It Has Become An Unaffordable Market
The News Tribune reports from Washington. “Pierce County home prices dropped in September for the first time in years, as sales activity continued to ramp down. Sales activity also lagged, with 40.5 percent fewer homes sold in September compared to the same month last year. Puyallup saw one of the steepest decline in sales, a 50.5 percent drop, along with a median sales price decrease of 4.2 percent.”
“The price drop and sales slowdown accompany a growing array of incentives for buyers and their agents, including cars, discounted closing costs and furniture shopping sprees.”
“In the six months Chris Wlodarczyk shopped for his first home, he watched the market become one he says strongly favors buyers. Friday afternoon, he counted off the upgrades he landed on the Orting home he’s buying for $262,000: an outdoor hot tub, a fully landscaped yard, a Jacuzzi bathtub and all of his closing costs paid.”
“His advice for house hunters? ‘Be choosy,’ said Wlodarczyk. ‘If you look hard enough, you’ll find a house that’s worth more than you’ll pay for it.’”
“Shirley Patterson took her North End Tacoma condominium off the market this week after listing it in June. ‘You can tell it’s a buyer’s market; they’re very choosy when they come in,’ she said.”
“Patterson priced the 1,000-square-foot unit, with a view of Commencement Bay, at $309,000 and later discounted it by $10,000. ‘I’m somewhat discouraged, but I think I can compete when I do the upgrades. I have the view and they don’t,’ she said, referring to nearby condo projects.”
The Herald Net from Washington. “Snohomish County’s housing boom is over. Builders are laying off workers, houses are staying on the market longer, and the overall number of permit applications has dropped by hundreds compared to last year.”
“‘Nearly every developer has or is contemplating layoffs, and it’s because of the slowdown in the market,’ said Mike Pattison of the Master Builders Association of King and Snohomish Counties.”
“That’s after what many call the largest building boom the county has ever seen, marked by bidding wars and rabid pre-sales of homes. During that boom, a 5,000-square-foot vacant lot went for as high as $247,000.”
“‘The housing peak is over,’ said Todd Britsch, president of Bothell-based New Home Trends, which tracks new construction. ‘These type of frenzies come around every 20 years.’”
“‘What we’re seeing is the natural cycle of the real estate markets,’ said Nathan Gorton, executive officer of the Snohomish County-Camano Association of Realtors. ‘We had the top three years ever in a row as far as sales go. All of a sudden sales are cooling off. Instead, we’ll have like the eighth-best year.’”
“Some builders are stuck with some of the leftover inventory because the number of buyers isn’t as high as it had been, Gorton said. Consequently, builders are ‘taking a deep breath,’ Gorton said.”
“Fewer vacant building lots are being bought, plummeting from 889 in the first three months of the year to 145 sales in July, August and September, said Toby Barnett of Barnett Associates Real Estate in Marysville.”
“Barclays is listing nearly 1,400 lots worth $74.3 million in Snohomish County, according to the company’s Web site.”
The Register Guard from Oregon. “In the first six months of last year, 334 Lane County homes were being foreclosed on. Fast forward to this year, when that number almost doubled, to 584, in the same time period, according to RealtyTrac.”
“Foreclosures in Lane County increased 92.3 percent in July and August compared with a year ago. Statewide, they rose 52 percent in the same time, according to RealtyTrac.”
“Berri Leslie, manager of the mortgage lending section of the state Division of Finance & Corporate Securities, suggests that Lane County’s biggest problem may be what most would consider a strength, high home values.”
“The Eugene-Springfield area’s rapid rise in real estate prices from 2002 through 2006 may have forced some buyers into the subprime market, she says. ‘If it costs more to get into a home, folks might have to rely on nontraditional (mortgage) products to afford it,’ Leslie says. ‘So there can be a lot more risks.’”
“Todd Williams, legislative committee chairman for the Oregon Association of Mortgage Professionals, says it makes sense that Lane County may have priced itself into its current situation.”
“‘It has become what we call an unaffordable market,’ Williams says, explaining that the area’s median income is not sufficient to afford a median-priced home.”
“‘When you have that situation and you have people who want to become homeowners, for the mortgage industry, it becomes incumbent on them to come up with some sort of products,’ Williams says.”
“Ren Nelson, a mortgage broker (in) Eugene, says she’s working with a client who has owned her home for 18 months. The home’s value has increased and the woman now has about 35 percent equity in her property.”
“But Nelson’s client financed the home a few years ago through another broker, taking a subprime, adjustable-rate mortgage. Because of a series of financial setbacks…the woman has been late on six of her monthly payments.”
“Now, despite her high equity, the damage to her credit makes it unlikely she’ll be able to refinance to avoid the interest rate increases on her adjustable loan. ‘The lenders are looking at her and seeing too much risk and exposure,’ Nelson says. ‘They’re saying, ‘We don’t want to do the loan,’ but she’s got all this equity. So the rules of loans and underwriting have completely changed.’”
“‘To be real candid about this gal … my vision is that she’s going to have to sell the house, because I’m not going to be able to refinance her,’ Nelson said.”
“Robert Broten, a loan officer at Pacific Home Funding in Eugene, says that when local home prices were increasing 20 percent or more per year, many homebuyers who couldn’t come up with down payments were able to get loans for the full value of their homes, or more.”
“Others took loans that had low payments in the beginning but then rocketed upward, or had a big balloon payment.”
