November 7, 2006

“We’re Just Getting Started” In Washington

The Seattle Times reports from Washington. “October’s local home-sales activity continued to reveal a softening market, according to statistics released today by the Northwest MLS, which covers 19 counties.”

“Brokers throughout the Puget Sound region reported more homes on the market and fewer accepted offers compared with the previous October. In King County, which accounts for 40 percent of the region’s housing activity, the number of houses and condominims on the market was 34 percent above a year ago, while pending sales were down nine percent.”

“‘Housing sales are down, but this has created a greater balance in the market between buyers and sellers,’ said (broker) Lennox Scott.”

The Seattle PI. “Seattle has plenty of condominiums left to build and plenty of people coming to live in them, according to experts who spoke at a local housing forum Friday. ‘We’re just getting started in Seattle,’ said developer Bryon Ziegler.”

“Several speakers said the media are trying too hard to declare a bursting housing bubble in stories about a national market that, in September, saw the largest year-over-year drop in the price of the typical new home in 35 years.”

“Seattle’s median price was up from the year before, but it was the smallest gain since January 2004 and the first time since then that prices declined for two straight months. ‘The U.S. market is cooling rapidly, no question,’ said Stuart Tyrie, VP of Wells Fargo Home Mortgage’s Builder Division.”

“The national home market should bottom out in the second or third quarter of next year and rebound in 2008, Tyrie said. ‘You want a good deal on a place in Florida? Give it about eight more months.’”

“Joseph Cortright, an economist in Portland, said economic growth would depend on courting a shrinking pool of college-educated 25- to 34-year-olds. These people, whom he called ‘the young and the restless,’ want to find a job where they want to live, rather than moving where work is.”

“Denser urban centers also are catching on outside of downtown, in places such as Ballard and Wallingford, Ziegler said. ‘People don’t have to move from their neighborhoods to enjoy the condominium lifestyle.’”

The Columbian. ” Home-building activity as measured by building permits in unincorporated Clark County continued to lag in October. The county’s Department of Community Development issued 103 permits for single-family home construction last month, down from 197 permits in October 2005.”

“Residential builders have received a total of 1,338 permits from January through October this year, compared with 1,831 permits in the same period last year, representing a 29.9 percent decline.”

The Bellingham Herald. “It’s no secret that in recent months the red-hot housing market has been cooling down. Whatcom County has seen signs of a slowing housing market. More ‘for sale’ signs dot neighborhoods as the inventory has increased from 30 days to a more normal six months. It’s taking more time to sell homes, particularly those in the $350,000 to $450,000 price range.”

“‘I think the story that needs to be told here is that Washington state, including Whatcom, is behaving differently than most other parts of the country,’ said Glenn Crellin, at Washington State University. ‘The rise in housing prices came later to this area than other parts of the country, so there wasn’t the same kind of run-up.’”

“With the housing market cooling off across the nation, including Whatcom County, there have been concerns about what will happen next with the local market. As of Nov. 1, more than 2,100 homes were listed for sale in Whatcom County on local real estate Web sites, about triple the number of homes available in August 2005.”

“Construction and real estate fueled much of the job growth in the past few years, so there is an expectation that the labor market could see some cooling as well.”

“There is already some evidence of this: The number of jobs added to the economy dropped. There were 3,400 jobs added between August 2004 and August 2005, but just 800 added between August 2005 and August 2006. ‘I would expect some job attrition, but it shouldn’t have a huge impact on the overall local economy,’ said Julie Hansen, an economics professor at Western Washington University.”

“‘There is still a lot of real estate-related business going on, whether it’s refinancing or remodeling. The biggest concern I would have is construction employment,’ Hansen said,”

“When it was a seller’s market, there was a ramping up of jobs in the industry. Currently the number of Realtors is 878, according to Peter Roberts, president of the Whatcom County Association of Realtors, up more than 200 from a few years ago. Overall, there are currently about 1,100 real estate agents in Whatcom County.”

“‘It takes about 18 months before a slowdown works its way through the market,’ Roberts said. ‘People will hold on to their Realtors’ license while they look for other alternatives.’ In the home mortgage industry, things seem to have slowed down a little, said Jeremey Beck, a mortgage loan officer at Horizon Bank.”

“Roberts said there is a glut of homes in the $350,000 to $450,000 range. ‘That will be a tough price range to sell in the coming months,’ Roberts said. ‘I’ve never seen so many homes come on the local market in that price range.’”




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122 Comments »

Comment by Ben Jones
2006-11-07 12:56:58

‘The student population boom in East Pierce County appears to have taken a reprieve this year. All districts except Orting saw slower growth than previous years based on their October head count of students. Fife, Puyallup, Dieringer and Bethel all had gains of less 2 percent, despite the continued construction of homes. There are 7,000 new homes in the pipeline in the Bethel area alone, Superintendent Tom Seigel said.’

‘The beginning family house is so much more expensive than it was four years ago,’ Seigel said. ‘So it may be squeezing out families that come with kids.’

From Bend Oregon:

‘The increase in the median cost of a house in Crook County is partly due to more high-end housing coming on the market in recent years, several real estate brokers said. ‘If you want to spend more for a house you can definitely do it here in Crook County, a lot of the developments have gone just another step up (in quality),’ said Mike Warren, of Crook County Properties. But Warren added that people looking for expensive homes in Crook County are still more likely to buy land and custom-build a house, because there continues to be plenty of land available for residential development in the area.’

‘If you’re looking for $500,000 homes, what we’re finding is people just look for the land and build what they want because you can still do that in Crook County and get exactly what you want,’ Warren said. ‘The houses that have been built … they’re competing with other houses on the market so they have to be actually worth it.’

Comment by jonaskinny
2006-11-07 14:29:03

i see this in Charlotte NC as well… everyone builds a new home. Some of my co-workers have been trying to sell existing housing for over a year and that trend is not new in CLT. Even as far back as 3 years ago.

Comment by LILLL
2006-11-07 15:16:46

Jonaskinny
How are prices doing in Meckleburg County? How is inventory?

