Washington Home Sales ‘Stuck In A Rut’
Some reports from the northwestern US. “Home sales in western Washington fell for the fifth straight month in July. Brokers reported 8,496 sales last month, down 15 percent from a year earlier. Realtors report that the consistently rising inventory has been a major factor in the sales slowdown.”
“Area-wide there are about 9,000 more listings now than at this time a year ago, NWMLS reported. Five counties (Island, Kitsap, Pierce, Skagit and Thurston) reported inventory increases of 50 percent of more from 12 months ago. At month-end, NWMLS brokers represented 31,910 active listings of single-family homes and condominiums, up 39.7 percent from a year ago. In June there were 29,856 active listings on the market.”
The Seattle Times. “Home sellers spoiled by three years of record or near-record sales may have to lower their expectations. If the Puget Sound area’s July home-sales numbers are any indication, homes might sit on the market longer.”
“Sellers need to take care to keep their homes reasonably priced because buyers know the market is changing, said Michael Tenore. ‘You can see the national trend is happening here to a lesser degree,’ Tenore said.”
“A slower market does have some benefit. ‘You may find that it’s less competitive,’ he said. ‘Maybe you don’t have to do a pre-inspection or waive certain contingencies. In general, there’s a little bit less pressure.’”
“Many first time home buyers in Seattle and King County are looking at condominiums as a way of getting their foot in the door of the real estate market. Developers are responding to the needs of first-time buyers, with more moderately priced condos located closer to jobs.”
“‘We recognize that there are a lot of higher-end high-rises and saw that the market might become saturated,’ said Doug Daley, pCEO of Harbor Properties. ‘It is hard to tell how long this cycle will last,’ said Daley. ‘We have seen the market flatten in some parts of the United States; we haven’t seen it happen here yet.’”
The Olympian. “Thurston County home sales continue to show signs of slowing as the South Sound housing market crossed into uncharted price territory last month. ‘It’s a good market, but the fever is gone,’ said real estate agent Eric Hjelm. ‘I don’t know if it will stay at that level,’ he said about the $300,000 figure.”
“Inventory levels also continued to increase in July, rising to 1,633, up from 1,031 last year. South Sound real estate professionals say there has been a noticeable shift in the market. ‘The ratio of buyers to sellers has drastically flipped from the past,’ said Chad Roraback, a real estate agent in Lacey.”
“‘The buyers haven’t left the market; there is just so much more to choose from,’ he said.”
“In Seattle’s hot real estate market a growing number of people are losing their homes in foreclosure. In Washington state the foreclosure rate is up nearly 30 percent over last year.”
“Why are more people losing their homes? Experts say interest only and adjustable rate loans are enticing buyers into trouble. ‘So they can get into their dream house when maybe they should have waited a few years when their income went up and not taken these risks,’ said lender representative Karen Gibbon.”
“Why are more people losing their homes? Experts say interest only and adjustable rate loans are enticing buyers into trouble. ‘So they can get into their dream house when maybe they should have waited a few years when their income went up and not taken these risks,’ said lender representative Karen Gibbon.”
Given that all real estate markets are local, doesn’t it seem like a bizarre coincidence to read about so many places all over the country where there is a combination of inventory gluts, softening or falling prices, and increasing foreclosure rates?
… and I forgot to mention falling sales (the reason for those ubiquitous inventory gluts).
Ubiquitous inventory gluts? Good one! :-7
And since all markets are local, there can’t be a national housing bubble either. Just tiny ballons loosing air or a crepe or soufflet, or (insert analogy here)……………with soft landing to follow.
it’s almost like home prices follow interest rates no matter where you live. I guess even in the middle of nowhere people figure out that lower rates are good if you want to buy a home?
do you guys think that OTHER countries know this? we should look into that…
And since all markets are local, there can’t be a national housing bubble either. Just tiny ballons loosing air or a crepe or soufflet…
Let’s call it a National Real Estate Buffet. You can take your pick of souffle, crepe, froth, upside-down cake, etc. Mmm, yum. Losing money has never been so delicious!
“Real Estate Buffet” is the best description yet.
“All-you-can-finance real estate buffet” pretty much describes what’s been going on the last few years. Flippers resemble the back for seconds, thirds, etc. crowd.
yes, that’s the one, um hmm, you coined it.
seattle and portland make it unanimous
Seattle’s “hot” RE market has been “cooling” for months.
For whatever reason, almost nobody wanted to admit it. The RE crowd here was screaming “HOT!HOT!HOT!” until just last week.