“‘I think a lot of them went into it thinking, ‘These (adjustable rates and other unfavorable loan terms) are temporary issues, and I’m going to fix them later,’ Broten says. ‘I think it got to a point where people…just didn’t have the financial plan, or the understanding of their financial situation, to afford a home.’”
The mail Tribune from Oregon. “Well-positioned real estate observers say the impact of failed subprime mortgage loans and the residual effects will have to work their way through the pipeline before the Jackson County market regains its footing.”
“For the three-month period of July through September 2006, there were 106 default notices sent out. For the same three months this year, there were 212, including 77 in September, said Lacey King, who tracks Jackson County defaults.”
“‘Most of them were in the $150,000 to $175,000 range. That shows there were a lot of people in the lower end of the scale getting loans when they shouldn’t have been lent the money. Looking at the real market value, I don’t think they put a lot down,’ King said.”
“The picture becomes clearer when King rattles off interest rates on the failed loans: 8.75 percent, 9.85 percent, 9.9 percent and 14 percent.”
“‘That’s a clear indicator of a subprime loan when you see rates like that,’ said Mike Sickels, CEO of People’s Bank of Commerce in Medford.”
“The woes of homeowners have created a growth industry for people like Brian Hilden. Hilden runs a company that helps distressed sellers unload their homes before they’re lost to foreclosure.”
“‘I sit with a lot of people who have really bad loans, many of them first-time home buyers,’ Hilden said. ‘A lot of brokers got pushy in the height of bubble. I think they were guilty of downplaying the seriousness of variable rates. There were people who got caught up in the frenzy of buying investment property, and about half of the people I’m dealing with were investors.’”
“Although Jackson County sales activity declined the second half of 2005, prices continued rising and inched up for several months before drifting downward. The median sales price for single-family residences in the county’s urban areas was $288,900 in January 2006. By last month, the median sales price declined 12.6 percent to $252,500.”
“‘There’s always a lag time,’ said Roy Wright, a Medford appraiser. ‘Volume will drop for a year or year and a half, and then the market will react. If you look at where the prices were in September 2005, they were 23 percent above September 2004 even though the sales rate was dropping.’”
“The inventory of residences available, from condos to rural properties, is near 3,000. In-migration by equity-rich homeowners from other states may be slowing as the markets they move from go ice cold.”
“Just as builders barged past the market’s stop signs, some mortgage brokers feeding the Wall Street investor frenzy continued to loan money even when it made little sense.”
“‘Definitely some people should stand up and say I am a part of what brought this on,’ said Colin Mullane, a member of the Statistics Committee of the Rogue Valley Association of Realtors. ‘As responsible adults when we hear rates that are too good to be true we should question it. If you go to Washington Mutual or People’s Bank and they quote you one rate and then you go to Fly-by-Night dot-com and they say they can save you $400 a month, you’re not going to be a responsible adult if you’re not questioning that.’”
“According to figures compiled by LandAmerica Lawyers Title, nearly a third of the county’s 40,679 single-family residences are not occupied by their owners, meaning that if investors bought near the top of the market and are wanting their money out, they’re likely going to take a hit.”
“Adjustable-rate mortgages taken on by many investors and first-time buyers during the latter stages of the boom will kick up to higher market rates. It may force more foreclosures in the short-term, Mullane admits, but it will be good for the overall market.”
“‘That needs to be flushed from the marketplace,’ he said.”
Another one bites the dust - the PNW has now joined the rest of us. Welcome to the decline!
It’s interersting how it happens. The news organizations just wake up one day and start stating the obvious.
A business associate tells me Bend Oregon has reached a plateau and should settle right about here. Because “its different here…”
And yet if you asked him how much it went up in the last 5-7 years I’ll bet he wouldn’t know or if he did wouldn’t find anything unusual about 100%+ appreciation.
Only place I can buy the “it’s different here” response is where it hasn’t gone up beyond historical norms. I don’t think there are that many of those places. (Anyone know a good one stop shoping site for appreciation by city in the last 10 years?)
Bend Oregon? I was from Portland. Bend Oregon is special? I must be missing something lol.
Well…Oregon’s motto used to be “it’s different here.” I guess people thought it applied to everything.
The new tagline (a year or so old, now) is: “Oregon. We love dreamers.” Your bud in Bend: Dreamer. Bend is toast.
Bend, Bozeman, Santa Fe, Tuscon, Flagstaff, Sun Valley, Boulder, …. No shortage of these “special” places. They all have one thing in common: pathetic local incomes that in no way support the absurd prices. Erase crazy CA appreciation, and these places all swirl down sewer.
Very true. Put Ashland, OR in that list. The only common denominator was allure to equity-rich locust. Now that the locust are eating their young, things will all have to depend upon local wages. A nice change in my view.
Thanks for the invite. So glad to be here!
Olympiagal, nice to see you! I wanted to thank you for posting the other day about homebrewing. I had been thinking about it for a while, but you pushed me over the edge. I got a kit from a homebrew store and my ale is bubbling away right now. I’ll toast the first bottle to you!
DP
We have stories here about mortgage fraud in the millions, and people walking free. Try this: Man faces 30 year jail sentence (!) for stealing a 52-cent donut…
http://www.stltoday.com/stltoday/news/stories.nsf/missouristatenews/story/2F37838AFD546C9A8625736D000B589F?OpenDocument
hmm.. 41 years old.. pushed the clerk down to the floor.. has a prior record (what a suprise) .. and stupid enough to shoplift a freakin donut?