 
 
Comment by mrktMaven FL
2006-11-07 15:16:54

“Fife, Puyallup, Dieringer and Bethel all had gains of less 2 percent, despite the continued construction of homes.”

Is school enrollment a reliable leading indicator for housing activity? In other words, has anyone done any published correlational studies? Obviously, there is a positive relationship between both. Moreover, can builders and investors use school enrollment figures together with birth/death rates to accurately predict future housing needs?

 
Comment by Mr. Fester
2006-11-07 15:57:05

Hi All,

My wife e-mailed me this at work. What do you think of these patterns for Jackson County (Medford, Ashland in Southwest Oregon - sales down, prices still up)? My impression is that people are pulling homes, to relist in the spring.

Fewer houses on market; prices steady (11:45 a.m.)
The inventory of single-family homes for sale in Jackson County is falling even as housing prices hold their own.
Although there is no rush to buy and plenty of choices remain for house hunters, the market continued to run against the national grain in October.
The county’s median-priced home sold for $283,950 in October, a modest 5 percent higher than the October 2005 mark of $269,950, according to figures compiled by Medford appraiser Roy Wright.
The number of houses for sale peaked at 2,017 in July and dropped to 1,877 at the end of October. Sales activity, however, trails last year by 37.5 percent.
Ashland was the biggest factor in the upward price push, with the median jumping 20 percent over the previous year. The October median was $465,000, compared to $389,000 a year earlier. Rural homes saw a 13.2 percent median gain to $390,000, while new homes jumped 28.2 percent to a median price of $358,950.
The median price is the price at which half of the houses sell for more and half sell for less.
East Medford was flat with median price of $291,250; west Medford saw a 9 percent decline to $219,200; Central Point’s median rose 2 percent to $255,950; Eagle Point’s median tumbled 14 percent to $239,000; and the Phoenix-Talent are saw a 4.4 gain to $271,500.
— Greg Stiles

 
Comment by Mr. Fester
2006-11-07 16:10:18

Hey all,

My wife just sent me this news clip for the Medford, OR Mail Tribune. It describes Jackson County in Southwest Oregon. I believe the decline in inventory is due to folks pulling to rent over winter. But I am surprised to see the Ashland median still up. Folks are cutting noticeably, but sales are slow. What do folks think?

Fewer houses on market; prices steady (11:45 a.m.)
The inventory of single-family homes for sale in Jackson County is falling even as housing prices hold their own.
Although there is no rush to buy and plenty of choices remain for house hunters, the market continued to run against the national grain in October.
The county’s median-priced home sold for $283,950 in October, a modest 5 percent higher than the October 2005 mark of $269,950, according to figures compiled by Medford appraiser Roy Wright.
The number of houses for sale peaked at 2,017 in July and dropped to 1,877 at the end of October. Sales activity, however, trails last year by 37.5 percent.
Ashland was the biggest factor in the upward price push, with the median jumping 20 percent over the previous year. The October median was $465,000, compared to $389,000 a year earlier. Rural homes saw a 13.2 percent median gain to $390,000, while new homes jumped 28.2 percent to a median price of $358,950.
The median price is the price at which half of the houses sell for more and half sell for less.
East Medford was flat with median price of $291,250; west Medford saw a 9 percent decline to $219,200; Central Point’s median rose 2 percent to $255,950; Eagle Point’s median tumbled 14 percent to $239,000; and the Phoenix-Talent are saw a 4.4 gain to $271,500.
— Greg Stiles

Apologies if this turns out to be a doublepost. First did not seem to take.

 
Comment by Chip
2006-11-07 17:00:00

I’m wondering if we might have the makings of a future thread dedicated to the issue of “where are the students?” A certain focus would be on asleep-at-the-switch local government officials who based future enrollment projections on nothing more than building permits and historic kids-per-household numbers, without ever wondering how many any of these houses would remain vacant because they were bought by speculators. Initially, it seemed that this was a problem for only the most bubblicious areas, but now I’m not so sure the infection didn’t spread much farther.

 
Comment by Eastofwest
2006-11-07 19:44:27

Sorry for a possible repeat ,but did you see this Ben?
You got a mention in SFGate

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/11/05/REG7DM52OS1.DTL

Comment by Loafer
2006-11-08 05:56:45

I’m assuming they meant “exhaustive” rather than “exhausting”, although I may be wrong!

 
 
 
Comment by Lisa
2006-11-07 14:32:42

“While the average income in Crook County has grown steadily, the rate of increase has not kept up with the rise in housing costs. Per capita personal income in the county was $22,719 in 2004, up 4 percent from 2003, according to a poverty report recently released by Oregon Housing and Community Services, the state’s housing finance agency.”

WTF??? So just who is buying these $500K houses, and how???

Comment by SillyConValley
2006-11-07 14:38:13

I would be very interested in seeing data that answers your question. For instance, could all the sales in Crook (or any) County be aggregated by the state of the purchaser? I think this would be a good signal of the strength of the speculation in an area (though in some areas like FLA, it seems the locals are in on the speculation as much as non-locals).

 
Comment by BanteringBear
2006-11-07 14:42:42

“WTF??? So just who is buying these $500K houses, and how???”

Nobody. They are all built with the hope that rich people and equity locusts will show up. Builders completely abandon the practice of building what is affordable for locals. They were as short sighted as the specuvestors. There is an expensive and painful lesson to be learned and soon.

Comment by Backstage
2006-11-07 15:55:59

Not quite. They are building them for $70 to $90 a square foot, then selling them for $150 to $200. Including land and carrying costs, I’ll bet that the builder could lower the price of that house to $300,000 and still make some pocket change.

This is VERRRRY bad news for the resale market.

Only those builders who are way over leveraged (e,g, Kara) will get killed. The big guys will lay off the salaried staff and construction workers, hunker down, and wait for the bottom.

I’m sure that every one here is concerned about poor Robert Toll. Where, oh where is he going store the $400,000,000 that he extracted from his company last year?

Comment by az_lender
2006-11-07 16:41:16

I am sure his storage plan does not include rushing out and buying 1000 of a competitor’s $400,000 houses.