Which meant a lot of stupid buying past the top, encouraged by local newspaper articles and TV news.
A couple friends who should have put their houses on the market last fall but still haven’t done so because they believed the lies about how “special “the area is!- even though they’re not crazy about the area !. One massive PR job.
It’s such a relief to have the realtors finally admit it. Should help lift some of the denial state and maybe prevent some marginal buyers from making huge financial mistakes.
WA State came in 6th in the nation for a certain type of risky loan, I think it was neg. am.
And our median prices in Seattle are not that far behind San Diego- like 100K or something. So this is one of the bigger bubbles in the nation.
Amen!
I find amusing too see Seattle real estate cheerleaders (mostly local newspapers) still trying to make people believe that the laws of physics don’t apply to this region…
Even the last group of rats on the last dry piece of the Titanic had hope as it went down…..
“…should have waited a few years when their income went up…”
Wishful thinking! After adjusting for inflation personal incomes have been relatively flat for the past five years.
That’s because low paid immigrants are added to the pool.
It is also because the massive layoffs in the tech industry, that tend to pay better than other industries, will drop the average down.
At least in MA those nice paying IT jobs where replaced by RE and construction jobs that have a lower barrier for entry than others, but also in general have lower wages. (RE agents had an average of 33K, while your basic programmer has an average of around 47K, and a network engineer is around 55K.)
Illegals seldom are added to the pools because they work under the table so to speak.
O/T
Countrywide’s Q raised deeply troubling questions about the industry. Neg-Am is a huge part of their portfolio which they cannot securitize and sell off these loans meaning Countrywide is accepting all of the risk of foreclosure expense, diminished cash flow and write downs. Stock is still way too high.
would you short the stock?
Nope.
http://stockcharts.com/h-sc/ui?s=cfc
I’ve held it in my IRA since 1994 when it was Countrywide Credit.
Let’s see. sales down, inventory up 2,000 houses in one month. Prices leveling off. That’s what all the earlier markets did before exhausting demand at these higher prices. Here are some related links:
‘Eastern Oregon timber harvests declined by 14 percent in 2005 from the previous year. ‘A beleaguered forest industry on the eastside of the state managed to keep the few remaining mills operating,’ said Gary Lettman, forest economist with the department. ‘but the possibility of industry decline is worrisome, as mortgage rates continue to climb, lumber prices fall, and the outlook for housing demand sours.’
‘It was announced Superior Studs would be closed for at least two weeks. The closure affects most of the 200 employees at both mills. Jim Hunt, with The Swanson Group, said, ‘We’re hoping that, yes, it’s going to bounce back, but I don’t look for it to get great overnight,’ he said. ‘It’s going to take a while.’
‘Allyn Ford, president and chief executive officer of RFP, said it’s still not accurate to call it ‘business as usual’ presently. ‘I think anybody in the industry today is under some pressure,’ he said. Church estimated that housing accounts for 40 percent of all wood products consumption.’
The mill article is great! This is where the true demand begins and ENDS. These guys are the front line of this bubble. Looks like they are cooling off big-time!!
Lumber could be the canary in the coal mine (as if we need one):
“Net income dropped to $314 million, or $1.26 a share, from $420 million, or $1.71, a year earlier, Federal Way, Wash.-based Weyerhaeuser said Tuesday in a statement. Revenue fell 0.5 per cent to $5.69 billion. Wood-product sales declined 11 per cent to $2.3 billion. Profit at the unit dropped 36 per cent to $131 million.
“Weyerhaeuser expects substantially lower third-quarter earnings from ongoing wood products operations compared with the second-quarter due to declining prices,” the company said in the statement.
Weyerhaeuser is among resource companies exposed to slowing U.S. new-home construction and the ripple effect on the price of lumber and other building materials. Lumber futures fell 9.3 per cent in the quarter to $320.70 per 1,000 board-feet on the Chicago Mercantile Exchange, from $353.51 a year earlier. U.S. housing starts fell 5.3 per cent in June to an annual rate of 1.850 million amid higher interest rates.”
-Vancouver Sun (British Columbia), July 26, 2006
I’ve seen lumbers charts, it’s impossible to correlate them to housing. lumber fluctuates like crazy. I see lumber as a confirmation factor in a large set of factors. if you have lumber going down and the home numbers(sales, inventory and etc.) weaking, then I think you can see it in lumber.
I’ve heard of similar surpluses in BC lumber, due to dropping residential building in the US.
