“Waiting For The Glut Of Inventory To Get Consumed”
The Seattle Post Intelligencer reports from Washington. “For the sixth month in a row, Seattle had more homes on the market, fewer sales and higher prices than the previous year, according to new statistics for December.”
“But the median house price of $420,000 was down from the previous month for the third time in the past five months, bringing it back to July’s level, according to numbers the Northwest MLS released Friday. ‘It’s more of the same,’ said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.”
“Prices on comparable homes, particularly in higher ranges, are going down, but people are taking advantage of that to buy more than they could have otherwise, Crellin said.”
“Michael Simonsen, CEO of Altos Research, in Palo Alto, Calif., has noticed cooling in the Seattle home market. ‘Any comparison with last year is down in terms of demand and numbers of sales,’ he said.”
” Median prices have not dropped with the changes in inventory and sales because only the good houses are selling, Simonsen said. ‘The lousier properties, they’re either going off the market or they’re just sitting around for a long time.’”
“Simonsen said 36 percent of properties currently on the market have had their prices reduced, relatively high, but lower than reductions of more than 40 percent seen in many San Francisco Bay Area markets. ‘While we see some positive things to keep the bottom falling out, we don’t see any big catalyst that will let prices jump upwards,’ he said.”
“Price cuts might not reassure already skittish buyers, Simonsen said. ‘I kind of think that people are attuned enough to the bubble headlines that if we see year-to-year price declines that might even scare people.’”
“Lucia Riva, who bought a townhouse in Ballard last month, said she wasn’t worried about price declines. ‘You don’t want to buy at the height of the market,’ she said. ‘Properties are taking longer to sell, but they’re not on the market for months and months and months and months if they’re appropriately priced.’”
The Mail Tribune from Oregon. “Existing home sales remain slow and prices have dipped slightly (in) Jackson County. While the number of new houses has fallen 42 percent, the demand for ‘pre-sold’ high-end housing has kept builders busy.”
“‘My understanding is that speculation houses aren’t moving well and we don’t build those,’ said contractor Larry Denn.”
“‘Builders and developers have taken the hard hits and price adjustments. The reductions have been made and if people are going to get in, there is really is no better time than now,’ said George Gardner of Diamond Key Builders.”
“Median pricing for existing homes in Jackson County dropped 5.4 percent to $264,900 for the rolling quarter that ended Dec. 31. Eagle Point, Shady Cove and Talent saw the biggest declines.”
“December’s median price was $259,900, down from $285,000 a year earlier.”
“‘Most of us are waiting for the glut of inventory to get consumed to a level to where we’re closer to the long-term standard in the marketplace,’ Gardner said.”
‘Strong job growth in Oregon outpaced much of the nation during the first half of 2006 to boost the state economy, but a downturn in the housing market has weakened growth and raised concerns about a slowdown in 2007.’
‘The lumber industry and other manufacturers are feeling the effects, Mitchell said. ‘You can see the weakening in lumber and wood products — no great mystery there with housing slowing down,’ he said. ‘By this time in 2000 we saw things changing,’ Duy said. ‘It was apparent that the job market was rapidly deteriorating. But it’s different this time. There’s none of that. It suggests that fears of a hard landing are overblown at this point,’ But the economists warned there remains a greater risk for recession when job growth slows. ‘What I worry about is I don’t know when the next recession is,’ Mitchell said. ‘I don’t think it’s in 2007, but it could be.’
‘This month, the 900 workers at Georgia-Pacific’s paper mill in Camas received a nice Christmas card from the Charles Koch family in Atlanta, wishing them ‘joyous holidays and a Happy New Year.’ The company now is in the midst of a harsh business reorganization. At Camas, for instance, 300 people will lose their jobs within the next six months.’
‘The card featured a cover photo of a beautiful, happy and obviously wealthy family. ‘Knowing what we’re all going through, the card just felt insensitive,’ said one G-P employee’s wife. ‘It just hit a nerve for a lot of us. It might have been better if they’d just not sent it.’
In case any PNW readers missed this from the desk clearing post:
‘If you thought 2002 was a strong year on the Central Oregon real estate scene, then you’ll probably like the cooled-down climate in the year ahead, a Redmond appraisal service predicts.’
‘About 8,400 property sales took place in the region during 2006 - a one-third drop from the 12,700 seen in 2005, according to Central Oregon Multiple Listing Service data compiled by Curtis and Margaret Drahn, who have been in the appraisal business on the High Desert for more than 30 years.’
“‘Strong job growth in Oregon outpaced much of the nation during the first half of 2006 to boost the state economy, but a downturn in the housing market has weakened growth and raised concerns about a slowdown in 2007.’”
“Ayre said construction topped the list of industries that showed strong job growth statewide last year.”
