“Buyers Are Leaning Hard On Prices”
A housing report from the Oregonian. “Portland hasn’t seen a housing market like this one in at least 10 years. Listings are up. Sales are down. Buyers, sensing an edge, are leaning hard on prices. The region’s 7,000 or so Realtors are working harder to sell homes.”
“‘If I’m not selling it tomorrow, I don’t care what it’s worth,’ said David Morganstern, a personal financial adviser in Portland. ‘You should buy a house for all the fundamental reasons about enjoying it as a place you live in, as opposed to, ‘Is it a salable piece of property?’ Then you’re a speculator, not a homeowner.’”
“The frenzied days of 2005 notwithstanding, most people make housing decisions based on lifestyle changes. Pat and Todd Salvo put their four-bedroom Lake Oswego house on the market about a month ago. ‘It’s a little slower than I would have expected,’ Pat Salvo said.”
“There’s enough uncertainty to give even the econometrics geeks the willies. ‘It’s a particularly risky year, and you want to increase your investment in housing? I’m not so sure,’ said Mark McMullen, senior economist for Economy.com who covers the Portland area.”
The Bellingham Herald from Washington. “Dave Christensen is a longtime local architect who holds onto all his work, no matter how old or dead the project. He estimates about half the projects he starts never make it to the groundbreaking ceremony.”
“A flurry of proposals in the late 1970s, 1980s and early 1990s came as Bellingham was trying to find a new identity, said Bellingham Mayor Tim Douglas, who also served as mayor from 1984 to 1995.”
“‘It was a time when Bellingham was flat on its back economically because of declines in our resource industries, including fishing and timber,’ Douglas said.”
“As Douglas begins his second stint as mayor, he is starting to see similarities with what’s now taking place. ‘Is Bellingham ready for high-rise condominiums in the downtown core? I guess we’ll find out,’ Douglas said.”
“Ken Hertz also sees similarities today to when he was mayor from 1976 to 1984. ‘So much of what was proposed back then was ‘pie in the sky,’ Hertz said. ‘There is so much being proposed today, it will be interesting to see what will actually get built.’”
The Daily World from Washington. “It was just about a year ago that Weyerhaeuser CEO Steve Rogel announced that the company would be closing two mills on the Twin Harbors, eliminating about 350 jobs.”
“So what happened here? ‘In looking forward at what the capital costs were to keep the (pulp mill) running and safe,…and we couldn’t see ourselves go down that path,” Rogel said.”
“The company also suspected that the housing boom wouldn’t last forever. And, right on schedule, the boom has, well, started to bust.”
“Because of the closure of the federal forests and more recently with the drop in home building,…the economics in the pulp and paper business on the West Coast is pretty difficult,’ Rogel said. ‘With the housing market dropping, all of the sawmills in the area are taking downtime and that’s putting pressure on the chip supply.’”
Also from the Daily World:
‘The biggest percentage decline in sales was 32.6 percent in Lewis County. Pacific County had a 19.5 percent decline. ‘Down at a Windermere manager’s conference in September, we talked about the impact of negative media on the real estate world,’ he said. ‘The hype of either direction has caused a lot of people to act or not to act.’
‘Seattle has the busiest, most congested freeways in the state, and some of the most dangerous criminals. Yet the State Patrol is struggling to keep veteran troopers in King County. King County is one of three counties losing large numbers of veteran troopers each year to other districts. Many seize their first chance to transfer because they can’t afford housing in the Puget Sound region and figure that, if they can earn the same wages elsewhere, they can have a slower pace or to return to their hometowns, State Patrol officials say.’
“King County is one of three counties losing large numbers of veteran troopers each year to other districts. Many seize their first chance to transfer because they can’t afford housing in the Puget Sound region”
the rule of unintended consequences
REIC cheerleaders trumpeting continuous influx of new homebuyers never expected that essential personnel would be leaving in droves?
Every morsel of news surrounding this “boom” leads to the conclusion that those who instigated and participated in it were relentlessly, eye-poppingly short-sighted, or avaricious, or both, or fill in your own adjective because my brain is starting to freeze from the stupidity of it all.
It will be even better for the RE bubble apologists during the next natural disaster when all of the cops, nurses, firemen are at home and cannot get into the city to do their jobs.
That is the true unintended consequence, people will die for lack of services during a natural disaster because they all commute in and the bridge is out.
They’re already bitching in Naples, Fla about the lack of lackeys (hahahha, making myself laugh) to pick up after and wait on the the rich old fossils there. And heaven forbid they have to get up from the table and get their own ketchup! Oh the humanity!
$anta Barbara has them all beat. PBS recently did a show on this very phenomenon (essential service/emergency personnel haivng to live well outside the city) and concluded if a major earthquake took out the one major artery connecting the city to the outside world (101 Fwy), SB residents would be toast. Of course, residents could all survive off stockpiled champagne and caviar for a while, but still…
It’ll be a libertarian’s paradise once there are no teachers, police, sanitation, or any other parasites. Just pure freedom, survival of the fittest. The way dog intended.