Out of area, but here in AZ, our business is right next door to a truss plant that for the past 2-3 years ran 24 hour shifts, including wknds. Now, one shift per day, and no weekends. Less employees too. This company (surprise!) supplies a lot of home builders in the Phx area.
Catherine
It is a Foxworth-Galbraith Lumber truss plant?
Yes, indeedy.
Realtors report that the consistently rising inventory has been a major factor in the sales slowdown.”
I don’t understand the logic in this comment. There are more homes on the market and as a result, they sold fewer? If that was the only factor that changed, they should have sold at least as much regardless of inventory numbers
Don’t try to undertand or make sense of “Realtlogic”. You’ll only frustrate yourself. Go to bed each night knowing you are right and they are wrong. Serenity now, serenity now!!!
“Realtlogic(TM)”
Good One.
Right, last year they said, ‘We could have sold more if we only had houses to sell.’ In every market I can think of that eventually turned, the ‘official’ reason was inventory.
Realtors report that the consistently rising inventory has been a major factor in the sales slowdown.
Having many houses to choose from doesn’t slow sales. What slows sales is the houses being priced than buyers will pay …. duh!
Realtors report that the consistently rising inventory has been a major factor in the sales slowdown.
What backasswards logic.
It couldn’t be..a) overpriced properties, b) no buyers
This isn’t as simple as supply/demand. It’s sellers who are completely over their financial heads flooding the market with “investments”. It’s not a balance of sellers have the “normal” reasons for selling…like retirement, down or upsizing, or moving, with buyers that have the same objectives.
It’s “houses on margin” (thank, Robert Cote) trying to find a dumber bagholder.
You’re absolutely right; it’s a logical inconsistency. I imagine that NAR is probably telling its folks to respond that way when asked, hoping that sheeple will confuse raw numbers (unit sales in a given market) with a ratio (sales as a percentage of total inventory). I CAN’T imagine why the good folks at NAR would think that average Americans would be so stupid as to fall for such a transparent con…
When everyone decides they don’t want to sell their home - that’s when sales will skyrocket.
For the past several months (while inventory climbed) seattle Relators said:
“Sales have slowed because inventory’s tight”. That was a lie. Inventory was “looser” than summer/spring ‘05 when things were still selling.
Now things are slow because there’s too MUCH inventory. Just last week, things were slow because there was too little.
I really wonder when consumers will start actually listening to the words realtors say and think about them. Because so far, they’ve been eating this crap up as though there’s actually a grain of truth to be found there.
“Realtors report that the consistently rising inventory has been a major factor in the sales slowdown.”
> I don’t understand the logic in this comment. There are more homes on the market and as a result, they sold fewer?
There is a possible logic. When inventory was scarce, buyers didn’t wait long with making offers and didn’t add contingencies that they would need to sell their old house first etc. With increasing inventory, buyers’ psychology changes: Relax, take time, compare, find a cheaper one - oh, maybe, on comparison, we shouldn’t buy now at all, or our own selling fell through, and we use the ccontigency to cancel the offer.
Are you all just stupid or what?
The only reason that sales are falling is that buyers are absent. The reason that buyers are absent is that they are missing. And what they are missing is buying a new home. Which means that demand is building. Which means as soon as the cork shoots off this bottle of pent up demand the bubbly will be flowing again and prices will shoot up!! Which means it is a great time to buy because your 15% appreciation is “in the bag”.
Hope that clears everything up…
all this pain and interest rates aren’t even high.
This is a MONSTER point. Wonder if MSM will ever mention this?
It’s all mentality. When there’s a glut, nobody wants to buy. On the contrary, when there’s low inventories, people will fight to get their hands on one which resulted in bidding wars.
Cracks in the bubble are becoming aparent in Boise: Ada county homes sales down .64% June 06 vs June 05. New construction sales are down 9.81% in the same period.
http://stats.intermountainmls.com/StaticReports/REPORTS/Ada/2006/June-2006-Ada.pdf
Portland, Oregon: Pearl and downtown update. The Pearl now has 105 listings, up from 51 on May 5. I haven’t seen a single new sale in a week. There are 2,340 units in the main Pearl buildings, but construction on 530 more (Wyatt, Metropolitan, and Casey) is well underway. Plus the following nearby are nearing completion: Civic, 261 units, Riverscape, 500 units. There’s also the Strand and John Ross, 459 units more along the Williamette, south of downtown. I walked by two more sites and the Waterfront Pearl, near the Pearl, with 370 units, has it’s foundation in, and ground breaking is under way on the Encore, 177 units in the Pearl. This totals 2,297 more units, all in the expensive $400-600 sf condo vintage. Looks like another San Diego bust on the way?