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Comment by 4shzl
2006-11-07 14:55:14

Lisa,

If you’re not familiar with the term “cargo cult,” Google it and you’ll understand the FB’s mentality in states adjacent to California.

We are The Ones With So Much Money Who Came from Across The Mountains (river, desert, whatever). Unfortunately, we’ve morphed into The Upside Down Ones Who Are HELOCed To Their Eyeballs. In some more remote communities, it will take them years (decades?) to figure this out. Until then, they will build little shrines (not to mention more condos) and light candles in our memory. Touching, no?

4shzl (in CA)

Comment by DinOR
2006-11-07 15:20:06

4shzl,

That is SO right on! I’ve tried to get people up here in OR to appreciate that for years! Ugh…. Waiting for Great Money Bird From the Sky to return! When are we ever going to move on? (Equally pathetic) is the frailest of ties CA’s attempt to employ to “fit in”. Maybe they came up here when they wrestled in school or one summer when they were in Eagle Scouts? Yeah dude, you’re a ‘local’, now where’s you’re checkbook? Even though I’ve lived here for over 20 years I failed to bring a wheel barrow full of cash so I’m actually in a lower “caste”.

 
Comment by Chip
2006-11-07 17:09:16

Read “cargo cult” in Wikipedia — really interesting. Who needs cable, with lead like this? I regret to admit that I have ceded ownership of the TV remote to my wife, a most un-manly thing to do; this blog and other Net goodies satisfying all of my couch-potato time.

Comment by Sunsetbeachguy
2006-11-07 18:07:24

Cargo was also the primary question in Jared Diamond’s fascinating book “Guns, Germs and Steel”

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Comment by Sunsetbeachguy
2006-11-07 18:23:32

Basically, why do Westerners have so much cargo in comparison to the rest of the world.

Partly geography
Partly ecology
Partly culture

Lots of luck.

 
Comment by Mr. Fester
2006-11-07 21:44:06

Hey Sunsetguy,

Great book review! You nailed it in nine words.

I read it a couple years back, fascinating absolutely, but seemed to me to be an all encompassing, highly creative, and eloquent version of the wild ass guess.

 
 
Comment by MDMORTGAGEGUY
2006-11-07 18:18:51

Chip- RE: cargo cult, apparently the shortage of land is congruent with the shortage of things to believe in.

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Comment by BanteringBear
2006-11-07 14:38:01

It is obvious that Washington is going to experience the same correction as all of the bubble areas. Though a little behind at the moment, the writing is on the wall. Properties are languishing on the market for months now. Affordability is nonexistant and people are just giving up on buying. I live near Gig Harbor, and construction is feverish right now. Most homes are being built on spec. With mills closing, and a slowdown in real estate and construction, job losses are going to be huge. It is carrying this economy right now. A 35% haircut in median price is not only feasible, but probable.

 
Comment by MacAttack
2006-11-07 14:38:32

I watched some $million+ homes go up here in Bauer Estates west of Portland. This area’s been moving up scale for years, but these were over the top for the area. There’s no gate to keep the riffraff like me out, and the houses face the main road (just set in 100′ down an entrance). I figured they’d have trouble selling these when I saw them built this Spring. Sure enough, same signs, same empty houses. A few lookey-loos from the surrounding six-figure neighborhood, no doubt.
What I find funniest of all is that “Bauer” means “peasant” in German.
:)

Comment by DinOR
2006-11-07 14:49:48

I did not know that. Best to keep that one under our hat until someone at the MAC Club/UC tries to rub our noses in it! LOL!

Comment by SFer
2006-11-07 14:57:43

Friends in Seattle relay to me that there’s no bubble there like we have here in Cali. I’ve been starting to wonder myself, since several friends have left the SF Bay Area to move up there or to Oregon in the past few years. For a while San Franciscans could sell a condo and buy a house in the northwest free & clear.

Anyone have stats on home prices vs. wages in the Seattle area? I know there’s a lot of microsoft and boeing money, but can it sustain high prices?

Comment by DinOR
2006-11-07 15:24:25

Microsoft’s share price is actually LOWER today than it was 5 years ago. No more janitor millionaires. Boeing moved hdqtrs. to Chicago. Check the Oregon Blue Book for the real skinny. Your pals are feeding you “woof cookies” b/c they don’t want to admit what a mistake they’ve made. Please turn on the Weather Channel for a preview of what the next 8 months are going to look like. If you’re even half serious visit in the winter, and don’t let your lease down there expire.

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Comment by seattlerenter
2006-11-07 15:58:03

In the Seattle Eastside areas I have noticed, the speculation is pretty large along with double to triple increases in housing costs and low 40%-50% rent vs. own costs, I would say we have along way to fall. I know of 2 families with 1 person working at microsoft and double incomes who have told me they would not be able to afford their house if they had to buy today. The whole we have microsoft does not hold alot of weight for me since they still do not make enough to afford the median here.

 
Comment by Michael Viking
2006-11-07 17:42:47

I’m not seeing that Microsoft’s shares are lower today than 5 years ago. Are you sure you adjusted for the split in 2003?

 
Comment by DinOR
2006-11-07 19:12:59

Michael,

There was a “one time cash distribution” of about $3 a share (done so late in the year no one could bury the tax consequences). So basically flat split adjusted. It’s splitting hairs anyway. The stock has done zip post tech bubble and most of the emp. stock options are “underwater” so how could this possibly be a catalyst for driving prices in the Seattle area?

 
Comment by packman
2006-11-07 19:17:04

Yes. Their price was running around the 60’s for a long time after the monopoly ruling in 2000; they’re now $29 (equivalent of $58 pre-split). Peak was $120 in early 2000.

That being said, the company is still growing revenue-wise and employees-wise. I venture that most of that employee growth is in India and China though.