Seattle’s having this problem with a variety of professions. You can’t find someone to help with yardwork who hasnn’t now styled themselves as ‘landscape design’ (without any training or certification) and is now charging accordingly. Policemen I work with at times in my job talk about the extra stress after the record spate of murders this Spring and Summer, as well as big changes in Seattle’s external review board for police incidents.
Also, a deadly crane accident across the lake in Bellevue is putting a slowdown on a variety of high-rise condo projects in Seattle and Bellevue as they worry over lawsuits on crane safety.
Make sure that the stockpiled caviar is Beluga.
Hey Ben,
You probably recognize me from the SEattle blog. Anyway, this is exactly what I have mentioned in several posts about South Florida. A huge vacuum of positions starts occuring as people simply move away to cheaper more affordable areas. In Florida it’s notable in places like teaching positions and even in what should be considered good jobs like Broward County. To see it start occuring in SEattle is a sign that the affordability issue is really catching up with people. It’s almost as relliable an indicator as condo builders buying up what’s left of affordable rental units….another factor driving avg earners away.
I’m getting annoyed with all these sellers saying they are just shocked at how slow homes are moving today, and that they need to get it done so they can move into the new place they have already “purchased.” These are grown adults who seem to have lost their memory as to what a realistic marketplace is like. Open your eyes and observe all the for sale signs. Note all the new construction taking place, STILL. In other words, use your common sense you fools! BTW, St. Joseph statues are not the answer, in case you were considering.
“Pat and Todd Salvo put their four-bedroom Lake Oswego house on the market about a month ago. ‘It’s a little slower than I would have expected,’ Pat Salvo said.”
I know a couple who fit your description to a tee, CA Guy. And, TTYTT, I avoid them. It’s easier than being around them and letting my Big Mouth smack their starry-eyed dreams down to earth.
I met a client this weekend and we drove around Bellingham for a bit. He had grown up in Bellingham and lived in Calif for the past twenty years or so. He was amazed (an understatement) at all the condos being built and even more amazed at the for sale signs abounding. And they didn’t even begin the groundbreaking for the 23-storey condo tower – big for Bellingham.
A record breaking November rainfall, followed by a significant abnormal snowfall yesterday – I don’t foresee Californians finding the weather entirely inviting, no matter how much less expensive the Pac NW has historically been.
Oh, and there was a shooting here this weekend. So stay away. Not only does it rain 400 days a year, but violent crime is on the upswing.
Spoken like a true local.
I hear all the whining about the rain in Washington and “Washington’s Mexico” (Oregon) is more about keeping Californians from wanting to move there than it is about reality. Am I right?
The 400 days a year was the give away? LOL
Maybe they should build a wall?
In OR, we found that mine fields work better than walls. Just enough explosives to remove a few toes. Takes two CAs to carry the wounded one back south. If we kill them, they would just leave them in place and keep coming.
That is why the comment spoken like a true local.
He is sarcastically sand-bagging to keep the equity locusts away.
Shhhh… don’t let the cat out of the bag, dammit! It’s been working so far –don’t blow it !!
No, I work with someone from SoCal who moved to Portland last September (this is her second rainy season). She is quite depressed, and says this will be the make-or-break year. I have three sisters. All were born in Seattle, like me. They live in the SF Bay Area, San Diego, and Laguna Beach. None spend more than a few days up here, and don’t see how I do it.
Ha !
Just moved from SD to Portland and I’m loving the weather this winter - all that snow on the mountains to play in
I even dig the rain - it’s like my native Ireland - it’s snowing outside my office window as I type
Yes, sometimes it rains all day and night, but mostly the weather is constantly changing. This is one place where the weather can change from one extreme to the other in fifteen minutes. Even days of forecasted showers will still deliver spectacular sunsets.
The weather card is the best thing this area has going for it, imo.
I lived in Portland for 12 years. I moved back there with my wife and she couldn’t wait to get back to Michigan after all of the rain all year long. She said she would rather spend 4-5 months in snow than 12 months in rain. We have now been in Michigan for 11 years and I have to agree with her. Love the Detroit suburbs (Birmingham.)
I just left the PacNW, and while it is absolutely GORGEOUS during the couple of Summer months, Winters will drive you to clinical depression. A typical winter month is rain every day, all day, and the total precipitation at a quarter inch. The longest I can remember with days of rain and not seeing the sun a single time was a little over 40. It REALLY takes a mental toll and you either get used to it, or take AD…..lots and lots of people are on serious AD meds.
Bellingham is a really nice small city; but that’s all it is and all it ever will be. There is NO major attraction for the area unless you consider the Canadian Border special.
