‘A Glut Of Supply Cooling Off Hot Market’
Inman News reports on Washington. “Home sales in western Washington fell for the seventh straight month in September, as rising inventory slowed price appreciation, according to the latest report from the Northwest MLS. Brokers reported 7,906 sales last month, down 15.7 percent from a year earlier when 9,380 sales were recorded, according to MLS statistics.”
“Brokers added 12,656 new listings to inventory during September. Last month’s additions included 10,697 single family homes and 1,959 condominiums to boost the total inventory to 34,443 listings, a 41 percent increase in supply from a year ago.”
“The growing inventory is giving buyers a ‘much better chance to selectively and judiciously make buying decisions without the frenzied attitude of the last four years,’ according to broker Dick Beeson in Tacoma. ‘Sellers are getting frustrated by longer marketing times with some now offering more buyer incentives than they would have previously offered,’ he noted.”
“‘Things have changed, and it’s now edging toward a buyer’s market,’ Beeson said. ‘Sellers can’t remain frozen in time, place or price when it comes to selling their homes.”‘
The Bellingham Herald. “A glut of supply in the past few months is cooling off what had been a hot real estate market. ‘It is a great time to buy and a challenging time to sell,’ said Lylene Johnson in Fairhaven. Johnson prepares a quarterly report after analyzing data from the Northwest MLS. ‘It was inevitable that price appreciation would slow down because of all the new homes now on the market.’”
“‘I wouldn’t be surprised if home prices continue to soften over the next few months,’ Johnson said. ‘But I think that means we’re just returning to a more normal market. We’ve had a couple of years of an unusually hot market, so when we go back to a more typical year, it feels worse than it is.’”
“At the end of September, the number of homes for sale in five of Whatcom County’s major markets (Bellingham, Lynden, Ferndale, Blaine/Birch Bay and Sudden Valley) was 1,450, more than double what was available two years ago.”
“‘I can’t remember a time when there were so many homes on the market,’ said Johnson. ‘It has resulted in some potentially great deals out there, especially the new homes that developers need to sell now.’”
“Realtor Gragg Miller estimates that the housing inventory (the number of homes left if no more homes came on the market) has enough supply for almost six months. That number of homes for sale is creating more of a buyer’s market.”
“‘Even with the oversupply, you still see strength in the number of buyers out there,’ said Miller. ‘It’s a different market now than a year ago.’”
“Also, the number of homes sold is down significantly this year, according to statistics compiled by First American Title. In the first eight months of 2006, 3,062 homes and condominiums sold in Bellingham, Ferndale, Lynden Blaine, Deming and Sumas. For the same period last year, 3,634 homes and condominiums were sold.”
“But I think that means we’re just returning to a more normal market.”
Funny……how my state of washington has been lagging in this decline and now that it’s finally starting to set in they still chose to use the exact words that were used in the other markets that were ahead of us in the downturn. Will be funny to watch as the phrases change down a very predictable path!!
I love the term “normal market”. To me it means 3x annual income (ok maybe 4/5 in some places) is the price of a house you should buy. They know that’s what a normal market is, right?
Oh yeah. From its peak the market maybe heading back to *normal* now but by Spring it will zoom right pass normal on the way down to OMG its a crash!
Oh yeah. From its peak the market maybe heading back to *normal* now but by Spring it will zoom right pass normal on the way down to OMG its a crash!
Actually, by Spring it will be a correction and hurry up and buy now before rates and prices go up! The word *crash* is not in the National association of realtors® dictionary, profanity is not allowed.
WA was the last nirvana.so to speak
even OR is around the Bend
In S. Oregon the sucking sound of a California bubble implosion is already audible and getting louder by the day.
I see stuff sitting here in Portland, too.
“‘Even with the oversupply, you still see strength in the number of buyers out there,’ said Miller. ‘It’s a different market now than a year ago.’”