 
 
Comment by deflation guy
2006-11-07 15:36:16

Boeing has been on a tear lately but the wages are just average for the manufacturing industry. Plus the industry is very cyclical. Paccar and Weyerhaeuser are starting to slow. The salad days are over for Microsoft. They are too big to be minting many new millionaires. Starbucks, Safeco, Amazon, Expedia, Costco, Nordstrom, T-Mobile and Alaska Airlines are all doing pretty well. Plus you have UW and the hospitals that are steady. So yeah, the economy is strong. However, housing costs have gone too far too fast relative to wages. Affordability is definetely an issue.

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Comment by Kim
2006-11-07 15:37:57

Median income for King county 2005: $59,718
Median home price 2005: 355K (SFH and condos)

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Comment by SFer
2006-11-07 15:51:12

Thanks. So for a couple, that’s about a 3x multiple of median price to income. Not great but not bad - still more affordable than California by a wide margin. And my friends do all complain about the weather. That and, from my opinion, it’s a nightmare to get around up there. No mass transit and the roads are just terribly designed - feel like you’re constantly driving in circles when in the Seattle burbs.

 
Comment by gepetoh
2006-11-07 16:02:21

Is that income per capita, or household income? If it’s household, that’s 6x, which is high.

 
Comment by seattlerenter
2006-11-07 16:09:07

I am not sure but I have heard the household average is in the $80k range.

 
Comment by seattlerenter
2006-11-07 16:13:03

And our median in 2006 is $435k.

 
Comment by DinOR
2006-11-07 16:14:40

gepetoh,

That would be my guess.

 
Comment by Chris
2006-11-07 18:51:56

According to this site, $56,881 is the median Household income for King County, WA. Granted this is from 2003. Though I doubt there has been much income growth.

http://www.census.gov/acs/www/Products/Ranking/2003/R07T050.htm

 
 
Comment by seattle price drop
2006-11-07 19:15:55

S’fer-

Your friends are either not from the area so don’t know how drastically prices in Seattle have increased since the late ’90’s, or they believe the local medias’ frantic reports of “No Bubble Here”.

Seattle is in a huge bubble which began to burst last winter (tons of stuff selling way under asking, substantial price reductions, etc.), then went into a bit of a save mode through the late spring and early summer, and is now continuing on with it’s burst.

It’ll be a mess here, just like every other out of control bubble area of the country, despite what the local media says.

Microsoft and Boeing wages do not support the median home price in Seattle. Apparently, no jobs here support the median home price as we are #5 in the nation for amount of toxic loans.

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Comment by SeattleMoose
2006-11-07 19:56:40

“The rise in housing prices came later to this area than other parts of the country, so there wasn’t the same kind of run-up.’”

The BS meter just hit the stop!! Who are they kidding? Prices up here have skyrocketed with places doubling or even tripling in the last 5 years. The median salary is about 60K and the median home is about 440K. You do the math. This place is as bubblicious as anywhere.

There are many speculators here as I found out this last summer when trying to rent a place. Of about 30 homes we tromped thru about 25 of them were being rented after having been bought in the last 3 years…a sure sign of infestors/flippers.

And of those 25, the majority were owned by people from out of state (several by foreign investors but most by CA investors).

So we have had a lot of speculation up here and a severe CA equity locust infestation.

Seattle prices are going to fall about 33% on average with 20% drops in the least inflated areas and up to 60% in the most inflated areas. I base this on using Zillow to figure out what the 1997 price was and then allowing 4% appreciation from 1997 until now. Then comparing what the home SHOULD sell for vs what the “zestimate” price is.

One last thing…during the height of the mania (summer/fall of 2005) there was NOTHING for sale under 400K. Fast forward a year, there are a lot of places sliding back under 400K that are half way decent. When they get to about 275K I may consider getting back into the market.

In the meantime we are renting a beautiful house in a neighborhood that we will never be able to live in….even if prices drop 50%. No yardwork, no taxes, no draining equity.

The roller coaster is just at the point where it is starting to dip down. The people in front are scared but the people in the back (Seattle) are not….yet.

 
Comment by Mr. Fester
2006-11-07 21:54:55

Great post Moose!

I was wondering about the Seattle market. I keep trying to tell my boss who lives there to wait before buying a new home. She bought a condo in Mill Creek in 2003 and now wants to buy a detached home. She keeps saying her financial advisor tells her RE only goes up (idiot!)….She is single and has only earned a good salary the last few years and will retires in about 5 yrs, so I hope she can find something reasonable.

 
Comment by rms
2006-11-07 23:19:12

SeattleMoose is right about Seattle. All of our “westside” friends have two household incomes, so they are hanging on, but it wouldn’t take much more than a nudge to send ‘em over the edge. The high housing costs are eroding the 401k contributions.

 
Comment by DinOR
2006-11-08 05:53:35

rms,

Great observation. Since mortgage brokers became “the new financial planners” in the post tech wreck/free money era the whole idea was to “borrow as much money and buy as much house as you can” b/c we all know RE only goes up! (So why throw your money away by diversifying in the stock market (which we all know is corrupt anyway) when you could be paying 400K for a so-so townhouse!)

This perverse logic has (along w/predatory lending) become the standard! Good luck with that.

 
 
Comment by bunkferd
2006-11-07 19:40:33

It isn’t like San Diego was a year ago. Houses are expensive and people are over indebted here like they are every place else. There are a lot of budgets priced for maximum performance and have priced in few reversals.

There will be problems here like every place else.

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Comment by Gustavia
2006-11-07 17:02:18

We had an 80s subdivison built outside Houston to the north. The billboards said “Coventry - Above all, Peace and Quiet”

Do these marketing types have any education, any context at all?

Comment by NYCityBoy
2006-11-07 18:38:50

Marketing is where you stick the dipsh#ts that can’t do anything else. They can’t even market well, usually.

 
 
 
Comment by deflation guy
2006-11-07 14:39:42

“‘Housing sales are down, but this has created a greater balance in the market between buyers and sellers,’ said (broker) Lennox Scott.”

Translation: “The market has peaked. Buyers should wait for better prices, motivated sellers need to start making concessions.”

 
Comment by jonaskinny
2006-11-07 14:42:20

would you take advise from this guy?

