The Market Is Declining From A Peak
The News Tribune reports from Washington. “Rising prices and sinking sales made for a mixed housing market in Pierce County last month as several thousand homes vied for buyers’ attention. Pending sales declined 21 percent, the largest year-over-year drop so far in 2007 and the biggest in the Puget Sound area. At the same time, the number of homes listed for sale skyrocketed, up 57 percent to 8,039 over the previous May.”
“Agent Gail Jensen in Spanaway, who primarily works with sellers, said she’s counseling them to price smart. ‘I haven’t seen a stagnant market like this in 18 years,’ Jensen said.”
“‘It seems like the listings are not hard to get. What’s hard to get are well-priced properties. Sellers being realistic is one of the main problems,’ said Dick Beeson, a MLS director.”
“Dawn Cutts said she thought her 1925 Mediterranean home in Tacoma was priced at market value but reduced it this week by $45,000 to $850,000. On the market for about 45 days, the 3,600-square-foot house is taking longer to sell than she anticipated.”
“‘We didn’t get comments that it was overpriced, but we’re just anxious to sell it,’ Cutts said.”
The Daily News from Washington. “The housing balloon hasn’t burst in Cowlitz County, but its definitely leaking. In May, housing prices fell below their levels in May 2005, marking the first year-over-year decline in the local market since October 2004.”
“Lower prices are partly the result of a glut of homes for sale, according to the Tacoma-based listing service.”
“‘I think we are leveling off. We’ve caught up to the (national) trends,’ said JoAnn Crayne, broker in Longview. Crayne said lower prices and a rise in home listings give buyers more choices, and sellers must be more patient. Sellers, she said, ‘can’t expect what happened a year ago when people were getting a couple offers a week.’”
“‘Bargain deals are few and far between,’ NWMLS director Kathy Estey said in a news release Wednesday. ‘In spite of growing inventory, prices are still increasing and homes that are priced right are selling very quickly. Insulting a seller with a ridiculous offer is not necessarily a winning negotiation strategy.’”
“In Cowlitz County, 668 homes were on the market last month, up 60 percent over a year ago and the most at any one time since June 2001, when 689 homes were for sale.”
“‘We’ve hit a pretty tough trend. We’re hoping we’re at the end of that cycle,’ she said. ‘I’m looking for homes sales to continue picking up this month but I don’t know about median price.’”
The Olympian from Washington. “Thurston County home and condominium sales gained some strength in May as sales dropped about 6 percent compared with a 15 percent drop in April sales, the Northwest MLS reported Wednesday.”
“Real estate agent Blake Knoblauch said the county’s housing market still is strong, though he acknowledged that its biggest problem is that it has more than 2,000 listings.”
“Home sellers today have to carefully consider the price, location and the condition of their homes, he said. ‘Entice (buyers) with price and ‘wow’ them with value,’ Knoblauch said.”
“The first-time buyer continues to be shut out of the local housing market, said real estate agent Jackie Tosland. ‘There has been a noticeable decrease in first-time buyers and lower-end homes,’ she said.”
“Real estate company Group 7 Inc. owner Ron Hill took a different view of the county’s housing market in May. ‘It was hot as a pistol until mid-May and then somebody flipped a switch,’ he said.”
“Tighter lending standards have resulted in more buyers backing out of deals because they can’t obtain financing, Hill said. ‘The people who shouldn’t be buying are now not buying,’ he said.”
The Seattle PI. “Seattle home sales shot up in May by 21 percent, compared with May 2006, according to the Northwest MLS. The number of homes on the market, however, shot up by an even-more-impressive 60 percent from May 2006. The county’s total sales nudged up by just over 2 percent, while pending sales declined 7.5 percent.”
“While the market is declining, it’s still good, said Matthew Gardner, a local land-use economist ‘We’re declining from a peak.’”
“Seattle’s May sales surge was largely due to condominiums, whose sales jumped by 74 percent. Gardner said completion of condos in new buildings like the Cosmopolitan and 2200, and subsequent flip sales of these units, can drive up condo numbers in particular months.”