Seems like Portland is full of overpriced units hitting the market at the same time.
It’s different in PDX though, with the urban growth boundary and all. LOL
Urban Growth Boundary was essentially defeated in a referendum.
OR voters approved a takings argument in relation to the Urban Growth Boundary and for all intents and purposes it is busted.
It may still be tied up in courts as I left OR in 2/2005.
Russ,
TheVaux is close to coming online too. NW
Not gonna be pretty. POP
http://www.thevaux.com/home.htm
Seattle’s got a ton of way pricey condos too- over a million dollars for condos downtown, plenty of them. When I think of downtowns that might might command over a million, Seattle doesn’t come to mind. It’s still mainly a 9-5 downtown. Not exactly much street life.
Some of the “lower” priced ones started knocking bucks off last week. 425K down to 360K in one fell swoop.
They need to be serious about selling these places because there are just too many projects that are still in the very initial stages.
Most Canadians are completely blind to the US housing bubble or it’s eminent collapse. We have a huge bubble here in Western Canada (Vancouver and Calgary), and have plenty access to US news via TV and the internet. 99% of people here will tell you that Real estate can only go up, and that it’s different here, and yada yada yada. Interesting to see.
http://www.calgary-housing.blogspot.com
It IS different in Canada, though - I’ll give you that.
Don’t worry Rob… people at work (in Calgary) have started to notice softness in prices… one’s trying to sell before their new one is finished construction, the other’s trying to sell so she can move (and take equity with her as a retirement cushion) to Cranbrook.
Good to see some articles about our neck of the woods.
In Whatcom County (north of Seattle), inventory continues to climb. I’ve been tracking inventory from a local RE website for the entire county, it includes all types of listings - SFH, condos, land, manu, comm…
01/04/06 1,951
08/08/06 3,393
Just about a 74% increase.
Last spring and summer, listings were lean, then they grew through the fall. Our realtor says prices are coming down a bit. I recently drove by a listing she told me about and if that house, in that location had been available at that price last spring we probably would have been very, very interested. But now we’re waiting this thing out - not going to throw our 20% down in a market with a bunch of FB’s.
I’m with you. Also waiting in Whatcom for prices to fall. It’s on the national lists as 51% overvalued (Bellingham anyway)- right behind the notorious CA towns.
They went berserk-o here with the “everyone wants to move here” thing. And I for one am glad they did. It should help push these prices down way more than anyone here suspects.
Good Luck! Stay Strong!
We’re in Whatcom co. too…what is the local website you are using to track listings? Have any insight into DOM also? Condos here at the beach have been sitting overpriced and vacant for almost a year, but no haggling yet.
‘Home sales activity in King County is slowing compared to last year’s blistering pace. On the Eastside, the median price of closed sales of homes and condos last month fell to $496,405, down from the record high of $514,975 in June. Despite concerns of housing bubbles in some parts of the country, including California, Arizona, Florida, Las Vegas and Washington, D.C., Crellin said King County will not likely see an overall reduction in home prices, although prices of some individual properties may fall.’
‘The Puget Sound region differs from other parts of the country where there is greater cause for concern about housing bubbles because property sales to investors, has not been as great here, Crellin said.’
“But.. but… we’re different here. Everyone in the country wants to live in the Seattle area.”
Ben,
Thanks for the WA post, we’ve been feeling neglected lately.
Seems like the Seattle area has really felt smug about how local prices haven’t dropped as quickly like other bubble areas, somehow we’re immune. I’ve been saying for a while that our market is behind the curve, the Northwest usually is, we get a recession later than the rest of the country and then we get a recovery later. Not sure why that is but I’ve lived in the NW since ‘79 and I’ve noticed it over the years.
WashingtonOregon media is hard to find. Locals should email in more links!
I’ve been waiting for our local Tacoma paper to have some kind of local article about the RE market (like all the terrific articles you’ve been finding) however they have turned a blind eye to what’s unfolding. They print national articles about RE, but I guess they’re too busy to go out and put together a local RE article. I even recently emailed the inventory stats I’ve been tracking to the paper’s RE reporter and it went nowhere (and now she’s leaving the paper). Here are the MLS inventory numbers (including condos):
2/13/06 - Tacoma 1185
3/07/06 - Tacoma 1159
4/11/06 - Tacoma 1194
5/08/06 - Tacoma 1299
6/08/06 - Tacoma 1376
7/08/06 - Tacoma 1469
8/08/06 - Tacoma 1667
Notice the big jump from July to August, it’s heading skyward. This bubble’s ’bout to blow!