Comment by sohonyc
2006-11-07 14:56:05

OMFG. The guy actually starts out by writing: “The bubble has not bursted”

Nothing more needs to be said about bubble naysayers.

Comment by jonaskinny
2006-11-07 15:10:10

yep and he actually says its a good time for sellers and buyers… practically in the same line.

 
Comment by John in GA (was John in VA)
2006-11-07 16:24:22

Sellers - it’s a great time for you, too. If you’ve been waiting for the right time to cut your asking price by 40% or more and take the financial haircut of a lifetime, wait no longer. Yep, it’s a great time to be a seller.

 
Comment by JWM in SD
2006-11-07 18:38:57

That clown is a major Douchbag. I love how he felt compelled to chronicle his life story…like buyers really care. I dare anyone to tell me that this whole mess will not end badly with idiots like that running rampant in the RE world. Oh well….low barrier to entry..

Comment by Mr. Fester
2006-11-07 21:59:07

I don’t usually get nitpicky about spelling, but I believe it is “douche bag.” He deserves a proper insult.

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Comment by 4shzl
2006-11-07 15:02:03

Nice haircut. And aren’t those diamond studs in his ears? Once the goatee fills out, he’s a cinch for a lead in that forthcoming epic, “The Pirates of Pinal County.”

Comment by Chip
2006-11-07 16:41:16

lol.

 
Comment by az_lender
2006-11-07 16:51:21

Re: Pirates of Pinal County. From: az_lender
I demand a speaking part. I have owned so many Deeds of Trust in Pinal County that when I took something to the AJ recorder’s office and asked how much I owed, the clerk said, “We don’t take personal checks,” and then said, “Oh it’s YOU!! i’ve seen your name so many times I’ll take your personal check.” I said, “But how do you know I’m the person whose name appears on the check?” Never mind, she was so impressed with the name that she took the check anyway.

 
 
Comment by txchick57
2006-11-07 16:54:15

LOL!!!!!!!!!!!!!! If that guy isn’t an indictment of the public school system, then I don’t know what is!

Comment by Mr. Fester
2006-11-07 22:03:14

Zing! You are in prime form tonight Txchick!

Now where’s Shaunta..?!

 
 
Comment by bradthemod
2006-11-08 08:35:02

Nice AZ photos on his site though:

http://www.azhouse.net/

This is going to be good. People like Chris Dunham will always find a niche to sell if real estate dives. I think the 1999 attitude though is starting to show signs of desperation with all the superlatives hurled at us despite the indicators that buyers are plain tapped out. If someone here knows about statistics, how would you describe the buyers left, something like 4 standard deviations from average in the greater fool distribution?

 
Comment by Chris
2006-11-09 05:25:14

That site is a barrel of laughs!!! I love reading the market reports from realtors. It’s like the Daily Show for the realestate market.

 
 
Comment by Dan
2006-11-07 14:43:21

Clark County WA……(Vancouver)
Keep your eyes on a huge development on the drawing board for a small community, Brush Prairie. It’s about 10 miles north of Vancouver. Another hot development spot is Camas to the east (McMansion Central).
The week I sold and moved, a developer submitted plans for a ONE THOUSAND UNIT development in Brush Prairie. That doesn’t seem like much except it equals the current total permit activity for Clark County for this entire year. Should be interesting…….

Comment by MacAttack
2006-11-07 18:51:45

I never understood how they could sell 1/2-million dollar + houses in Camas with that PAPER MILL SMELL! But they do. Not to bash the place… I do like the Washougal River.

 
 
Comment by DinOR
2006-11-07 14:44:57

Even though these articles primarily offer quotes from builders and realtors it’s still marks a fairly pronounced change in sentiment. Previous to this all we got from Seattle, Portland or Bend was that it won’t happen there! No way.

Just getting these shills to concede that things “might” be slowing down is a major event. All we’re seeing is the tail end of the rolling bubble. MEW from CA dries up and equity locusts die on the vine, of their own accord. If you really want a hoot go to Craigslist for Bend and you’ll see some pretty desperate people grasping for straws. With no real source of employment (outside of building homes for CA’s/Portlanders) there really is no source of income. Unless you like logging or re-treading tires that is.

 
Comment by GetStucco
2006-11-07 14:47:42

Tsunamis originating in California hit Washington’s shore with a time lag. That is why Washington kept going up when California crested, and will tank after California.

 
Comment by au contraire
2006-11-07 14:47:45

Who knows what is up with the Spokane market? I see houses taking several hundred thousand dollar haircuts in the most desirable areas—though mostly deserved haircuts from greedy sellers. Thank God for Zillow and the county assessor website for telling me what the greedy bastards paid just one or two years ago. Spokesman-Review is still spouting “cheerleader” garbage. Anyone know of builders in trouble in Spokane?

Comment by BanteringBear
2006-11-07 15:49:49

I know that Spokane is horribly overpriced given wages. I was there a few short years ago, and there were thousands of homes available for well under $100k. Now, it is hard to find any. It was infiltrated with speculators. It is going to crash way harder than Seattle as the economy there is notoriously bad. In the nicer areas (South Hill), asking prices are more than double what they were a few years ago. When I was there, I saw large Craftsman style turn of the century homes completely remodeled on large lots for $200k or less. Now, they are asking over $500k which is absolutely proposterous given wages.

 
 
Comment by Annata
2006-11-07 14:49:10

“The rise in housing prices came later to this area than other parts of the country, so there wasn’t the same kind of run-up. Now we’re returning to more normal circumstances. Prices will level off, but I’m not anticipating lagging demand.”

I have always thought that the Portland/Seattle area got into the bubble a little later than most of the country and that some sense of pattern recognition might make the bubble a little less severe here. What I find amusing is that the current conventional “wisdom” in the Pacific Northwest is exactly the same flawed logic the rest of the country used about six months ago. (“Sure, sales are down, but that means prices will level off, not fall.”)

It reminds me of a Dilbert character with no sense of pattern recognition who gets zapped by lightening every five minutes and says, “Ouch. I’m glad that won’t happen again.”