I think “strength” might be better replaced with “weakness”. I seem to have lost my pom-poms!
be very interesting what is happening in King County. All the belltown condo projects appear to be selling out.
oh btw: talking (actually listening) to co-workers at lunch. The only folks that make head-way (i.e. real money) are from real-estate. It is kind of sad.
Not sure I understand your point.
Just a guess, but I think he means making a salary doesn’t get you very far anymore, you need passive cash flow or money from flipping too.
I can recall my former landlady having a big chuckle over that “passive income” terminology. Believe me, rental income is anything but passive — it requires a LOT of work.
That is a fact
I’ll take the “job” I have now (managing my property) over my former job (working 12 hour days at a law firm) any day. Once you get good tenants in place, and if you keep your building reasonably up to speed, it’s not all that much work, in my experience.
TROLL ALERT. Hey F, there are lots of condos down here in PDX… bring a bucket of money on down and get rich!
“oh btw: talking (actually listening) to co-workers at lunch. The only folks that make head-way (i.e. real money) are from real-estate. It is kind of sad.”
Something tells me your not in accounting.
Something tells me these “friends” are counting unrealized profits. Lets see them try to cash out.
Well what do you know! F here is the troll Mikhail, who happens to work at Microsoft. I’m gonna tell Bill Gates on you Mikhail.
Dang…and he thought cashing those options and buying RE was a good idea!
ROTFL
Mikhail, how many flips do you have? Alligator snipping?
Way to go Ben!
Ben:
Now that there is a concerted effort by trolls rather than disagreement between people which happened in the past (yes there were trolls then also — but since the MSM has picked up the HB) you have arrived. Who can argue with the evidence you post?
What is astonishing to me is that a MS worker is so deeply depended on RE. Why is that? Everyone I know who made money off of MS don’t have anything to worry about. Once they got the miracle gain, whether really big or big but not so big, they didn’t look a gift horse in the mouth and have since invested wisely.
Could there be a MS employee for whom enough wasn’t good enough?
Novasold
Sad truth is, many of those who cashed out their MS stocks in the late 90’s WOULD have been set for life, but they were not prudent with their $.
Most MS workers today can not even DREAM of buying a decent home in Seattle without an ultra toxic loan, which is exactly why our Mikhail has been posting and re-posting his “help the people afford homes, keep the toxic loan puke party going” posts.
Yes, these condo projects are selling out to fools, who will suffer when their condo value crashes and leave them holding the bags with I/O, ARM, tax and a mountain of debt. I live near E Yesler & 14th Avenue in Seattle, and I’ve seen condos around my neighborhood sitting on the market for months without selling. I just took a walk last weekend and checked on them again, and “Price Reduced” signs were begging for attention. I heard you work for Microsoft, why don’t you buy some more condos, dude? Quit your job and flip condos.
A guy at where I work bought his 2-bed room, 900 sq feet condo for $370K because he was afraid to be “priced out of the market” forever. This is very sad. In a few years its value will be like $250K. He is spending about 50% of his income on this sucking condo. Good luck with that in a couple of years. If he loses his job, you will see how interesting it is.
my mom is selling her condo in the pearl district in portland or. does anyone know if the market is bad there too??
it will be worse later- sell now
condos always take the biggest hit
good advice. Tell her that if her open house doesn’t attract buyers, lower the price and do so quick. Or… hold onto it for a long time. Don’t chase the market down. Fact, today you must lead the market (in price) to sell.
Now is a good time - LOTS of towers going up and things are slowing though not dead.
don’t know… I don’t see prices slashed or anything on Craigslist. But there is lots more coming on the South Waterfront, and some new towers planned for the Pearl that I don’t believe will come to pass.
The Pearl had 55 listings in May, and has been in the 120-130 range since August. I check this about once a month.
http://pearl-district-lofts.com/portland-oregon-pearl-district-homes.html?ob=b
Mostly sellers steadly reduce prices by 2%, then watch the paint dry, the another 1%, watch the paint dry some more. I don’t have the exact figures, because no realtor will give it to me, but I’d guess only 6-8 actual sales per month. It’s like the lotto, once in awhile somebody stupid shows up. Meanwhile about 600 new units, held by flippers will be completed early in 2007, and things ought to get real interesting.