“Seattle’s inventory of homes for sale has increased every month since April 2006. Gardner said he…doesn’t expect an oversupply in the next couple of years. ‘I’m getting a bit concerned about 2010, though,’ he said. ‘It looks like an awful lot of units will come to completion then.’”
The Idaho Statesman. “The vacancy rate for houses in Ada County has fallen dramatically in the last year, according to a recent industry survey. Industry members attributed the scarcity of houses for rent to increases in home values that have priced many area consumers out of the market, and to an influx of new residents who are choosing to rent while they decide where to live.”
“‘One big reason for these vacancy rates is because the three- bedroom house that used to cost $130,000 now costs $200,000,’ said Patrick J. Chapman of Chapman Properties.”
“Chapman, a 13-year veteran of the property management business, said some newcomers to the rental market include consumers who purchased homes with adjustable-rate loans and now have seen their monthly mortgage payment jump dramatically. They sold their homes or were foreclosed on and had to move into rentals.”
“According to RealtyTrac, the most recent statistics available show that there were 424 foreclosures in Idaho in April, compared with 190 for the same month a year ago.”
“Ada County had 116 filings in April, compared with 44 a year ago. Overall, there were 1,457 foreclosures in Idaho during the first four months of the year, up from 947 for the same period in 2006.”
“‘Lenders were letting just about every Joe into a home,’ Chapman said. ‘Now those lenders are foreclosing on a lot of those homes. And they have increased their lending criteria, which makes it impossible for some people to buy a home.’”
‘Year-over-year home construction activity declined in May, as measured by building permits issued in unincorporated Clark County (WA). The county has issued 587 building permits for single-family homes in the first five months of this year, a 20.2 percent decline from the 736 permits issued during the same period last year.’
‘Permits issued in May were the lowest for that month in five years, according to the Clark County Department of Community Development.’
‘Scottie Pippen, the former Trail Blazers star, has found out the hard way that selling a high-end house for a profit is no slam dunk even in Portland’s healthy real estate market. The retired basketball legend and his wife sold their 2.28-acre West Hills estate for $2.95 million last month, down from the $4 million they paid in 2000.’
Pippen has made a series of bad financial descisions…
http://www.suntimes.com/sports/basketball/bulls/269688,CST-SPT-pip23.article
“…that a pilot persuaded him to consider buying his own jet.”
Bugs: eh Daffy, give Scottie… Don Kings phone number, Maybe he can do a pay-per-view wedding with Dennis Rodman, Mike Tyson can stand in as “Best Man”
“‘We didn’t get comments that it was overpriced, but we’re just anxious to sell it,’ Cutts said.”
Actions speak louder than words. I would take a complete dearth of buyer interest as a fairly clear sign the home is overpriced for current market conditions.
I agree. House prices are like car sticker prices - the price is the starting point of negotiation. If no one is making an offer, it’s because it’s so overpriced that a prospective buyer is not even willing to submit an offer, believing that the seller has unreasonable expectations.
“Insulting a seller with a ridiculous offer is not necessarily a winning negotiation strategy”
A serious low ball offer is seemingly the only thing outside of the 1-year anniversary of your first MLS listing that gets some sellers ‘attention.
“Insulting a seller with a ridiculous offer is not necessarily a winning negotiation strategy”
It’s not necessarily a losing strategy either.
and as you sellers are finding out insulting the buyers with a ridiculous asking price is not a winning negotiation strategy either!
Here’s some advice sellers - GET REAL! (in Dr. Phil voice)
“Insulting a seller with a ridiculous offer is not necessarily a winning negotiation strategy”
(another Dr. Phil comment) “Yeah? How’s that workin’ for ya?”
BayQT~
“Insulting a seller with a ridiculous offer is not necessarily a winning negotiation strategy”
I’m in the business and have never understood this statement. If someone lowballs and you have a few offers then throw it out, but if your property has been sitting on the market with no offers or if the last ten offers have been in that realm that’s not insulting that’s friggin reality. I don’t get it…
Evidently, the seller thinks that a buyer who is less insulting will come and purchase the house at the appropriate price. I’ve seen this happen even with a distressed seller:
A guy I know is getting foreclosed. He owes the bank $600k, the house appraised at $610k. He puts it on the market for $660k - yes, ten percent above appraisal. He actually got an offer for $640k (miracle of miracles) - the house needs a total interior rehaul. The distressed seller refused the $640k offer.