I think a lot of people are underestimating the effects the housing BUST is going to have on local economies, especially in places like Oregon. Most new jobs were directly related to the real estate boom. But beyond the obvious jobs in building, lending, etc., there are countless other industries which catered to these people. It’s the sandwich shop which fed the workers who will cut down on employees. It’s the boot store, the tool store, and on and on and on. When housing starts are fall off a cliff, so do a lot of these other businesses profits. The housing boom meant EVERYTHING to certain towns throughout many states.
I request a favor from this board.
I need to research Ann Arbor, Mi. real estate with the focus on condo’s. Can anyone recommend websites (free or fee)?
Thanks
By whom and with what borrowed money is the main question. I think you will have to let in the country more Russians, more Mexicans, more Cubans, more Chineese, more Columbians, more North Koreans, more Eskimos, more Pigmees, more Martians just to buy the stuff. Can we pay with Martian turbidium dollars ?
Marc : You are mixing up your currencies. The Martian currency is the Wonk . It is the Uranusian currency that is the turbudium.
btw: Real estate on the moon is going cheap. You can commute there to California. Only take a light hour at rush hour.
However, nightlife there is a notoriously dull: There’s no atmosphere.
” Median prices have not dropped with the changes in inventory and sales because only the good houses are selling, Simonsen said. ‘The lousier properties, they’re either going off the market or they’re just sitting around for a long time.’”
Ditto for the SF Peninsula. Modest price drop of 5-10% for comparable homes but the median price hasn’t changed much at all.
Bingo.
I stilll have to endure my coworkers smugly saying prices are not falling HERE because of job growth, desireability, etc. ad nauseum….
Inventory has dropped off since October as people wait for the “spring miracle” to save them. And the only homes selling are to desperate GFs (future FBs) who are still paying top dollar.
Come spring everyone will flood the market at the same time and then we will start to see precisely how “special” we are.
it is going to be a long wait
“‘Most of us are waiting for the glut of inventory to get consumed to a level to where we’re closer to the long-term standard in the marketplace,’ Gardner said.”
I, too, am looking forward to 2010.
But horrors, what if that inventory not only expands, but does so at an accelerating rate - while actual, closed sales continue to plunge?
Most of us in here are waiting for the glut of NAR dissembling, and seller greed and misplaced optimism, to be consumed….
Comments about “waiting” just underscore the low level of sophistication that these so-called realty geniuses are operating at…they wish, hope, pray, bury St, Joseph icons in the dirt, whine, cry, etc.
How about pretending it’s real money you’re playing with, and lower the damn price?
“How about pretending it’s real money you’re playing with, and lower the damn price”
well the donald chump wannabes would be just giving their properties away
ride this one down to the bottom greedy bastards
We’re waiting too
And unlike the NAR dissemblers, FBs, and greedy sellers, time is on our side.
Exactly. If there’s a “glut” now, just wait for Spring. And with all the negative RE stories out there, I can’t imagine this is going to “get consumed” anytime soon.
In general you are going to have to wait for a bottom anyway. What, are you going to buy an asset that is declining in value? Don’t hold your breath waiting to buy a house. It could be several years.
“Price cuts might not reassure already skittish buyers, Simonsen said. ‘I kind of think that people are attuned enough to the bubble headlines that if we see year-to-year price declines that might even scare people.’”
I challenge any REIC member to offer a single example of a “bubble” headline. The only use of the word bubble I have ever sees in the MSM has the flavor of a REIC expert quote, such as “There ain’t no stinkin’ bubble.”
But that will never stop them from blaming the MSM for the “slight downturn” we’re in now. If the MSM would only tell their truth, we’d still be in the ‘04/’05 market right now (implied ‘damnit!’ at the end).
I’m glad that the lady in Ballard neighborhood didn’t buy at the height of the market when she bought 1 month ago. I’m glad to see that the Seattle stereotype of Ballard residents driving down the street dragging sparking seatbelts out their doors no longer applies.
On Long Island, I’m there’s a flurry of open house this weekend. I see more that say “Price Reduced” , “Owner Motivated”, “Bring All Offers”. It looks like smart sellers are looking to get an early jump on the competitition. My feeling is that any strong buyers will be looking the next couple months for a good deal, then it’s down hill after that. Sellers that aren’t agressive in picking up a buyer early will be left swinging in the wind, as prices drift down the rest of the year.
well with 72 degree temps in nyc today maybe these delusional people selling these overpriced pos’s think it is spring already
”Median prices have not dropped with the changes in inventory and sales because only the good houses are selling, Simonsen said. ‘The lousier properties, they’re either going off the market or they’re just sitting around for a long time.’”