Russ, I posted before reading your numbers…
Let me get this correct, 6 to 8 sales per month and another 600 units are about to hit the market. In rough numbers, 80 to 100 months of inventory will hit the market in less than 6 months?!?
Sell… Lead the market and sell.
Depends on the cancellation rates on the new projects when they close. If it’s the 40% seen elsewhere, then supply on the market will triple.
From this web site, I got the PDF that included these remarks:
‘The Puget Sound region is now in the midst of a transitional market in which we’re seeing far more equilibrium between buyers and sellers than we did earlier in the year,’ said NWMLS director Joe Spencer.’
‘Pending sales fell about 18.5 percent from a year ago, with every county reporting fewer transactions. NWMLS members notched 8,160 pending sales (offers made and accepted, but not yet closed) during September, which compares to a year-ago total of 10,014 pending sales. Through nine months this year, pending sales are down 8.6 percent from the same period a year ago. Beeson believes the drop in pending sales is due in part to indecision by buyers and reluctance by sellers to adjust prices to reflect reduced demand. ‘Buyers are more patient now than they have been previously,’ he remarked.’
‘Pierce County has nearly five months of inventory compared to just over three months for King and Snohomish counties, Larson noted.’
‘Larson acknowledged being ‘a bit concerned’ about Pierce County’s condo market, ‘particularly downtown, where they seem to be going up everywhere.’ With more than four months of supply (about twice that in King and Snohomish counties), he wonders if demand exists to sustain all those units, particularly considering ‘many of the unbuilt units aren’t even part of the data yet.’
‘The president of John L. Scott Real Estate remains confident. ‘While the market has slowed down somewhat, we’re not experiencing the same dramatic effects of other areas like California and the Northeast,’ said Joe Spencer. ‘Because the media have focused so much on those areas, many local buyers/sellers are in a holding pattern, waiting to see what the Puget Sound market will bear in the coming months.’
Locals with an interest should download the PDF, as there are some surprises. Kitsap Co. appears particularly weak and more than half of King Co’s inventory was added in the last month. Snohomish and Pierce were close behind.
Hey Joe Spencer,
“Transitional” my a$$. I took a tour of Mill Creek town center last weekend. I went to RiverCrossing right next to the town center and checked out some houses I saw in 2005. They were bought for around $550K in 2005, and they are listed now for $870K. Now, that kind of price will take people who can make $200K-300K a year to buy. Where the hell would you find that kind of income to buy such astronomical priced houses? And it’s not RiverCrossing alone. I went around Mill Creek and houses that costed $300K or $400K a few years back, and now they are listed in the $700K. Suckers like you, Joe, who benefit from this bubble have been real chearleaders for the bubble; “whose bread I eat, his song I sing” is your goddamned motto
The consequences of all this will be very, very bad. Good luck to all suckers and GFs.
I live about 2 miles from Mill Creek Town Center. $870K ??? You must be kidding me. Those houses were built in the “modern” tract style - cubes without any architectural style built right next to each other. 2500 sq ft homes on 3000 sq ft lots. You can literally stretch your arms out and touch walls of adjacent houses. Plus, those homes are right next to the Bothell-Everett highway so you would also get 24 hour traffic noise.
I would like to add that the Puget Sound region is LOADED with flippers. The industry would like you to believe otherwise, but the market is just inundated with these specuvestors. We are now, like all the other bubble areas, in a market where only the greatest fools are buying, and FB’sare left holding the bag.
I would like to add that over in Spokane (Eastern Washington), the situation is probably even worse given income levels. Flippers pushed prices way out of reach of the working poor. I look for that area to get hammered hard and soon.
Great link. Okanogan and Whatcom counties were not added until August ‘05 for those interested. Pity.