All I can say is UFB.
rehaul. = overhaul + rehab, I believe.
Did I just invent a word?
i think you did! nice work.
rehaul. = overhaul + rehab, I believe.
Did I just invent a word?
- Outstanding! This blog is one of the finest!
Nah
http://www.google.com/search?client=safari&rls=en&q=rehaul&ie=UTF-8&oe=UTF-8
“…The distressed seller refused the $640k offer…”
That’s stupidity if it appraised at 610k
I find people asking 700k for a house that sold for 225k 3 years back as insulting. So I guess my realistic offers of 375-380k are better than my other offer of “pound sand” and more tax bills and more mortgage payments.
It IS insulting to buyers that sellers feel entitled to 3 X what the house sold for a few years back. THAT’S the crime here. Buyers really need to step up to the plate and start lowballing big-time- and not this namby pamby 10-20% off stuff.
BTW, I like Tacoma (know some would disagree), but the fact that somebody would put what sounds like a regular house on the market there for almost a million dolllars speaks volumes about just how insane this, and everyone involved in it, got. Anyone who would buy that place after a measly 45K price cut is certifiable, IMO.
So…let me get this straight…..
The guy found himself between a rock and a hard place, couldn’t pay his mortgage to the point of having it go into foreclosure, he OWES $600,000, yet priced it to sell at $660k (and REFUSED $640k) because he wanted to be able to walk with $60,000.
Now, the way I’m looking at this is that he wants to be rewarded for not paying his bills, and (of course) will only take what HE thinks he should get. What a prime cut, grade A, top of the line, dumb a$$ he is. UFB is right.
What is wrong with people?
BayQT~
Let’s not forget the buyer might have wanted $50K cash-back, meaning he’d be underwater.
Now, the way I’m looking at this is that he wants to be rewarded for not paying his bills,
lol - sfbay this guy wants to be rewarded for simply allowing the rest of us to breathe the same air…I think his pic appears under the Primo Narcissist rubric.
And the rest of your post is also on point.
*chuckling*
$640,000 - cartel commission = $601,600. If it’s as bad as you say, the buyers were probably asking for quite a bit back at closing too, which probably brought the seller in below their magic payoff number. I don’t agree with it, but I can see the decision making process.
Hooray! My hometown is finally showing undeniable collapsing bubbliciousness. Thanks for your reporting on this, Ben, and to all the great commenters who dig even deeper. This month’s figures for Seattle and its surrounding areas correlate strongly to the data posted here awhile ago, that bubbles begin at the urban hotspot and radiate outward, then collapse in reverse order. Here it is, right on schedule, a year behind San Diego! Props also to The Tim’s Seattle Bubble blog, where he and his crew do a lovely job focusing on our area.
What data are you looking at that gives you hope? The rise in Seattle condo sales by 74% is depressing.
Read the article. A bunch of condos hit the market and were flipped. When have we heard that before?
peak” was july of 05
I love these pronouncements
Gross ups projected bond yields to 6.5% over the next 2-3 years. After 25 years of being a bull.
Into the future…he’ll still be eating 1″ thick (No-Mad-Cow) Texas prime, no worries …
txchick- Where did you read that? I made a comment the other day to a friend that I thought his comments a few months ago about being bullish on bonds was self serving propoganda for him to get out his massive long positions. I’m assuming your talking about Bill Gross @ PIMCO.
Reuters or Bloomberg, can’t remember now. Really giddy from that nosty close on the S&P
Reuters.
He is always self-serving.
Interest rates have nowhere to go but up. The 3 worst things that can happen to real estate are now in full bloom.
1. Higher rates
2. Recession
3. Credit contraction
It really is different this time.
Add to that list the rising costs of essentials for living: gas, food, electric, insurance and we are reminded of the movie ” The Perfect Storm”.