Here’s a note on Lumber/Timber from the South. My FIL has been a large timberland owner for over 50 years as well as a retired professional forester. He told me over the Holidays he cannot remember “saw log” prices being this low…..his term for large trees used to cut lumber. Pulpwood….small pine is no longer sold by the board foot, but by the ton because the price is so low. Another issue with lumber prices is so many mills have stopped accepting “saw logs” because the price is so low they cannot process it…..got rid of the necessary equipment. Some, but not all, can be blamed on Canadian imports…..you decide for yourself. I can only share the reality of people who live and work in the timber business right now.
Last comment…..I spoke with a realtor today, nice guy, and pretty straight up talker. We were discussing future resale issues in general and he shared a funny saying….”People who say resale value isn’t important don’t realize, unless it burns to the ground, at SOME point in the future, someone else will be living there. It might be your kids or your grandkids, but it WILL be resold.” The jackass who commented on it’s unimportant what it’s worth unless he’s selling tomorrow shows just how stupid some people are. You never know what the future holds and a few years of bad timing can mean financial disaster…..which we are reading about more and more each day.
Sorry for the long winded comment
While there are plenty of Washingtonians and Oregonians who want to keep equity locusts away (and for good reason), the weather definitely is an obstacle for a lot of people. Some, like myself, enjoy it. But others (the rest of my family) severely dislike not seeing the sun for extended periods of time. And a lack of sunlight can translate into depression for many people. For the most part, if you love the sun, you’ll hate living in the Northwest. That is just the way it is. I have heard many stories of people moving from California to Washington, only to leave within a few years due to the weather. It is definitely not for everyone.
Plain and simple, the weather sucks here and it’s expensive. I honestly have no idea why people would stay given the prices.
Too many condos in Bellingham? Not in San Francisco apparently:
http://tinyurl.com/y4l8dp
“Portland hasn’t seen a housing market like this one in at least 10 years. Listings are up. Sales are down. Buyers, sensing an edge, are leaning hard on prices. The region’s 7,000 or so Realtors are working harder to sell homes.”
Do ya think it’s really the “buyers leaning hard on prices”?? Or do ya think it might be there are no buyers and what’s really “leaning” on prices are terrible loans, desperate sellers, and the ever increasing inventory in almost all markets. If buyers are “leaning” on prices, don’t ya think there would be a significant rise in closed sales? Instead there are rising cancellations and inventory. “Leaning” on prices doesn’t make a sale, dude.
There are still buyers up here regrettably, as it is still possible to buy a house albeit in the outskirts between $200-$300k here. But I think buyers are watching carefully what is happening in other markets and know that CA is crashing. So I think buyers leaning hard on prices is a correct assessment. Now if they would just lay off making offers for a year or so we would be getting some where.
Don’t the CAR #’s come out today? Why are they stalling?
BTW, for any locals that get the Oregonian in print; the article says there is a part two, but the online version has the same report twice. Was there a part two in the print edition?
Ben, I don’t think there is a part II to this article, but I don’t get the physical paper so I can’t be sure. But if you look under the title in the light pink box there are 3 scenerio options that you can link to: First-time buyer | Moving up | Downsizing
Under first-time buyer they are saying that “rents are going up 5% so you better buy now” argument. But renting here in close-in Portland, our rent has not increased the entire four years we have been here. If our landlord did decide to raise rent by $50-$60, I probably wouldn’t complain at all.
Yeah, my rent went up by $5/month last year. That’s a real financial hardship, considering that my rent costs only 50% of the equivalent mortgage … Rents have been nominally flat in Portland for the past six years, so just to keep up with inflation, we’re due some moderate hikes.
Also, my storage space went down by $25/month, so I’m still $20/month ahead!
I saw this article in yesterday’s Oregonian. I don’t remember anything more being in the print edition than what is on the web. Part 2 may simply refer to the the three scenarios linked at the top (1st time buyer vs. moving up vs. downsizing.)
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Sorry - I just lost a few posts. I thought maybe my browser was kicking them out.
… Now back to our regularly scheduled program…
“‘If I’m not selling it tomorrow, I don’t care what it’s worth,’ said David Morganstern, a personal financial adviser in Portland. ‘You should buy a house for all the fundamental reasons about enjoying it as a place you live in, as opposed to, ‘Is it a salable piece of property?’ Then you’re a speculator, not a homeowner.’”
Anyone who employs this guy as a financial advisor should immediately fire him, as he obviously fails to grasp the huge net worth implications of life’s biggest financial decision for most Americans…
I’m trying to figure out what his comment is about. Is he encouraging people to buy and not worry if it’s going to slide down in value? Or is he telling people not to buy if they’re going to flip?
Exactly - see my 2:11pm post below. Basically, what he’s saying is:
Cautious, data-driven cost/benefit analysis of price, based on time-tested market fundamentals = reckless speculator.