Up until the early ’90s Boeing was far and away the big driver in the Seattle economy. I suspect that still play a bigger role in the economy than techies would like to believe. It would be interesting to examine the correlation between the commerical airplane cycle and the Seattle economy. I suspect that after 1990 the connection becomes gradually weaker but is still there.
The commercial airplane sector of the economy will tend to lag the rest of the economy by its very nature. Airplane design, construction and delivery have a much longer timeframe than other commodities. Right now airlines are buying delivery slots for airplanes to be built in 2008 and beyond. As a whole the US airline industry just turned its first profit last quarter since 2001. This should be another good year for Boeing, financial charges related to DoD scandals aside.
“I’ve been saying for a while that our market is behind the curve, the Northwest usually is, we get a recession later than the rest of the country and then we get a recovery later.”
I agree, I’ve been noticing here in the Portland area, that although inventories have gone up almost 80% over the last year, asking prices are still up 10%. What I hear from people is that they expect a Californian to come and buy their overpriced place because it is still cheaper than California, and of course “Everyone wants to live in Portland!”
I can’t wait till prices finally start falling!
Ha !
I am one of those dumb californians - I moved up from SD 4 months ago - ran the numbers and rented a nice place in the Alameda district instead of even looking at purchasing - sure the rent is high - but it’s WAY cheaper than buying right now
So much for my Californian stereotyping, good move. When I explained this situation to by wife we sold our house in 05. Now were renting 4000 sq.ft. on 5 acres for less than half of what it would cost to buy, and I call the owner when something breaks. I don’t know how the owner covers his payment, but when they foreclose on him in a couple of years, maybe I’ll buy it.
Also, I was a RE agent for a couple of years, but I had to quit because I have a conscience. I think most agents rate right below pond scum, and the public will agree when they realize that their Agents were not looking out for their interests, but their own.
“I’ve been saying for a while that our market is behind the curve, the Northwest usually is, we get a recession later than the rest of the country and then we get a recovery later.”
I agree, I’ve been noticing here in the Portland area, that although inventories have gone up almost 80% over the last year, prices are still up 10% from last year. What I hear from people is that they expect a Californian to come and buy their overpriced place because it is still cheaper than California and of course “Everyone wants to live in Portland.”
“King County will not likely see an overall reduction in home prices, although prices of some individual properties may fall”
What the heck does this mean? Too bad for them, MOM median price is down already. Isn’t that an “overall reduction” in home prices? Or do $/sqft if you want, and I’ll bet that’s down too. Will they not admit it unless every house in town puts up a sign that says, “For Sale, Reduced 20%!”?
Actually, it sounds like they’re saying that there’s merely a little froth in isolated properties. Right.
Same logic as : Town A will fall, but Town B, 2 miles down the road will not.
Just apply it on a smaller scale:
My neighbor’s house will fall in price, but mine will not.
See, it works! You just need to apply the logic consistently!
“Property sales to investors have not been as great here,” Crellin said.
This is an oft-repeated line around here yet I have never seen any reports or statistics to back it up.
Meantime the MLS is full of “Investor Alerts!”
And I was astounded to see how many of the “sold” properties I checked on the King county records had been bought by LLC’s.
So I’ve got to assume it’s just another lie, until shown otherwise.
The headline on that Seattle Times article, “Homes taking a bit longer to sell, but prices still up”, is so typical of any RE news nowadays, but it appears to me that the only purpose it serves is fooling the sellers. Sellers might think their homes are still worth at least as much as they were last year, but they don’t understand very few homes are sold and if all the sellers have to sell at any price, we would have experienced a crash the same magnitude of the 2001 Nasdaq crash.
Unfortunately for them, not many of them can afford to lose money month after month just to keep the price high, so they will all have to sell at any price they can get and the 2001 crash is destined to make a repeat only in a different market this time.
It’s not about fooling the sellers, it’s about keeping the realtors happily buying advertising.
“the only purpose it serves is fooling the sellers”
What a great observation. That has already lowered my blood pressure considerably. It’s like telling your HS buddy that the girl he’s taking to the prom really is a “catch”. You just have to keep reassuring him (or her in the case of the ladies) that you can’t understand why everyone else doesn’t recognize her/him for the “undiscovered looker” they really are! After all you loaned him the money for his “tux” and the there’s a no return policy. Why would you want to insult a lifelong friend? You suck it up and just keep telling yourself “it’s one night out of my life”!