Generally (99% of the time) recessions lead to lower rates. Thus, if you have one, you don’t have the other.
The Fed is stuck this time around and they know. They have no control whatsoever over long term rates (10 & 30 yr). I would argue we are already in a recession if you look beyond the bogus gov’t statistics. If Ben and Co were to lower, the long bond might collapse entirely in this type of environment(inflationary).
Yep, time for stagflation to rear its fugly head again.
But 99% of the time the USD is not being flushed down the toilet by everyone in the world, in which case you are forced to raise interest rates regardless of the state of the economy. Or you risk even more dire consequences.
I guess you don’t remember the early 1980’s with double digit interest and unemployment rates.
I agree with that Jerry. I hate it when people pull that “99%” out of their rear end. People here like numbers, and we’ll call you on it!
Check this out.
Ohio Sues Real Estate Firms for Pressuring Appraisers
http://www.bloomberg.com/apps/news?pid=20601087&sid=a16zEJ5yMe3Q&refer=home
Great article. Go Ohio. Finally getting at (one of ) the cruxes of the matter.
Discouraging though how bad things had to get before anybody took the slightest bit of action. Ohio’s had mounting unemployment, bread -lines and foreclosures for years. It’ll take a while for other states to get as bad as Ohio (assuming they do get as bad).
Holy cow this all reminds me of when Chrysler unveiled the PT Crusier.
Idiotser, drivers where paying $5000 over sticker. Now look, dime a dozen. Sellers if you get anything get this! The day of the $200+ per sq ft are over and your greedy azzes missed it.I drove by a row of new pt cruisers @ a dealership in el lay last week…
All had a sign with 20% off of msrp, on the windshield~
Rented one with unlimited mileage… $24.95 a day …drove it from the Orange, CA to Elgin, Neb and back Ran good…a little small…drove well, I’d give a thumbs up.
What the hell is there in Elgin? I’d rather rent a Corolla. In fact, whenever I rent a car, I request something Japanese.
Pretty smart of Chrysler to repackage a Neon that way, though!
You left out the Mazda Miata.
I miss mine. Got a Subaru WRX but miss the rear wheel drive. The Miata is a kick ass car if you don’t mind the inevitable insults from friends.
Chance the Gardener: Yes. In the garden, growth has it seasons. First comes spring and summer, but then we have fall and winter. And then we get spring and summer again.
“While the market is declining, it’s still good, said Matthew Gardner, a local land-use economist ‘We’re declining from a peak.’”
A la din sa ne , I expected the quip about “Dawn Cutts … reduced it this week by $45,000 to $850,000. On the market for about 45 days, the 3,600-square-foot house is taking longer to sell than she anticipated.” A bigger “Cutt” than that is needed.
I do like Chance.
Hoz,
Too obvious of a name, Cutts (and perhaps their kid “Cole”?)
Where’ve you been?
Builders “forgiving” home loans?
Hmmm
http://www.charlotte.com/business/v-print/story/147609.html
From that same article:
“But borrowers were generally unaware of the 20 percent loans until closing. Some were originally quoted a lower price, but at closing were given papers listing a price 20 percent higher, and offering a second loan.”
I would love the chance to survey these borrowers and find out just how many even know what the words 20 percent means
The so-called economist who doesn’t expect an oversupply of housing in Seattle for the next couple of years is “concerned about 2010″ because of a lot of new units will come to completion then.
Great, just in time for that second wave of ARM resets (see Credit Suisse chart).
If there were any justice, though, this guy would be out of a job long before 2010, based on his moronic projection for 2008.
Seattle’s in the top 10 of the nation for Alt- A and option ARMs. On the Credit Suisse, they start adjusting in full force around 2010, right?
Selling these downtown condos has become a full time, round the clock project up here. Every week there’s an article about the pleasures of, the hipness of, the convenience of, etc. owning a condo downtown. Every article is feature length and explores a different aspect of whatever the appeal might be for that week. It’s pretty sickening because it’s so clear it’s just a marketing tactic being presented as “news”.