Comment by mrktMaven FL
2006-11-07 15:19:32

The ’six month lag’ pattern is exactly the same here in FL.

 
Comment by DinOR
2006-11-07 15:28:37

annata,

Because we were so underpriced for years our legitimate bull run actually started a little earlier, mid-late 90’s. Like all bubbles it started with sound economics until and alas, we are consistently ranked among the LEAST affordable markets in the country. What started out in earnest will end in tears (just like every where else).

Comment by Portland_OR_Bust
2006-11-07 16:12:26

So what do you think will happen to Portland? What are your predictions? Housing bulls say that because it is the least expensive major city on the West coast, that it won’t see much of a downturn. Maybe a 10% decrease, tops. And why was it so underpriced for years?

Comment by DinOR
2006-11-07 16:53:20

You know I’ve heard that until it’s coming out of my ears. Just in an effort to keep things simple, there was a time when folks in the BA/LA could sell their homes and out right pay one off here. Well since that will soon be no longer true look for the Rose City to take it in the shorts. In the end we are actually only a “sub-market” of the BA. Although there will be massive protest, to a degree (so is Seattle). The majority of the pain will be in the outrageously priced condos downtown, the Pearl District etc. where prices are at Manhattan levels. In a weird inversion we’ll be the last to see the correction whereas typically we’re the first to have to tighten our belts.

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Comment by Portland_OR_Bust
2006-11-07 17:18:54

Thanks for your comments DinOR. Of course I hope you are right. I have also heard a lot of people say that PDX will not have a correction because it did not rise in price so much and PDX has never had a price drop. Do you remember how prices reacted to the housing bust in the early 90s? What happened here? I would love to hear your recollections. It can be very frustrating here because it is still possible to buy a house in the $250k-$300 range, but not a great house. In 2003 you could buy a sweet house in the West Hills for that. So people still continue to buy away at these prices. I guess I fear prices will just flatten out for a long time here.

 
Comment by DinOR
2006-11-07 19:32:12

Portland_OR_Bust,

All good questions. I sat in on a client meeting w/their CPA and he joked that in the mid-80’s you could have bought the entire state for 100K! Things were bleak to say the least so anyone that tells you we’ve never had a price drop doesn’t know what they’re talking about. The transition from a lumber based economy to a tech based economy was protracted and painful.

When you’ve time check out Craigslist for the Portland, Salem and Bend areas. There is as much desperation on the part of sellers as there is in Sacramento or FL or wherever. Please to notice the rash of “lease 2 own” postings. In ways b/c of our national per capita high of “self employed” people Oregon’s “underground economy” was made to order for flipping. There will be as much pain here as there will be any where else. Like everything in OR it just takes “a little more” patience than elsewhere.

 
 
Comment by Annata
2006-11-08 08:58:07

Average Pearl District are not Manhattan-level yet, not by a long shot. Manhattan runs ~$1000/sf; Pearl District is ~$400-500/sf. I do believe that Pearl District prices will fall 20-30%, but I doubt they will fall below 2002 levels.

In 2002, Hoyt Street Yards was listing penthouses with mountain views and large terraces for ~$350K, and you could negotiate them down to about $325K. That was actually pretty reasonable. These days, Pearl District has a lot more amenities, so I think equilibrium price may be a little higher than that. Of course, the bursting bubble may create a mass psychology that will cause an overcorrection, so maybe prices will fall more than 30%.

I think the most vulnerable areas in Portland are South Waterfront, the recently gentrified areas of East Portland, and the high-density “town centers” in the suburbs. These are areas where people are paying prices similar to NW23rd, Pearl District, and Downtown even though they still lack basic amenities. Once the bubble bursts, and it becomes clear that the amenities people were betting on won’t actually arrive anytime soon, prices will drop like a rock.

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Comment by Dan
2006-11-07 16:52:38

Don’t rule out having the excess housing inventory in the PacNW being bought up by folks who operate Meth Labs!

I can see the virtual tour set to heavy metal music instead of that annoying elevator tune.

Features include:
Gigantic kitchen with five cooktops
Fireproof walls
Industrial strength A/C w/filtering system
Police scanners in every room
Closed circuit cameras and alarm systems

Slogan - “The market is HOT; come cook with us!”

ROFLMAO

Comment by DinOR
2006-11-07 16:59:05

Don’t laugh. I’ve heard there are already parts of the country where partially finished (and apparently abandoned) McMansions are being used for exactly that!

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Comment by SeattleMoose
2006-11-07 20:04:21

“I have always thought that the Portland/Seattle area got into the bubble a little later than most of the country and that some sense of pattern recognition might make the bubble a little less severe here.”

I would argue that the last place to still have high prices will end up being the LAST place anyone would want to move to. Think about it. Everywhere prices have fallen except in Seattle. Will this tend to create a net inflow or outlfow of people/jobs/etc.?

Let’s see…one can live in CA by the beach and enjoy the best climate in the US for the same price as being bundled up in soggy weather from October thru May…not to mention the “as bad as LA” gridlock traffic up here.

Hmmmm….decisions, decisions

 
 
Comment by au contraire
2006-11-07 14:51:02

C’mon Y’all–Give me the scoop on Spokane. Nobody shoots straight in this city!

Comment by seattle price drop
2006-11-07 19:26:31

Go to http://www.ziprealty.com and get a free account if you want the straight info. It’ll show you how much is price reduced and DOM’s.

Warning, Zip, like every other MLS site, delists and relists with new MLS #’s so the info’s actually even a bit “worse” than what you see.

Comment by SeattleMoose
2006-11-07 20:06:39

The delisting/relisting is a raging epidemic up here. The only way to keep track of everything is to keep a list of properties by address and watch their MLS numbers come and go…

 
 
 
Comment by deflation guy
2006-11-07 14:53:15

“‘I think the story that needs to be told here is that Washington state, including Whatcom, is behaving differently than most other parts of the country,’ said Glenn Crellin, at Washington State University. ‘The rise in housing prices came later to this area than other parts of the country, so there wasn’t the same kind of run-up.’”