He obviously fulfills most if not all the requirements of a Darwin Award contestant, and should move on to the next round, imo.
Only remaining question is if, while out on bail, he’ll push some old lady down, killing her for the sake of the $4 in her purse as she hits her head on the concrete.
“Some builders are stuck with some of the leftover inventory because the number of buyers isn’t as high as it had been, Gorton said. Consequently, builders are ‘taking a deep breath,’ Gorton said.”
That death gasp can be really scary….
‘Joseph Bartels, CEO of Redmond kit plane maker Lancair International Inc., says he’d be sad to leave Central Oregon’s clear, blue skies. Bartels, like all so-called ‘amenity migrants,’ loves the quality of life the High Desert affords him. But as a business owner, he said, he may not be able to afford the region’s land prices and cost of living for his employees.’
‘I’m worried that one day somebody is going to end up offering me so much money (to relocate the company) that I would be an absolute fool not to take it,’ Bartels said last week, acknowledging that a town in Colorado is courting his company.’
‘GL Suite is a 10-year-old company that moved to Bend nine years ago from Lake Oswego. President Bill Moseley said Bend appealed to him because it seemed like a good place to raise his young family.’
‘Now, Moseley needs affordable housing for his workers. His 42-person business would need 18 more employees to meet its present demand and will need up to 100 by the end of the year, he said. ‘High housing prices mean pressure on wages,’ he said.’
Maybe Sears will start offering those prefab $5,000 kit homes again. They can build a little worker’s camp behind the factory.
They were less than that! I lived in one in Dixon Illinois when the boss let all but her relatives go after 9-11 and Naperville was a little pricey for the unemployed. You know what? It was a solid house with details we now consider add-ons: deep eaves, a steep roof pitch, oversize molding, 6-panel doors, plaster walls. Oh, and the yard was strewn with violets, there were tulips, lilacs, an old stone pond. Wish I could find something that nice after housing bottoms out that isn’t 3500-4000 sq ft. Where do we buy, when we want a decent neighborhood and high-quality construction and we don’t care to grow old in a condo?
quite a bit on info on the net, but i couldn’t find the page i wanted.. It had color pix of several remaining homes, a few that were available for purchase.. if i recall, this little village was build to support an auto (?) manufacturer’s workforce, and was eventually abandoned when they relocated up north.
I did see that one early model sold for $419… I do recall now that $5,000 was what the homes sold for when the manufacturer bailed out.
Anyway, it’s not too suprising that wikipedia has a page devoted to it..
..seems the Great Depression was the death knell. Sears had begun offering financing in the ’20’s and experienced too many defaults to sustain things.
http://en.wikipedia.org/wiki/Sears_Catalog_Home
This common mistake confounds me to no end. The real estate blow out came before the Great Depression. During the Great Depression home values actually went up. Quit being lazy and pretending that grand gestures are an excuse and go look it up. If you were that sloppy in observing current housing prices then you would wonder why they started to go down recently.
huh? grand gestures and excuses..
i dont exactly get what you’re talking about.. I posted a link.. one part of the aticle reads:
“Sears began offering financing plans in the 1920s. However, the company experienced steadily rising payment defaults throughout the Great Depression.”
It appears that whoever wrote the article thinks that Sears became disenchanted with the project and dropped it due to all the loan defaults.. and these occurred during the Depression years.
If you have a reference that says otherwise, share it.
I live in one of those, circa the 1920s.
So…we’re among the few who realize a double bed was once the maximum. Bedrooms were 9 x 10!
Nope, my biggest bdrm is a monster 9×12′, but the bath is a bit snug at 6.6′x5.6′
Here’s one for sale
http://www.everyhome.com/pa/ch/uu/t5150225.htm
very interesting .. 9ft ceilings.. sure are nice, stylish homes.. good craftsmanship everywhere.
Commercial zoning could be good or bad, depending..
350K ? i wonder what a local lender would say to that..
‘A day after Forbes magazine declared the housing market in the Seattle area the most stable in the nation, local statistics showed that home sales in Snohomish County had dropped 31 percent from a year ago.’
‘Mark Zandi, chief economist for Moody’s, didn’t say things would be great here, just that the models don’t predict the problems that are occurring in most of the country. ‘It’s not like any of these markets are going gangbusters,’ he said. ‘Even Seattle: It’s been very strong, but conditions are weakening and this year, at best, will be an OK year.’
‘One thing agents agree on is that the people who want to sell their homes need to price them realistically because there are plenty of homes out there. And homes need to be move-in ready, said Windermere spokeswoman Sonja Riveland. ‘With all the choices out there for buyers, homes with deferred maintenance are sitting,’ she said.’
‘A day after Forbes magazine declared the housing market in the Seattle area the most stable in the nation, local statistics showed that home sales in Snohomish County had dropped 31 percent from a year ago.’
What a difference a day makes!
It’s said that the best contra-indicator is when something makes it to the front page of the major monthlies.
“And homes need to be move-in ready, said Windermere spokeswoman Sonja Riveland. ‘With all the choices out there for buyers, homes with deferred maintenance are sitting,’ she said.’”
I remain highly skeptical about this received wisdom. The question is whether whatever increase in market value can be achieved by
getting a home into ‘move-in ready’ condition more than offsets the
pecuniary outlay plus loss of market value due to the downtrend in a falling price market. I suspect sellers would often do better by just discounting the selling price to factor in deferred maintenance costs.