Truthfully, they’ve needed more dwellings downtown for decades because it’s deader than a doorknob down there after 5PM on weekdays. Hopefully they’ll do well after the crash when they can be had or rented for firesale prices. Get some warm bodies roaming the streets for once.
Testify!
Homebuilders dragged down by Meritage, rate fears
http://www.reuters.com/article/hotStocksNews/idUSN0721686820070607
“The sense is that it’s going to take the fundamentals a long time to unwind.”
From 1929 to 1957 is how long it once took… to rewind.
“Agent Gail Jensen in Spanaway, who primarily works with sellers, said she’s counseling them to price smart. ‘I haven’t seen a stagnant market like this in 18 years,’ Jensen said.”
If this is the worst it’s been in 18 years, and we haven’t really started yet (as per “The Chart”), whoa nelly this thing’s gonna hurt.
Spanaway, that’s the town where the ruins of Spamalot can be found, right?
Nope, mostly the ruins of meth labs
Sitting here with a glass of wine. You almost made me spit a mouthful. I’m up here from New Zealand for 6 weeks (ex Seattle guy) and am pretty amazed at what’s going on. Has everyone gone crazy? Big drop coming. The NZ dollar is up to $.755 US which makes me very happy. The only question left is inflation or deflation. Inflation gets the ‘homeowners’ out but…
“While the market is declining, it’s still good, said Matthew Gardner, a local land-use economist ‘We’re declining from a peak.’”
Anybody care to make a stab at this inane comment? Decline, fall, soften, splat, whatever hyperbole these guys use…it’s ALL good.
And what is a “local land-use economist”? Is that a fancy word for appraiser?
Good catch! This “local land-use economist” uses his Oxford education to advise developers. Ka-ching! He is oft-quoted in our Seattle MSM as an unbiased expert, hee hee.
From his company web site…
oops - bad html
With offices in Seattle and Portland GARDNER JOHNSON has been actively involved in the development of many of the most complex real estate developments in the western United States. Our experience includes:
Land Use and Regional Economics
Residential Market Analysis
Commercial & Industrial Market Analysis
Financial Analysis
Strategic Planning
in other words,
a carpetbagger.
A Joe in every home and a foreclosure in every garage?
“‘Lenders were letting just about every Joe into a home,’ Chapman said. ‘Now those lenders are foreclosing on a lot of those homes. And they have increased their lending criteria, which makes it impossible for some people to buy a home.’”
On the subject of “declining from the peak,” I see two developments that bode very badly for stocks at the moment:
1) Plunge protection seems to have temporarily lost its heft against selling pressure;
2) The bond market is selling off at the same time as the stock market.
By contrast, many of the wobbly periods for U.S. stocks in the late 1980s were accompanied by a flight-to-quality which concurrently drove down Treasury bond yields. There may be a flight to quality underway at the moment, but it is apparently not into any of the assets whose price movements are shown on this screen:
http://www.marketwatch.com/tools/marketsummary/
The problem is there is no quality to fly to, and people are having to sell everything to keep the alligators at bay.
Wow, that was really well written.
according to LA Times…
Currently, nearly 3% of the homes for sale in Southern California are owned by lenders, according to home-search website ZipRealty, up from a fraction of 1% a year ago.
Nice to hear the lenders get to stew in their own broth…
From the article…………..
“Countrywide Financial Corp., the nation’s biggest home loan provider, declined to comment about the homes it is selling. On its website, however, the Calabasas-based lender offers a list of foreclosed homes for sale that tops 8,900 nationwide, up 60% since January.”
WOW
HOW did you get that bugeye guy?
Hopefully for the “subprime is contained” crowd, there is zero correlation between subprime mortgage rates and 30-year fixed rates.
MORTGAGES
U.S. mortgage rates hit 10-month highs
30-year fixed-rate hits 6.53%, its highest level since Aug. 10
By Amy Hoak, MarketWatch
Last Update: 11:19 AM ET Jun 7, 2007
CHICAGO (MarketWatch) — Mortgage rates reached 10-month highs this week, responding to market concerns of a tight labor force and wage growth, Freddie Mac’s chief economist said Thursday.