I wish I could have info on Spokane market. The realtors here tell me things are selling and I should put in offers. Things are “different” here and the Western WA folks want to move here to avoid traffic
Bureau of Labor Statistcs employment for Spokane Wash 2006
You got to have workers to sustain this real estate market…
With employment down over the last 6 months, and unemployment at 5.2%, national avergae is 4.6%…this kind of
info gives me numbers that tells my Not Good
Labor Force Data
apr may june july aug sept
Employment (1) 219.3 218.2 216.2 213.4 214.9 212.1
It’s fascinating to hear the different reasons realtors give their perspective victims for why each area is different.
It seems to me that a full days drive across the Cascades and deserts of Eastern WA is an awfully long way to go to avoid Seattle traffic.
Do you really believe that?
RE is going down in every nook and cranny of the US. Spokane won’t be different.
“The realtors here tell me things are selling and I should put in offers. Things are “different” here and the Western WA folks want to move here to avoid traffic”
This is a bunch of nonsense. I only know one person who thought they would like to move to eastern Washington, and that was because he thought houses were still cheap there. He looked at the prices and changed his mind. The traffic is bad here, but not so bad that we want to move east of the mountains. The only real lure was cheap housing, and that is gone now.
“‘I wouldn’t be surprised if home prices continue to soften over the next few months,’ Johnson said. ‘But I think that means we’re just returning to a more normal market.
Phew, Thank God it’s only going to soften a little more and then be normal again, I was worried there for a moment. I’ll have my check book at the ready don’t want to miss out this time. RE only goes up, no real correction is coming!
The neighborhood in Vancouver, Wa across from where I work has (and has had since spring) between 30 and 33 of 130 homes for sale. Almost all have been on the market for at least 6 months. Wish I wanted to buy in there, I would seriously consider sending a note to all the agents/owners that I was a prequalified buyer that would entertain their competitive bids on such and such a date. Then see if I could get a groveling war going between some motivated FB’s.
But alas, I will have to wait for that opportunity to come to south suburban Portland - hopefully in 2008 sometime.
A recent conversation with a friend about Quincy, WA. A very small town in the middle of the state has no jobs, bad weather, and no scenery. (they are building a few new datacenters there, which they predict will increase the population by a whopping 41 people):
Friend: My neighbor baught a pre-construction house in Quincy last spring for $300k. He’s already made $200k on it!
Me: He sold the house for $500k already?
Friend: Well, no - but that’s how much it’s worth.
Me (internally laughing at this point): Man, he should sell. that’s a great profit for 6 months.
Friend: Oh no. He’s going to hold onto it. It could be worth a million some day.
Me: Who buys a house in Quincy for that much? Like, is it their prime residence or second home?
Friend: I don’t know.
Me: I mean, I don’t think Quincy has jobs to support half-million dollar homes, do you?
Friend: They’re probably second homes for rich people.
Me: Is your neighbor rich?
Friend: No.
Me: Hmmm.. Why would anyone buy a house for $500k in Quincy, when you could get one in a ski-town for the same price? or on a lake? Or shiny new condo in downtown seattle?
Friend:
I think the towers in Bellingham are hilarious. But - nine months of the year, living in the penthouse would be really cool… you could look down and not see the ground. You’d be in your own cloudy world.
Great story…I hear the same stuff ALL THE TIME.
“My house is worth 5 zillion dollars”
Of course, it’s a stucco sh*tbox on a tiny lot, in the middle of nowhere with an HOA from hell, a clubhouse with one treadmill in the “gym”, a sandbox full of cat crap for the kids, with neighbors scheduled to be on Jerry Springer next week. Oh, and a 2 hour commute to work.
Welcome to the wonderful, wacky world of flippers!!!
Another actual conversation I heard yesterday at my sons’ cross country track meet:
Man: I bought my house in 2003 for $270K. My neighbor sold his for $410K in the spring.
Woman: That’s great.
Man: Yeah, in a couple of years my house will be worth a million dollars.