My sister and husband are a case in point: They have been fixing up their home to sell all year (in the St. Louis MO area) while the lending market has dried up, used home inventory has swelled, foreclosures have burgeoned and prices have turned down. The chances their expenditure of time and money to fix their place up to sell will be more than offset by falling prices seems pretty high to me.
Even if you only get 50c on the dollar for your improvements, it is all profit for the realator.
move-in ready?
Hey, seller’s. Do not attempt to predict my needs and wants and preferences. If you do, the money is coming out of your pocket.. I’ll also deduct what i think it’ll cost me to undo your handiwork.
I believe they referred to deferred maintenance, not upgrades. I think needing a new roof would definitely detract from a home’s value.
Needing a new roof doesn’t detract from the home’s value.
Lets say a the home, if in good condition has a market value of 100K. It needs a 10K new roof. Without the roof, it’s value is 90K, and it should sell for that.
If the seller installs the roof, the selling price is $100K.. If the buyer does it, the selling price is $90K.
Buyer is also going to spend $10K eventually on a new roof, somewhere down the road.. but after the deal is closed.
Eventually this home must get the new roof.. the only terrible thing is that the RE agents will not get a 6% share of the dollar cost of the roof.
Another thing.. I am no doubt in the minority, but i prefer they just patch the roof, if necessary, so it’s not raining inside. I may go with Spanish tile.
Agree, Joey!
Also, if you do it yourself, you know it’s done right. When sellers “fix things up” for selling, they will often use shoddy materials & low-skilled labor so they can get maximum returns on their money.
Best to save themselves all the time, effort and money and just discount the price. That way, the buyers can fix, tear-down or maintain things as they see fit.
Mind-boggling just how upside down our economy has become! Aside from the fact that we seem to produce nothing but bad debt as an export product, here we have a company that does produce something that is being driven out by insane housing prices because it can’t afford to pay people enough to buy those houses in the area. But wait - aren’t local wages supposed to determine the price of houses?! That is how insane this Bubble is - companies can’t pay people enough to afford make-believe prices on area housing thanks to bad loans that allow the fantasy prices in the first place.
This madness has to stop somewhere… and the sooner, the better.
And right on time:
Yesterday I went out getting windfall apples for a cider press I just got, so I drove all around the peninsula I live on—this is north Thurston county in Washington state– and I was amazed at how many new ‘for sale’ signs are now up. A LOT. They’re popping up just like mushrooms, now that the rain has come. And of the signs that were already up, many have sporty new ‘Reduced Price’ banners on them. I’d reach a crossroad and there, nestled next to the quiet blacktop in the rainy forest, an absolute buttload of RE signs.
This area has been booming with development, as Thurston county becomes a bedroom community for Seattle and Tacoma, all that wretched crap up north, and boy have I hated watching it happen. I may have mentioned that on this blog a few times.
But looking at all those RE signs, I was amazed…and the waterfront! I mean, there’s a fair amount of waterfront for sale, and it’s actually staying on sale, even has reduced price banners. In 2005 you’d get multiple bids almost immediately. You didn’t even HAVE to list, or get a sign, mow the lawn, all that tedious stuff; you’d just call the waterfront specialist guy and tell him you were thinking of selling and he’d call you back with a list of prospective buyers.
Wow.
Things are changing, and it looks like it’s accelerating, to me.
‘Thurston County home sales dropped 18.8 percent in September, yet another sign that this year’s housing market has cooled from last year, Northwest Multiple Listing Service data show.’
‘Last month, 349 single-family houses and condominiums sold, compared to 430 units last year, a drop of 18.8 percent, according to the multiple.’
‘The inventory of unsold homes also increased to 2,295 units, up 15 percent from last year’s inventory of 1,996 units.’
Is this today’s paper, Ben? Thank you! I haven’t gotten it yet. The lane’s muddy and I can’t find my boots.
I’ll just levitate on out there and grab it, ’cause I want to read this right out of the actual paper, with hands that shake with joooooooyyyyy.
The web page says the 5th.
Okay, Ben, this is ironic, or something, because I don’t have the Oct 5th paper copy to read with shaking hands of joy. I saw the headline on the front page of this same issue, ‘Home Values up 19%’ and I ripped it up and set it on fire without reading anything else besides those four words.
In the fireplace, of course. I manage my drama properly.
So I never got to the article you just posted, which would have restored my sunny nature promptly, which it does right now!
Hooray!
I always read the article that headline with stuff like that. Some of the best material!
Hmmm. You’re evidently not high-strung and prone to shouted soliloquies, then. On the other hand, I did lose a heartening article to the flames, and wouldn’t even have known it.
Very well: when I see these headlined articles of which you speak I will focus on being levelheaded and reading them without screaming. For one whole week.
Olympiagal,
Patience. We were seeing rising prices in the face of falling sales right into this year in Jackson Co., OR. Drove me nuts. I was assuming that equity bandits from CA were still flush enough to prop up our market. Everybodies, comments about a 12-18 mo. lag between sale and prices have turned out spot on here,as the article Ben cites discusses. >12% YOY declines at last, and things are just heating up! I would guess the same pressures have been hosing W. Washington, and the same fate is in store. I suspect next year will see the real pain begin up there.
For sale signs popping up weekly near me as well. Lots of them are longtime owners with pipe dream prices. I suspect many signs will come and go with few transactions. Just a case of old Ethyl trying to sell the farmhouse on 10 acres for $500k. Not gonna happen.