Prices doubling in five years is not the same kind of run up!?!? Oh, that’s right, he’s from WSU. That explains it ;)

Comment by Dan
2006-11-07 16:55:58

Have you ever seen the Palouse Hills? Jeez……mile after mile after mile of NOTHING. NOBODY wants to live in Pullman; regardless of price.

 
 
Comment by goleta
2006-11-07 15:23:03

They blamed the exceptionally good weather for the slow Summer months. Now we have an 100-year flood, I wonder what will be their excuse for the Fall (pun intended)?

Comment by Kim
2006-11-07 15:43:36

I should note for those who aren’t from this area that 100 year floods come at least every 20 years, it’s only been 11 years since the last one. Only certain areas get flooded.

 
 
Comment by Pointlines
2006-11-07 15:49:19

Sorry OT, but looks like HOV - Hovanian is taking a big turd write-down… just announced!! They are taking a 300 Million dollar writedown.

SYMBOL - HOV

The story is at Yahoo dot com.

Comment by crispy&cole
2006-11-07 15:55:10

Hovnanian sees Q4 net loss, net of charges

_________________________________________

Losing money already. BAHAHHAHAHAHH!!!!!!

 
Comment by crispy&cole
2006-11-07 15:57:27

PE is now non-existant!

 
Comment by crispy&cole
2006-11-07 15:58:51

The Company estimates that it will incur pretax inventory impairment charges and land option deposit write-off charges totaling approximately $300 million,

_________________________________________________

WOW!!

Comment by mugsy
2006-11-07 16:20:05

HOV’s “dead cat” bounce is now over. To the basement it goes. Who’s next?

 
Comment by luvs_footie
2006-11-07 16:56:11

Also posted in another thread…………Australian interest rates up .25%

http://www.rba.gov.au/

 
Comment by mrktMaven FL
2006-11-07 17:03:05

From marketwatch.com regarding HOV, “The Company estimates that it will incur pretax inventory impairment charges and land option deposit write-off charges totaling approximately $300 million, with about 50% of the charges associated with inventory impairments. Prior to the effect of these additional charges, fully diluted earnings for fiscal 2006 are expected to be in the range of $4.85 - $5.25 per common share, near the lower end of the Company’s prior guidance of $5.00 to $5.75 per common share. Net of these charges, the Company expects to report a net loss for the fourth quarter. Despite the charge-offs and the net loss for the quarter, the Company expects to report a pretax profit in the range of $215 million to $255 million for the year and to end the year with total shareholder’s equity in excess of $1.9 billion, an 8% increase from October 31, 2005.”

Link: http://tinyurl.com/y6quvz

 
 
Comment by GetStucco
2006-11-07 21:21:28

Cool — I expect HOV’s stock price will go up tomorrow, now that it is on the critically endangered list.

 
 
Comment by John in GA (was John in VA)
2006-11-07 16:19:13

Before I was John in GA and John in VA, I was John in WA, and I lived in Skagit County (just south of Whatcom County). Beautiful area, but there are very few people living there that make enough money to afford $400K houses. Whatcom county is far removed from Seattle — too far to reasonably commute.

My father-in-law is a builder in that northern Puget Sound area. For the last few years, things have been going great. I practically begged him to sell out his projects and retire — that the party couldn’t go on forever. However, he had to start just one more condo project, and early this year the music stopped. He has only sold two units since June (both to business partners in the project), and if he doesn’t sell some more soon the bank will cut off his line of credit and he’ll be stuck with a half-finished project and no financing. He’s personally leveraged to the hilt, so this would be a personal financial disaster - lose the house, lose the business, everything. Of course, he’s responsible for his own circumstances, but this is what happens in financial manias — lives are ruined.

Comment by BanteringBear
2006-11-07 18:42:16

Reminds me of the father of an old aquaintance of mine. He was a bigtime builder, but got greedy and spread himself too thin (early 90’s). He lost everything including including his personal residence and his wife. He ended up moving in with his daughter, bought a 30 year old beater truck, and worked small jobs by himself in his late sixties. It was sad.

Comment by DinOR
2006-11-07 19:38:58

BanteringBear,

Oh, you mean the “Oregon Retirement for People that weren’t lucky enough to Get a State Job Plan”. It is sad. I’m hardly making light of it. It’s a serious problem here especially on the OR Coast where we send our old people to die. A friend grew up there and he always described it as “Appalachia West”.

 
 
 
Comment by B'hamster
2006-11-07 16:23:19

I’ve said it before, but I don’t know who’s going to live in all these in-town condos in Bellingham. At least three or four more projects (one a 23-storey - big for here).

And I won’t even get into the the outskirts where there developments upon developments with no infrastructure (eg, Semiahmoo, Birch Bay), unlike White Rock, BC, where they have the residences clustered around the main street business district.

On a side note, I’ve never lived in a town where there are no jobs (like here).

Comment by goleta
2006-11-07 22:30:57

A Bellingham realtor told me that many old homes here have no water meters and owners of those homes only pay a low fixed-rate for their water usage. Surprisingly, I also heard from Microsoft employees that their water bills are very substantial ( something like $200/month, but I’m not sure).

 
 
Comment by jonaskinny
2006-11-07 16:33:11

this site is pure evil. shows you what your neighbor/uncle/cousin paid/financed…. nothing good came come from this LMAO

Comment by Portland_OR_Bust
2006-11-07 17:06:57

Can this really show you how someone financed their house? I could not find that feature, but I did not log on. Scary if so.

Comment by jonaskinny
2006-11-07 17:09:49

yep… showed me that my neighbor got in after us with an 80/10 and that there is NO way my cousin bought last year without help from the folks based on what he paid, how much he got in proceeds from his prior place, and his mortgage debt.

just create an account (takes 2 seconds and is free) and click the show details under buyer tab… it got our situation spot on!

Comment by hedgefundanalyst
2006-11-07 19:22:31

Where is the buyer tab?

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Comment by Chip
2006-11-07 17:16:49

“Scary if so.”