Ho-hum article about “The North Texas housing market took a hit in September”:
http://www.builderonline.com/industry-news.asp?sectionID=26&articleID=376583
…with this stunning quote (from a building industry trade magazine!):
“While the Dallas-Fort Worth home market isn’t suffering the meltdown seen in California and Florida, some potential homebuyers are apparently taking the wait-and-see approach.”
Meltdown! Now I know what a soft landing is.
“Sellers are getting frustrated by longer marketing times with some now offering more buyer incentives than they would have previously offered,…”
Cry me a river….I am so sick of this sob story.
%$#(! the sellers
If they have been in the house a long time, then they have room to lower their price. Other wise they are being greedy.
If they bought in the last few years, then tough luck. It’s their own fault for being a willing participant in an over heated market and there-by allowing prices to get bid up. They were part of the demand, now they can be part of the supply.
My story…I kept getting outpriced, outbid, etc., because I refused to “bid”, to take an ARM or an IO, skip an inspection, etc. Instead, I banked my cash, while I watched the market outpace my savings. Yes, I was dismayed, discouraged and even disgruntled.
Now, with prices flat/falling, I have caught up and lapped the market. I am now much better positioned to buy what I want, when I want, where I want, under my terms (not theirs). If I were to buy now/soon and even if home prices slid further, I would still be better of than most of the FBs out there. Sure, I might be a GF, but I would have everything I want in house, without compromising, being in a sucide loan, or one pmt away from bankruptcy. Sure my equity might be reduced by a lot, a little, who knows, but…with a downpayment of 1/3, a 30yr fixed and over 2 years net income in reserves (in cash CD/MM) and zero non-mtge debt, I suspect that I could ride out most financial storms.
Bottom line for me…
@#$% the sellers, the realtors, the MSM, the mtge brokers, the flippers and everyone else getting burned…it’s OUR turn now…
Ok, I’ll do it for you… Rant off. Nice rant, though.
thanks..
I do feel better.
That’s my exact sentiment right now. Even if I don’t wait for the bottom - if the right opportunity comes up, I’m on it.
I am already fishing for one right now.
Questions…
How do you know if it’s a real bottom or false bottom?
If prices uptick..How do you know it isn’t the beginning of another upward trend?
Answer for me is…I know we like 19## or 20## plus n appreciation per year or
n times income or n times rent or peak minus n%, but I have faced that it will be impossible to spot the bottom before or when we hit it. I think, like any other market, it will be after the bottom is far behind us (in dollars or time). I am under no illusions about that, so I’ll buy in the manner described above.
-
1997 prices + 3.5% annual compounded is your offer
that would make a house that was $200k in 1997 approx. $270k today.
I’d be interested to see what that $200k house is at this moment.
Anyone have any examples from their area?
Please provide $$ and location
did a little investigating…
that would be about a 40% haircut off today’s pricing, which would make this house that just sold for $600K http://tinyurl.com/hjahx worth about $360K or so.
thoughts?
-
http://www.files.bz/files/11251/Financial%20Calculator.xls
http://www.files.bz/files/11251/RealEstateValuationMethods.xls
-
Be patient. It will take a little time.
Just don’t wait past mid-2007.
-
mid 2007? i think bottom could be in 2008 or 2009 or even 2010+.
“Just don’t wait past mid-2007.”
Why, because prices are going to all of a sudden skyrocket again Bill? I think you are an industry shill.
“It is a great time to buy and a challenging time to sell”
a great time to buy is when prices are lower.
It’s a great time buy and guarantee yourself a spot on ‘the ass-end of the pyramid’ (as Buck Stictland would say).
I wonder if the market will become more normalized when the bottom drops out of the Cali market and people realize there’s not a lot of appeal to six months of fog and rain in B’ham versus 300+ days of sun in Cali. I hope not, ‘cause someone needs to fill up these condos that keep sprouting like mushrooms here.
Bellingham’s been talking for months about building “Affordable Housing”.
Now they won’t need to, the builders already built it for them.