“May’s unemployment rate remained at the second lowest level since May 2001 while average hourly earnings rose,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a news release. “Additionally, unit labor costs increased 1.8% over the first three months of the year, tripling the original estimate, and fueling inflation fears.”
The 30-year fixed rate mortgage averaged 6.53% for the week ending June 7, up from last week’s 6.42% average. The mortgage hasn’t been higher since the week ending Aug. 10, when it averaged 6.55%; it averaged 6.62% a year ago.
http://www.marketwatch.com/news/story/us-mortgage-rates-hit-10-month/story.aspx?guid=%7B92584C03%2DDDED%2D4C17%2D8C50%2D4D3CB6E473C1%7D&dist=SecMostMailed
Probably had something to do with the weather…
Probably had something to do with the weather…
Oops, double post somehow
Probably had something to do with the weather…
Lenders were letting just about every Joe into a home,’ Chapman said. ‘Now those lenders are foreclosing on a lot of those homes. And they have increased their lending criteria, which makes it impossible for some people to buy a home.’”
Hey Gomer, do you think that we REALLY need to check and see if Sgt. Carter has the money/income to pay back the home loan?
Hey, Pat. Can you state the obvious again?
Lenders were letting just about every Joe into a home,’ Chapman said. ‘Now those lenders are foreclosing on a lot of those homes. And they have increased their lending criteria, which makes it impossible for some people to buy a home.’”
‘From a peak”
we are way past the peak now and heading south fast really fast.
The real fun starts this fall. I hope there will be enough to amuse us over the summer.
does anyone have info about Wenatchee, WA, saw a recent stat showing Wenatchee to be #1 in real estate appreciation in last 12 months. I am moving there from San Diego.
Well I don’t know the details, but back in the 90s the local government in Wenatchee went insane and undertook a massive witchhunt, accusing local schoolteachers of being pedophiles. This became a national news circus. The charges turned out to be fabrications. The current governor of WA was on the side of the witchhunters.
I hope you’re kidding, Jim. So do you have a house to sell in SD? If so, you’ll get screwed on your sale - IF you sell, and then you’ll probably buy at the peak of Wenatchee, from which point the value will fall. Great plan, genius.
Brother Palmetto. I am sure there will be plenty of items to entertain all summer.
I’ve been trying to sell my home in the Las Vegas area. I got some stats today I found shocking. In 2004 there were about 5,700 SFRs and condos available for sale in the area. The latest numbers are about 26,000 houses and condos on the market and Lord knows how many still being built. The whole town must be on the market. Two homes near me finally sold after a year on the market and 10A% drops from original asking price.
Cut to the bone and sell NOW! Seriously, get out any way you can.
I forgot to mention, and can’t recall the exact percentage now; but a huge number of those homes are vacant. And the number of developments currrently under construction was remarkable. The agent with whom I spoke was startled at my pessimistic outlook on the real estate market. I told him I felt California had no choice but to crash, and in some areas there it would be complete carnage. I said when that happens, it’s going to drag the rest of the Vegas housing market down with it. As strange as it may seem, in many ways I’ve noticed that Las Vegas is almost a suburb, a bit far, but a suburb of the L.A. metro region.
I’d already cut to the bone as a FSBO and wasn’t getting the response I’d hoped for, so had to go with an agent, and raise the price for agency fees. Two houses doors away sold this week, and I picked a middle price. If the agent can’t do anything, I’ll watch prices and end the agency early, I’m not optimistic at all.
The local CBS television news station is reporting today on the horrible market here. It’s very rare you hear or read the media here say anything truly negative about the town and its economy.
I wonder how long it will take for those thousands of vacant homes to return to the desert from which they sprung. A quarter inch of stucco, plywood, and styrofoam can’t be eternal.
The agent with whom I spoke was startled at my pessimistic outlook on the real estate market.
You just don’t drink the same kool aid he does.
Well, Steve, props for knowing what you have to do, just sorry that it is so late. How did you advertise FSBO? What would happen if those vacant homes started being torched? Maybe I shouldn’t go there. If the MSM is picking this up, take a loss and GET OUT.