending standards changed.’”
“And now? ‘It’s supply and demand,’ Deasy said. ‘There’s still eight sellers for every buyer in a month.’”
“Closed sales of all residential properties - condos and houses - slid 38 percent, and pending sales dropped 23 percent, while the number of properties listed rose 18 percent from a year ago.”
“The story was similar in Snohomish County. Closed sales for houses and condos plunged 40 percent; pending sales slid 19 percent; and inventory rose close to 8 percent. The median selling price for houses there fell 9 percent from August 2007.”
“In West Seattle, the median selling price for single-family homes dropped 13 percent from last August’s level, from $428,500 to $374,000. That’s partly because lower-priced houses in neighborhoods such as Delridge and White Center are selling well, and higher-priced houses aren’t, Howard said.”
“They aren’t moving because the asking prices still are too high, he said.”
“‘I was out this morning to look at four houses in the $850,000 to $1 million range, all within a quarter-mile of each other, three with views,’ Howard said, ‘and if you looked at these houses with me, you’d have to say, ‘How did they price those houses?’ At least three of them are overpriced. The best thing you can do to satisfy clients today is telling them the truth.’”
“The median selling price for a house in Kent dropped more than 15 percent since August 2007, from $365,500 to $310,000. William Collins, assistant broker at Windermere’s Kent office, attributed the drop to the large number of bank-owned homes on the market as well as short-sale houses.”
“If an agent takes a client out to look at 10 houses in South King County during a weekend, he said, odds are that seven or eight of them will be ‘distressed’ properties.”
The Bellingham Herald from Washington. “In what was already a very quiet summer for local real estate, August was especially ugly for sellers.”
“Only 255 homes and condominiums sold in Whatcom County in August, down 35.9 percent compared to the same time last year, according to the Northwest MLS. In a separate report released by Lylene Johnson of The Muljat Group South Office in Fairhaven, single-family home sales in both Bellingham and Whatcom County in August were down 40 percent year over year.”
“Median prices also dropped. The median price for homes and condos sold in August was $260,500, down from $275,000 in August 2007, according to the NWMLS. The median price for homes and condos sold in July was $265,000.”
“‘When activity is down 40 percent overall, there aren’t many price points to look to for relative strength,’ Johnson said. ‘I’ve also seen prices coming down, and we’re seeing more short sales and foreclosures sales.’”
“The rest of the Puget Sound area saw similar drops in home sales and prices, according to the NWMLS. In Skagit County, home and condo sales were down 49.5 percent year over year, with the median price dropping from $280,500 to $254,935.”
The Wenatchee World from Washington. “The FHFA - Federal Housing Finance Agency - has placed both Fannie and Freddie in a conservatorship that puts the government in control to restructure and revive them.”
“Local statistics show foreclosure rates haven’t been much above normal, but home prices have soared in recent years. Loans are still available, but only to borrowers with good credit histories and a perceived ability to repay. Sandy Blakley, vice president of marketing for Richland-based Gesa Credit Union, agrees loose lending will likely not return.”
“‘I’m certain that with the painful memories of such large loan losses still fresh in everyone’s minds, the FHFA will not allow those standards to slip again,’ Blakley said.”
“Lending rates may come down a little, but none of those contacted expect a return to the free-for-all lending that landed the country in its present mortgage mess - the worst financial crisis in generations, according to some media reports.”
“‘It caused a terrible problem,’ Ken Martin, president of Cashmere Valley Bank, said of lax lending practices that awarded home loans to applicants with poor credit histories and insufficient income to repay. ‘It’s caused mass foreclosures, massive delinquencies. … At the end of the day, all it did was drive up house prices.’”