There’s a sure way to save Bellingham RE - sell Whatcom County to Canada. It would then become part of greater Vancouver “RE can’t go down because of the 2010 Olympics” BC. Still a lot of GF’s north of the 49th.
From Oregon
‘If you think the neighborhood is crowded now, just wait a few years. Subdivisions in the pipe-line could mean more than 5,000 housing lots in Salem. Projects already under construction or pending amount to 2,134 acres of subdivisions.’
‘The number of proposed and under way housing projects even surprises some local developers, who brush aside concerns that the housing market is cooling. Whether the many housing projects are a sign of prosperity or a danger to Salem’s livability is a matter of perspective.’
‘Home building is responsible for a large share of the 8,800 construction jobs in the Salem area. In Oregon, employment in construction amounted to 18 percent of the total job growth in the past years two years, said Art Ayre, a state employment economist.’
‘Some of the pending projects may never advance beyond paper. ‘It will be interesting to see how many of these pan out,’ said Mike Erdmann, executive vice president of of the Home Builders Association of Marion and Polk Counties. ‘Our market is not going to double.’
In the largest newspaper in Seattle, “Seattle PI”, sponsors its own Real Estate blog “Seattle Real Estate Professionals”
Of course, it’s just a gigantic sounding board for REIC.
We’ve been handing them such a beating lately that Susan Ryan has turned off comments on her latest puff piece.
Check it out….
“Opportunity is Knocking at your Next Front door”
http://blog.seattlepi.nwsource.com/realestate/archives/107472.asp
“Just say no to bubble talk” - she says
http://blog.seattlepi.nwsource.com/realestate/archives/107264.asp
That Susan Ryan is a sucker.
You have to read the comments in the 2nd piece…
Oh, I’m laughing too hard!
My favorite quotes:
“I think the Japanese in 1986 didn’t believe in real estate bubbles, either.”
“GET OUT IF YOU CAN - IF YOU HAVE AN ARM OR CAN NOT AFFORD TO STAY IN YOUR HOME IF PROPERTY VALUES CONTINUE TO FALL AND INTEREST RATES GO UP, YOU NEED TO START LOOKING AT A PLAN B SUCH AS RENTAL OR MOVING IN WITH SOMEONE - YES…IT IS GOING OT BE THAT BAD!!!!”
“In God we trust. All others BRING DATA”
“Anyway we should be nice to the clueless realtors because a lot of them will soon be jobless.”
“I’ve already done my reading on Japan and as a result I am aware of what’s about to come our way. It is because of ignorant individuals like yourself that cause societies to repeat history.”
“Q: For 2-3% do you guy just fidel with those key things and open doors?”
“Uhhhhm, I thought that the two things that drive a market are “supply” and “demand”…”
Seattle Post Intelligencer needs to take a cue from the Seattle Times.
Seattle Times humungous RE section on Sunday had a 1/2 page ad about the “Bursting Seattle Real Estate Bubble”.
You know the drill: make money from this bursting bubble. The Apprentice girl is holding a seminar in Seattle.
So now we’re all about DEALS!!!DEALS!!!!DEALS!!! instead of HOT!HOT!HOT!
Things are getting ultra schizy here now.
I believe a Florida poster remarked it was the same thing there when the bubble began bursting in earnest. ie. 2 articles on the same page, one saying “We’re hot!!”, the other “We’re a mess!!”
http://seattlebubble.blogspot.com/
Blog war heating up… this is going to be fun.
My favorite Susan Ryan comment:
“If you’ve read my posts and comments here, then you know that I too despair over the financial length people will go to to buy a home.”
Yeah, right, I’m sure she felt a lot of angst taking 3-6% for all those rapidly escalating home prices. That must have been very tough on her.
They call him Flipper, Flipper, faster than lightning,
No-one you see, is smarter than he,
And we know Flipper, lives in a world full of wonder,
Flying there-under, under the sea!
hahahahahaha
but the real Flipper liked being underwater