“Lots of them are longtime owners with pipe dream prices.”
They waited too long, I guess. A number of long time land holders (mostly farmers) here in this part of FLA unloaded big time during the boom. Orange groves and tomato fields fell to the bush hoggers overnight, it seems. But some that waited are now trying to get boom prices. Ain’t working for them.
This summer I drove across the US from San Francisco to Chicago and back (different route). The visible excess volume of housing was staggering. I also fly cross country nearly every week–and you can see it from the air too.
“That’s after what many call the largest building boom the county has ever seen, marked by bidding wars and rabid pre-sales of homes. During that boom, a 5,000-square-foot vacant lot went for as high as $247,000.”
I paid a bit more than this for a 2.9 Million square foot lot…
But you left out the most important part — did you find any apples?
Apples! I sure did! I got bushels! I loaded my little car up to the top. I had them in my pockets, in my lap… I had to drive very carefully all the way home. Lovely apples. Some wonderful heirloom kinds, too, off very old trees. All nice and fragrant, with bruises and little worm holes here and there–just right for apple jack. I’m gonna squish the crap out of thesyer apples and then I’m going to ferment the precious fluid into a golden nectar.
The most important part, is did you wash the apples with warm soapy water before putting them in the press.
Pasteurized cider sucks, and so does E. coli.
I pretty much only pick off the bigger slugs.
If anything can live through the seething broth of my apple jack creation, then they deserve a certificate pronouncing them to be the most evolved creature in the room. I will not fight with such a being.
Ewwww. Sounds like you can quite literally have a “slug” of your apple jack.
PNW tequila. Gotta eat the slug.
“Ren Nelson, a mortgage broker (in) Eugene, says she’s working with a client who has owned her home for 18 months. The home’s value has increased and the woman now has about 35 percent equity in her property.”
I find it very card to believe that virtually ANY property in the US had gone up 35% in the last 18 months, unless it was renovated or something like that.
Is there any chance at all that this is true?
This is a mortgage broker talking. ‘Values’ are pretty subjective, especially considering she now faces a forced sale.
“Now, despite her high equity, the damage to her credit makes it unlikely she’ll be able to refinance
home equity .. now there’s something you can bank on..
oops.. thought i closed the italics.
i may need help here.
People still have the notion that all that bubble driven “equity” is somehow real or meaningful. This lady may have put down 10% and then seen peak of bubble prices for similar properties reach 25% over what she paid. Therefore she thinks she “has” a whole bunch of “equity”.
What she really has is delusional thinking. When she tries to sell and finds that current prices are below what she paid she will bump up against reality.
Still, it amazes me to see how many owners and real estate people still talk as if the bubble prices have some bearing on current reality.
I find that hard to believe as well..although I have heard that there are some states that continue to see appreciation..But that does seem a little high..oh wait…must remember lots of creative “appraisers” out there…must remember it is not science but an art..
The article says that she’s owned her home for 18 months, but she financed it a few years ago. Something’s wrong with the timeframe in the article.
Possibly she’s owned the home for 18 years, and the 35% equity isn’t delusional?
Here’s another link from the Seattle Times online. Not surprisingly, it was the third most popular story yesterday. Guess Seattle wasn’t so “special” after all.
From the article:
“Reflecting mortgage-market turmoil and buyer uncertainty, the median selling price of King County houses has fallen two months in a row. It’s now back to where it was last spring — a sign that prices are softening as the number of for-sale homes continues to build…King County’s median single-family home price last month was $450,000. That’s less than March’s $457,500 median and almost $32,000 less than this year’s high of $481,750, set in July.”
King County includes Seattle.
Here’s the link, DUH!
http://seattletimes.nwsource.com/html/realestate/2003929200_homesales06.html
Good find:
‘As of Sunday, Metter will have chopped almost 100 grand off the price he set for his four-bedroom home in June. If that doesn’t do the trick — and Metter readily concedes it may not — he plans to rent the house.’
‘He’s certainly not the only struggling seller, as home-sales numbers released Friday by the Northwest Multiple Listing Service reveal the most depressed market in years, albeit one that’s healthier than most of the nation’s.’
‘King County’s median single-family home price last month was $450,000. That’s less than March’s $457,500 median and almost $32,000 less than this year’s high of $481,750, set in July.’
Here’s the best part:
“The Metters, who bought the home for $354,500 in February 2001, hung the for-sale sign on June 8.”
Greed as pure as the bright blue sky.
My jaw just hit the floor. However, they should have stated which year “June 8″ occurred. I first thought 1991!
But four months and counting says only one thing, GREED!
From the article: He and his wife, Debbie, decided last spring to sell their home on Northeast 197th Street in the Summit at North Creek neighborhood and return to Hawaii.
later
“It’s a smoking deal at $647,000, but no one’s looking at it,” Stickney said with a sigh.
Maybe not… Apparently you haven’t led the market enough.
There were 98 homes for sale in Metter’s general Bothell area earlier this week Please tell me I’m not the only one who had to read that twice and verify it didn’t say “Brothel area.”
Let’s see… list for $629, 950. Let’s assume someone bids $617 (or they negotiate to that amount). So we have a conforming loan with a $200k down payment.
I know its out of the region, but I’m finding some of the fastest past drops in areas where the bulk of the homes are conforming.
Got popcorn?