This is a natural consequence of bloated inventories in the face of a dying conundrum. The reason the “lousier poperties” are not selling is because they are priced too closely to the “good properties” which are selling. Likewise, most used home sellers are not providing enough of a “used-car discount” to compete with brand new ones the developers are selling around the corner.
Huntington plant lays off 112 workers
HUNTINGTON, Ind. — More than 100 workers have been laid off from a northern Indiana plant that makes electronic components for heating and cooling control units.
“It’s by far the largest layoff we’ve ever had in the history of hourly workers at the plant,” said Tyler Brown, president of the International Brotherhood of Electrical Workers Local 983.
Slumping sales in the new-housing market made the job cuts necessary, said Mary Milnoe, a spokeswoman for the Hartford, Conn.-based company.
“This layoff is temporary in nature,” she said. “The employees will be recalled as sales production increases.”
**** By the Spring they will need to recall these employees? ****WTF!
“Price cuts might not reassure already skittish buyers, Simonsen said. ‘I kind of think that people are attuned enough to the bubble headlines that if we see year-to-year price declines that might even scare people.’”
Skittish headlines with stories contained within of families getting conned into buying a home by the REIC and now have to declare BK and lose the home. Those type of headlines.
Well there is going to be a lot more as 2.2 million are anticipated to go into foreclosure according to the (CRL). By the way that is a lot. I mean really that is a big number, think about it 2.2 million. Lets say it together 2.2 million. Sort has a ring to it.
PROGRAM ALERT:
On CNN, right now (west coast): Open House - Mortgage Meltdown
1 hour special.
Bad sign. And if it appears on the cover of TIME magazine, the bust is finished and it’s time to buy. We are not there yet. But you never know.
John Mauldin’s latest e-letter has expanded my understanding of the sub-prime debt problem by quoting (i think) Gary Shilling about how the BBB tranch of mortgages in RMBS magically turns into mostly AAA in CDOs by being “diversified” cr#p instead of homogeneous cr#p. Probably Stucco or somebody here has explained this before, but I didn’t digest it. One question that comes to my mind is, what will happen at Moody’s if/when mountains of paper that they have rated as AAA starts to turn into ashes?
It’s amazing to hear RE bulls blame negative press for a slowing market. The DOW lost 500+ on the first trading day following 9/11 and continued on down until March of ‘03, partially because of the negative press of terrorism, but mainly because the market was overvalued.
What’s the lesson? An over-inflated market is susceptible is ANY negative news.
And that moron Greenspan lowered interest to 0% and created another bubble. The trick to get rich downhere?
Anticipate which bubble these bastards in central banking, yes these bastards, are about to create. Take your position just before the bubble starts and wait that the bastards in banking push the stuff to extreme limits.
Well, don’t be surprised if the next bubble is now puffing up in large cap stocks. August ‘06 was the turning point, the media practically turned off the light-switch on a peachy housing market once the reports came in on Q2 ‘06. Coincidently or not, that’s when the indexes began their step-like ascent to their current high levels. I know it’s ridiculous, because you’d think the market would go up because of good economic fundamentals. It seems like the market is going up because it’s the only other attractive asset class against anything else right now, besides cash.
No it’s not ridiculous. In a world where nothing is fundemental, your analysis is probably quite true. It’s exactly how the sh-ts in banking work. You can call all these morons “the bubble masters”. And naturally Ben Bernanké once the bubble deflated in commodities and real estate, will have to create another bubble.
You got it. Actually producing anything is for chumps. It’s all about shoving your way to the front of the inflation trough, eating all you can, puking, eating some more, and then turning around and sh-tting into whatever’s left for all the poor slobs downstream. Screw them before they screw you.
What this ultimately does to a society is left as an exercise to the reader. Weimar Germany is a good starting place: mises.org/journals/rae/pdf/rae7_1_1.pdf
iverside, CA realtors or buyers. Need your opinions please
Prices are lower???? There is a NEW development I’m looking at. 2bedroom 2.5bathroom 2 car garage attached townhomes in Riverside County, Lake Elsinore area. Starts at 270,000 up to 3bedroom @ 300k
Is this price still the old run up prices from 2005 or is it a “safe” bet to jump in on this at this price??
What do you think the possible scenarios for 2007 regarding housing in Riverside county? Should I wait it out? Should I jump in??? Pros and cons scenarios? Also, I’m worried that if I go in would they offer these townhomes at lower prices if the demand is low later in the year????
Thanks for your time.
I am hardly an expert on RE, and certainly not on RE in Riverside, but boy that whole place seems like it’s heavily overbuilt right now. I’d be very scared to buy there right now.
No. I have heard that the Martians will be buying soon.
Please consider commuting expenses and IMHO wait until thanksgiving 2007 to see how things are going before buying. There will always be plenty of RE to choose from…no need to hurry.