I don’t think it’s scary, and I am just about the most anti-government guy on the blog. Anything that affects the value or salability of a property, including liens (mortgages), must be recorded in the public records, in order to be unassailable as to fact and date. That protects everyone. Therefore, since mortgages (including home equity loans/lines) are recorded, it is for anyone to see. It makes every potential buyer’s life a lot easier, to see this stuff up front. I’ve driven to courthouses in small towns to dig up this information, so why not save the fuel and give it to me online? Levels the playing field, as I see it.

Comment by jonaskinny
2006-11-07 18:10:43

of course… im just saying it makes it really easy for guys like me to do stupid stuff like look up someone’s address and see what they borrowed etc. when i really should not be concerned with such details… if i was buying the place that would be totally different but it makes it painless to snoop.

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Comment by Portland_OR_Bust
2006-11-07 22:58:26

Just thinking ahead to when we do buy a house. I don’t want the ex-wife to know what we put down.

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Comment by motepug
2006-11-08 07:02:38

When I ask realtors (and sellers too) for this information, before I even look at a house, all I get is a blank stare, even though it’s public information. In reality, it’s a waste of time making an offer if the offer won’t cover the mortgage, fees, etc. Better to wait for the foreclosure.

My county’s records are on microfiche, if you can believe that, so it’s a pain to dig the information out. So much for progress in Oregon.

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Comment by Tom
2006-11-07 16:49:01

Posted this in another thread. In case anyone missed it:

Zillow has competition!

http://www.cyberhomes.com

Comment by walt526
2006-11-07 17:30:19

Awesome. Better interface IMHO.

 
Comment by OCDan
2006-11-07 17:47:53

Still overvalued crap. Looked up my old home. Sold past January for 400K. Cyber has it listed at 493K. No way that home will go for that. It is a mere 1600Sq. ft. on a 4700 ft. lot. The home is in Fontana. What a crock.

Comment by Tom
2006-11-07 19:20:53

There is a link there so you can tell them that. Hopefully it will allow them to better evaluate the property.

 
 
Comment by SeattleMoose
2006-11-07 20:10:56

Doesn’t work with Safari….oh well, neither does Zillow.

That is why I keep FireFox as my browser for those sites that cater only to the “dark side”…

 
Comment by BanteringBear
2006-11-08 00:02:04

I believe they are way, way overpricing homes. I looked up a handful, and they are not even close.

 
 
Comment by joelinVC
2006-11-07 17:49:23

“Joseph Cortright, an economist in Portland, said economic growth would depend on courting a shrinking pool of college-educated 25- to 34-year-olds. These people, whom he called ‘the young and the restless,’ want to find a job where they want to live, rather than moving where work is.”

… And they want to live in their parents basement drinking near-frozen Yoo-Hoo from a vintage Star Wars sipper cup
under a now-yellowed poster of the Teenage Ninja-Turtles
while texting friends profound questions about the sexual orientation of Thelma from Scooby-Doo…

Oddly enough they STILL qualify for a 0-0-0 no-verified income loan on a 700k house.

 
Comment by OCDan
2006-11-07 17:53:18

OT:
Just went to foreclosure.com to check on the 92688 (Rancho Santa Margarita) area code and it looks like a battlefield out there. 161 residences listed in some stage of foreclosure. Sadly (?, maybe) 61 have a tax lien on them. Prop 13 be damned. 1.15% of 800,000 is not going to save these people. Imagine getting that 4K tax bill twice a year along with the 2500-3500K monthly nut. Ouch, that’s gotta hurt. All I know is that the RSM list gets longer every week. Things are going to get really really ugly around here 2Q2007.

 
Comment by OCDan
2006-11-07 17:54:54

Have to add that 893 residences are in some stage of foreclosure in the 92633 zip of Fontucky, CA. WOW! Thats where I used to live, see post above. There is some pain going on there.

Comment by OCDan
2006-11-07 17:56:19

Sorry, meant to say, 92336.

 
 
Comment by OCDan
2006-11-07 18:09:32

Interesting, went back and looked at the street I used to live on and 3 homes have tax liens on them. Couldn’t get the addresses w/o signing up, but I wonder if one of them is the house I used to own (payoff)!

 
Comment by seattle price drop
2006-11-07 18:55:32

“Roberts said there is a glut of homes on the market in the $350-450,000 price range. ‘That will be a tough price range to sell in the coming months’, Roberts said. ‘I’ve never seen so many homes come on the local market in that price range’”.

In a roundabout way, Roberts has summed up the problem, which is: Those 350-450K homes are actually 120-200K homes that were bumped up to a wishing price.
Once they come down to what people around here can reasonably afford, they’ll sell.

There’s a good reason he’s “never seen so many homes in that price range” around here before. It’s because nobody around here can realistically afford that price range.

Comment by Betamax
2006-11-08 00:14:23

That’s why Seattle Eric, with his two $600k houses, is dead in the water.

Comment by BanteringBear
2006-11-08 10:22:16

Precisely. Seattle Eric is the GF. He didn’t realize it at the time, but the price he paid for his rehabs was far more than they were worth had they already been remodeled. There is no market for his homes at the prices he wishes and needs to get.

 
 
 
Comment by seattle price drop
2006-11-07 19:33:16

Two of the three zip codes in Bellingham are now OVER 50% price reduced. And that does NOT count the de-listings and re-listings under a new MLS#.

I expect the third zip to join the “over 50%” majority shortly, unless a ton of homes are just flat out taken off the market to wait for “January when the Fed lowers the rates” thing that realtors here are sqwaking about.

 
Comment by jag
2006-11-08 07:04:59

When the Fed does lower rates .25% and listings jump….and sales don’t occur…..will that be the “tipping point”?

Comment by seattle price drop
2006-11-08 15:34:46

IF/when the Fed lowers and sales do not rebound, it will be a wake up call to all the foolish sellers who believe that lower rates will “do the trick”.

I think some of these sellers are begining to understand this on their own though and will not be surprised when the spring bounce fails to materialize no matter WHAT happens.

There’s got to be a little voice in the back of some of their heads that’s starting to repeat, louder and louder “these prices were never realistic, it was all a foolish dream…”

 
 
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