Neil
So, as of Sunday, Metter will have chopped almost 100 grand off the price he set for his four-bedroom home in June. If that doesn’t do the trick — and Metter readily concedes it may not — he plans to rent the house.
_______________________________________________________
LMAO!!
Every city follows the same pattern. Lower price, ohh wont sell, then I will rent…In a few months they will realize renting is cash flow negative, then try and sell at a lower price, unfortunately they will be competing against a tsunami of foreclosures…
… and builder liquidations …
Crisp,
It is the exact same pattern, everywhere! Not to mention that pattern starts in the far out burbs near the construction simultaneously the condos sales tank. Yet, because of the lack of small unit sales, the median skyrockets and the NAR touts that and only that.
much munch munch!
Neil
Last night, TLC ran a show called “Please, Buy My House!”.
One family from NJ slashed the price of their home from $1.1 mil to $700k. They then had their son (an interior decorator) redo one room, and agree to provide his services for the rest of the house for free. It did go under contract, with another $65K slice form the price.
Another lady that was getting divorced had dropped $200K from $700K to $500K. She then brought in a Fung Sui(SP?) expert to restore the houses spiritual energy. It sold, with another $50K slice from the price.
The final couple had a house in South FL, moved to Carolina for a job. We’re spending $10K a month on the bills of that Fl house. Had drained savings, taken 401K loans, were talking about cashing in the kids college savings accounts…..
Lady did a radio appearence, flyers everywhere, all kinds of signs promoting an open house. One person shows up, but he has a house down the street he is trying to sell. Not a serious looker. NO serious lookers at all.
The show ended with them renting for $5000 a month, half their carrying costs.
Hopefully, they’ll use the $5K a month to pay their 401K loan back, not make any more payments on the FL house, and go into foreclosure, then file bankruptcy.
I watched this last night, too. Mentioned it in one of yesterday’s topics. I think this is going to be one of my new fav shows to watch.
As I said yesterday, I believe someone on the blog predicted some time ago (last year) that we would see these types of shows appear. They may have been joking at the time (we were all talking about Flip This/That House, Property Ladder, the Montelongo brothers in San Antonio (btw, creepy Armondo has a radio spot on selling his “secrets of success”), but with the light shining on the current situation someone was bound to see a money-maker in this “Please Buy My House” topic.
BayQT~
“Last night, TLC ran a show called “Please, Buy My House!”
I saw this too, couldn’t believe my eyes. Then, it was followed by a 2005 episode of Flip This House. Oh my.
Wow! That is just too funny.
“‘What we’re seeing is the natural cycle of the real estate markets,’ said Nathan Gorton, executive officer of the Snohomish County-Camano Association of Realtors.
Like death is a natural cycle of life. What a moron! Typical RE-speak.
“the natural cycle of the real estate markets”
i guess this cycle can be considered natural in a disturbed, perverted sort of way.
Extraordinary profit influences behavior in unnatural ways.
If I were ever to leave Florida, the PNW is where I’d go. Ran into a fellow from Seattle out and about the other day shopping at one of the used stuff outlets around here (us “stuff” bottom feeders are always looking, no matter where we are). He started sneezing his head off and said “I’m allergic to FLA”.
I believe that you would love the PNW and that the PNW would love you right back. This is a great place, for the right sort.
“‘Most of them were in the $150,000 to $175,000 range. That shows there were a lot of people in the lower end of the scale getting loans when they shouldn’t have been lent the money. Looking at the real market value, I don’t think they put a lot down,’ King said.”
And let’s not forget that it’s the “lower end” / first time buyer that keeps the rest of the RE chain greased. Without them, no one trades up, trades over over or trades down for retirement.
Here in the Rogue Valley, folk became so accustomed to the California retirees sliding up and paying ever-increasing prices, they’re shocked at the slow-down, not realizing or figuring out that all those no-sales in Sacramento means no sales here either.
We’re still in la-la land. Noticed a smaller number of listings in jacstats.com this month. Probably waiting for that spring rush. Still, that Mail Trib article is the first of that nature we’ve seen to date.
I’m waiting for small acreages to return to affordable. In ‘98, we bought 12 ac’s for 68,500. At the time, I was nervous about committing to land that expensive. Had to leave to state for family reasons, so we sold it. BIG mistake. We’re back, and renting. Similar parcels are being “offered” today for 250K to 500K. This is raw land we’re talking about, no utilities. As I’m now responding to any blue-skies comments, “Let me know how that works out.”
‘ Geoff Pfander put his Wedgwood house on the market in mid-September. ‘I’m trying to have faith in Seattle,’ he said at an open house last weekend. ‘I think (buyers) just have more choices now so they get to look around more.’
‘To stand out in a market with more and more homes for fewer and fewer buyers, home sellers are reducing list prices, offering special financing and entering potential buyers into drawings for a bottle of champagne if they’ll say what they think of a house.’
‘Teri Daligney held open houses last Friday, Saturday and Sunday at a West Seattle home she and a partner remodeled and put on the market at the end of July. ‘I live three hours away, and I want to stop driving,’ she said, noting that they had only just finished renovations. ‘We get tons of people coming in and looking, but nobody who’s serious,’ Daligney said. ‘I just think they’re scared.’
‘I think the media has kind of scared them,’ said Kari Scott, an agent with John L. Scott Real Estate, referring to stories about the slowing market, particularly nationally. Scott also noted that tightening credit standards have made it harder for people to get mortgage loans. She hosted an open house Friday at a West Seattle home whose price she has cut by about $100,000 since listing it for $899,000 in June.’