Paying whatever wishing price seller desires regardless of fundamentals and/or ability to service debt = sensible homeowner.
As a non-practicing (but for myself) “CFP” I agree with GetStucco completely.
A financial advisor who doesn’t consider the macro economic factors in a major, personal, financial decision is beyond useless; he’s dangerous.
He not only ignored the macro factors, but he ignored the worst case, which is wiping out your net worth plus several year’s worth of household earnings by purchasing a home at near the all-time record low level of affordability.
When prices are rising we are told to buy because a house is “our biggest investment” and it leads to “wealth”, but when prices begin to fall we are told that paying attention to the financial implications is somehow wrong. Talk about two-faced.
If the weather won’t keep the Californians away, how about this: my property tax valuation just went up 197%. Oh yeah, it is 24 degrees F, there is 16 inches of snow on the ground, and the northeaster is blowing.
borderbuster
Where are you at?
north whatcom county, just south of Blaine, WA
“‘If I’m not selling it tomorrow, I don’t care what it’s worth,’ said David Morganstern, a personal financial adviser in Portland. ‘You should buy a house for all the fundamental reasons about enjoying it as a place you live in, as opposed to, ‘Is it a salable piece of property?’ Then you’re a speculator, not a homeowner.’”
The deceit and hypocrisy in this quote is mind boggling. When prices were shooting up 20% a year, these jackholes were insisting we should buy now “to get in the game” because prices were sure to rise tomorrow. Now all of a sudden, a house is a place to live in again.
When people like the regulars here insisted upon actually crunching numbers and refusing to buy because they didn’t add up (something no speculator would dream of doing), we were labelled “jealous bitter renters” as well as accused of being “afraid of commitment”. Now all of a sudden, crunching numbers and trying to estimate a home’s underlying value is somehow a hallmark of being a speculator, not a cautious buyer.
Lies, damned lies and the REIC…
HARM,
Although I don’t know this guy personally it’s not untypical of the “lip service” these types of planners put out. They don’t want to offend any of their clients that they’re fully aware may be reading this. Secondly (did I hear a tinge of personal buyer’s remorse in there?) The statement might actually have some validity if it weren’t for the fact that (yes, even Portland) is coming off a 10 year frantic RE bull run!
“‘If I’m not selling it tomorrow, I don’t care what it’s worth,’ said David Morganstern, a personal financial adviser in Portland. ‘You should buy a house for all the fundamental reasons about enjoying it as a place you live in, as opposed to, ‘Is it a salable piece of property?’ Then you’re a speculator, not a homeowner.’”
Oh, so now they get it. Where was this talk when houses were being overpriced into the stratosphere.
I just want this whole thing to blow up so we can get it over with already. I’m tired of the denial, the lies, the frauds, the irresponsible speculation, the wild eyed dreams of unearned riches, the FB’s, the defaults, the foreclosures, the scams. Everyone knows where this is going, even if some are still shilling differently. This is like a slow moving car wreck or pulling a bandaid off one hair at a time. I wish it would just crash, and then everyone could pick up and move on.
Amen.
Ric,
I hear what you’re saying, but almost “no one” knows where this is going except for the readers of this blog and a few others. Most other folks are totally ignorant of what’s going to be happening.
“‘If I’m not selling it tomorrow, I don’t care what it’s worth,’ said David Morganstern
This is like saying that as long as you didn’t plan to crash your car tomorrow, you didn’t care how much insurance cost.
It would be nice if everyone enjoyed the kind of financial security that would ensure they wouldn’t need to sell their house tomorrow. But with marauding corporate CEO’s, offshoring, downsizing, and a national savings rate hovering near zero, few people are in such an enviable position. Therefore a house’s market value matters quite a bit.
The conventional wisdom that real estate only goes up in the long term may be true, but it is not in itself helpful. Most people lose money in real estate because holding in the long term becomes unfeasible and they are forced to sell.
“national savings rate hovering near zero”
Negative last time I checked…
Annata,
Wise beyond your years! Absolutely fantastic. In my own inarticulate way I’ve been trying to describe that to clients for the last several years but never with this classy delivery.
Of course this constant turnover is great if you’re a realtor, appraiser or mortgage broker (which is where the “real money” is!) This is why (although I’m plenty steamed about prices) my biggest objections to the REIC are obviously unending transaction expenses but also ethics! Both well ahead of price.
What a prescient article that was in the Bellingham Herald. Spirits are high here. A lot of people think B’ham is poised for a major comeback. But somebody knows it’s not going to happen again this time. So that article showed up in the Sunday paper describing all the times B’ham was poised for a comeback that never materialized.
I love the image of this man saving decades worth of dog-eared arichitectural plans on paper in his office- the dreams that never got off the ground. Sometimes our local paper is positively brilliant.
Thanks for posting the article Ben.