Naw, your prices have kind of scared them. Media cheerleading is all good on the way up though, but damn the bastards when you’re stuck with a depreciating asset in a crashing market.
As someone mentions above, the repetition is shocking. Now Seattle Realtors are blaming the media for “scaring people” while they are altruistically offering to dump a boat anchor in the dory of the first media-dead fool that comes along. Sheesh, the thought of paying >$500k for any house scares the bejeezus our of me, and with my Meister Brau salary it should!
Scott also noted that tightening credit standards have made it harder for people to get mortgage loans.
why do agents and alike still think the banks should keep giving dead beats money? im so tired of hearing about this. o yes its all the banks fault we cant sell a home! give me a break!
Yep, the Realtor(R) we’ve worked with here in Pullman is convinced that the government will work something out with mortgage lenders by the spring to make sure that a “full range” of mortgage products are available again. So we can get “back to normal.”
Yeh, what has happened over the past decade has been “normal”.
Exactly. Keep hearing that all over the place, even by those who claim to be somewhat “realistic” about the RE market. They think when prices are at 2004 levels (some areas are already well below that), we will be “back to normal.” Sick.
“That’s after what many call the largest building boom the county has ever seen, marked by bidding wars and rabid pre-sales of homes. During that boom, a 5,000-square-foot vacant lot went for as high as $247,000.”
FBs were not the only GFs.
An FB by any other name….
Just north of the border, White Rock has the first notable price declines in the Vancouver BC area. WR is a well-to-do seaside suburb and popular retirement area. It has some commuters but is far from major job centres. WR is literally on the US-Canada border and has a border crossing.
A local news story a few nights ago mentioned Vancouver seniors buying in relatively cheap retirement communities in the PNW as a result of the higher Canadian $. I think this is the main reason White Rock is starting to sink like a stone.
From today’s Washington Post (print edition)
Cathedral Heights $499K
Open By Appointment
Classic Doorman Building
Great value in this classic doorman building, 24-hour front desk, outdoor pool, indoor garage space, This spacious two bedroom two bath unit is just waiting for your touch, easy to renovate. Come see the light in this unit, large windows throughout! Three HUGE walk-in closets for storage. Also rent at $2500/mo. Section 8 applicants accepted.
Nancy Itteilag
202-321-0110
Long & Foster
202-363-1800
Also don’t ads cost by the character or word ? Why add closets are for storage ? Are all garages indoors ? Unless agents mean attached ?
Note. This is from Washington DC Post. The invitation for Section 8 was just too good not to share.
What is the section 8 limit for the area? Here it is $1,800.
Thanks,
Neil
Don’t know DC limits.
Wait a minute…how do I apply for section 8? I want my handout from the nanny state too.
“‘It has become what we call an unaffordable market,’ Williams says, explaining that the area’s median income is not sufficient to afford a median-priced home.”
It’s been an unaffordable market for several years, doofus. The problem was that everyone deluded themselves into “affording” it with virtual-reality loans.
Extract fro recent e-mail correspondence with a Ziprealty realtor:
Thank you for your e-mail it is nice to know how people are viewing the current market and conditions. I like your analogy as to “catching a falling knife”. My personal viewpoint is somewhat different. A lot of what is happening nationwide does not depict necessarily what is going on in Orange County. Subprime was not as big in South O.C. which means not a lot of foreclosures. ***SUBPRIME417k HAVE CREEPED UP AND THIS IS ONE F THE REASONS OF THE SLOWDOWN Granted housing prices were over inflated several years ago during the sellers market where two, three or more could be submitting offers on the same property. This caused buyers to overbid the asking price by thousands of dollars driving prices up. Real estate has always been cyclical and right now we are on the down side. We are bound to go up *** ??? THIS IS NEWS FOR ME, WHY DO YOU THINK WE REACHED THE BOTTOM. YOU THINK THAT IT’s OK TO HAVE 200% APPRECIATION IN 2000 TO 2006, AND THEN A 10-15% CORRECTION AND THEN BACK UP? and don’t you want to buy low and sell high? Many sellers have had their properties listed since last spring. They have probably reduced the list price every couple of months. Prices have come down but there is not a bottomless void that they are falling into. They are most likely about where they should be ***I DISAGREE, IF THEY ARE WHERE THEY SHOULD BE, WHY NOTHING SELLS?, THERE IS STILL A HUGE GAP BETWEEN INCOMES AND PRICES. We are sitting on the most valuable real estate in the country if not the world ***DO YOU REALLY BELIEVE THIS? WHAT ABOUT SWITZERLAND, SOUTH OF FRANCE, AMSTERDAM - THEY ARE PRETTY GOOD PLACES TO LIVE, TRUST ME. This is one of the best buyers markets probably in the last 10-15 years *** NOT REALLY, THIS IS WORSE THAN 1995-2002 FOR SURE IN TERMS OF AFFORDABILITY. I WISH I PURCHASED IN 1996, 11 YEARS AGO. Typically if you hold onto a property 5 years or more you will make money off your investment ***I THOUGHT HOMES WERE PLACES TO LIVE IN. CHECK IN FEW YEARS WITH THE FOLKS THAT BOUGHT IN 2004-2007. Also sellers are anxious to deal which means they will pay sometimes most if not all of your closing costs. They may be willing to accept 90-95% of what they are asking. 95% of something is better than 100% of nothing. If you think prices were going to drop 5-10% you just made it up by paying $540,000 instead of $600,000. ***5-10% IS NOTHING, I AM LOOKING AT 30-40% AT LEAST. Many homes on the market have been upgraded and there are so many to choose from. The last issue to look at is the low interest rates. Here are two scenarios:***EVERYBODY IS SCREAMING INTEREST RATES, I AM MORE CONCERNED ABOUT THE PRINCIPAL. IF INTEREST RATES ARE 0, AND I HAVE $600,000 LOAN, PRINCIPAL ONLY is $1700 A MONTH. YOU ADD ANOTHER $650 PROPERTY TAX + $350 INSURANCE, MAINTENANCE AND YOU GOT $2700 A MONTH.
Moral of the story: don’t believe anything a realtor says!
Moral of the story,
Get out that old “rule of thumb” thatyou should expect to own 5 or more years before you break even. Ok, buying today is breaking even in 2015 (2005 breaks even in 2017 by my estimation). Some aren’t ready to hear the big picture. Ok, spoon feed them the old sensible rolls.
Got popcorn?
Neil
“Real estate has always been cyclical and right now we are on the down side. We are bound to go up”
Bound to go up? What, 7 years and over 100% appreciation wasn’t good enough for you? Man, people have gotten so used to being entitled to asset prices increasing forever.
We are bound to go up”
i think this is alot of wishful thinking. did you notice that she/him dident use the word “will”. there is no guarntee.
“His advice for house hunters? ‘Be choosy,’ said Wlodarczyk. ‘If you look hard enough, you’ll find a house that’s worth more than you’ll pay for it.’”
My advice: ignore advice from soon-to-be impaled knife-catchers who ran out to the beach to pick up all those pretty shells when the tide suddenly rushed out, but failed to see the Tsunami bearing down on them.
“‘Definitely some people should stand up and say I am a part of what brought this on,’ said Colin Mullane, a member of the Statistics Committee of the Rogue Valley Association of Realtors. ‘As responsible adults when we hear rates that are too good to be true we should question it. If you go to Washington Mutual or People’s Bank and they quote you one rate and then you go to Fly-by-Night dot-com and they say they can save you $400 a month, you’re not going to be a responsible adult if you’re not questioning that.’”
I wonder how many times Mullane refused to sell a house to a potential customer, because he questioned whether or not his or her loan seemed to be too good to be true? My guess is zero times.
Ben you made my day!! Over and over and over we hear everything is fine here in Lane County Oregon (we are different .. the bubble mess is out “there” like in California. None of those problems here … buy now because OUR prices are going up.) This blog is the only glimmer of reality we have in the neck of the woods! Thank you!
It is so awesome that Snohomish county has declared the boom is over!! That’s the county north of Seattle where a lot of folks got chased to because of high Seattle city prices. In fact, I know a young couple who just bought up there a couple months ago after despairing of ever being able to afford Seattle. Talk about bum timing! I did my best to warn them about waiting just a bit longer but they had the blinders firmly attached, oh well……
In more optimistic news, my friends in Seattle have finally seen the light and are price reducing down to 485K from 630K. Had an open house today and might be getting an offer. YAY!! Just goes to show that, in these situations, it pays, literally!, to be realistic! I’m so happy for them to get out from under that mess. And it’ll do the neighborhood comps a world of good too.
I can’t tell you how great it feels to have the PNW real estate head south. Though the market here in Pullman hasn’t had the crazy appreciation of Bozeman, MT (my previous home), the bubble dynamics and downturn are EXACTLY the same. Spring-summer-fall of 2007 in Pullman are spring-summer-fall of 2006 in Bozeman, with the amp turned down.
That said, there are STILL investors trying to make a quick buck here. A guy from Portland, OR put earnest money on 7 lots, and tried to start an “executive” lease to own scheme. The plan: convince builders to share the financial risk, build a bunch of high end homes, and lease them at twice the going rental rates in town with a buy option.
Me: Why would anyone pay double rent?
Mike: To lock in the purchase price of course.
Me: Why wouldn’t they just buy a home, then?
Mike: They might have a hard time selling their previous home, or be rotating through a short term executive position.
Me (to myself): Have you spent even 5 minutes studying the demographics of Pullman, WA?
This guy has now lost the deposits on 5 of the lots as he can’t get any builders to front money for the scheme. But in the same development a 4000 sq ft monster home nears completion, a spec home built by the “1000 hills investment club”. Good luck selling that monster in today’s market. And some idiot just bought 5 new construction spec “luxury” homes that had been sitting on the market for almost a year. My guess is that they negotiated a discount and think there will be profit in a quick flip. Builder’s response? Time to ramp up building again now that he has finally cleared hanging inventory (he had to shut down his entire operation this spring). Some folks are awfully determined to put their head in that noose.
Good news: Ran into a guy I shared a ride with back in May, and he asked whether we had bought a house yet (we were low-balling this spring). When I said “no”, he responded “good for you, prices are already going down, and they’ll go down a lot further if you wait a year or two.” This from a long time resident and home owner.
Pac Northwest eh? here in Missoula the Sunday morning radio show is put on by the Realtors, and the gal said we’re different because this is the PNW.
Look out below! Things are shaking loose all over the Great Northwest, and not a moment too soon. I have not been following Missoula, but since wages there have no doubt increased 100% over the last five years you should be fine…………………………………………:]
:^)
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