Inventory Up, Prices Fall In South Sound, Washington
The Olympian in Washington reports on the now familiar signs of a housing bubble bursting. “The South Sound real estate market is beginning to evolve from a seller’s market to more of a buyer’s market as inventory levels rise and home prices decline, according to Olympic MLS data released Wednesday.”
“Active home listings in March stood at 1,047, well above the 568 active listings for last March, the data showed.”
“As a result, the median price of a home dropped slightly from $248,475 in January to $244,575 in March. ‘We are seeing some stabilization in pricing based on the inventory in the marketplace,’ said Olympic MLS Manager Jerry Wilkins.”
“With more homes coming on the market, buyers don’t have to react as quickly to the home of their choice, resulting in fewer multiple offers for the same property, said (broker) Jeff Crandell of Lacey.”
“‘There has been a leveling of our market that we’ve all been anticipating for some time now, but it’s taken longer than I would have thought,’ Crandell said.”
‘There has been a leveling of our market that we’ve all been anticipating for some time now, but it’s taken longer than I would have thought’
Glad to have some good news for some patient readers in Washington.
People in the PNW are really arrogant when it comes to their home prices. Most believe they have prices fueled by their own organic economy, but in reality, they are just equity refugees from California bidding up prices.
Look over the past 30 years and you will see that when California stagnates, Washington gets whacked, and when California appreciates, Washington booms.
When California sneezes, Washington catches the flu.
One day, there just won’t be anyone with the money to buy a crappy little mildew infested, uninsulated, Northern exposed crap-box.
20 cents on the dollar by 2010.
eleua,
If we were being truthful Portland/Seattle are actually “sub-markets” of CA! When Boeing left Seattle, Portland tried to outdo them but had to settle running off several mid-sized employers. Robert Cote’ astutely calls them Helenites. Defined as PNW cheerleaders that “go off” at the slightest provocation
I grew up here, but I have also lived in 10 other SMSAs across the nation. With the exception of San Francisco, the PNW now (and BI in particular) posesses the most intense provincial arrogance of anyplace I have ever lived. It was not always this way.
Dr. Eleua thinks a healthy dose of humble pie might cure the patient.
“Take 2/3 to 3/4 off your home price, and call me in 2010.”
“…most intense provincial arrogance of anyplace I have ever lived”
SD included? Where equity appreciation has turned most homeowners into paper-millionaire snobs?
No. I was only in SD for 3 weeks in ‘96.
“With the exception of San Francisco, the PNW now (and BI in particular) posesses the most intense provincial arrogance of anyplace I have ever lived. It was not always this way.”
On behalf of all the 6.5 million residents of the San Francisco Bay Area, I gladly accept your award.
Seriously. I have lived here for a long time and it’s getting harder to take by the day - SF Bay residents are so smug and self-satisfied, it must be a contagion. For most here, what they do at work or for leisure, what they own and what they think, is not the most IMPORTANT thing on earth.
Sometimes it’s so ridiculous, it’s entertaining.
In my experience, phenomena like this among the populace are relatively new to Seattle and didn’t exist in San Diego just a few years ago.
On a related note, someone recently was telling me about a South Park episode where the show was discussing how SF, with its affection for hybrid automobiles, now has a “smug” problem (I thought, having been brainwashed by SF residency for some time now: “well, of course, one must be a more evolved, enlightened form of homo sapiens if they are a hybrid owner”), rather than a “smog” problem.
Very funny.
That South Park episode should be put in a museum someplace. It really nailed SF.
“San Francisco completely disappeared up its own a–hole.”
That says it all.
SF suffers from “boiling frog syndrome.” It -used- to be a great place but it has eroded slowly over decades and like the frog the people aren’t aware they are being cooked alive.
it’s a beautiful city from across the bay. once you’re in the middle of things it gets as gritty as the L.A. produce/garment district.
climb any hill and it gets nice again.
pancho villas at 16th and mission rocks. best burrito on the planet.
And, to be fair, I should add to my earlier comment.
It’s really not the whole Bay Area that congratulates itself with regularity on its political correctness, coolness, wealth & beauty and such.
The “smug” problem is really centered in SF, Marin and Berkeley. Other than that, it’s probably not too much different than most other places.
Helenites? I must admit I have not heard that term. Do you have any background info on the term?
PNW cheerleaders “going off”… I have my visions of that; can you give some?
I think its a riff on Mt. St Helens.
Helenites…”going off”…Mt. St. Helens…5/20/80…
Very funny.
I invented it Feb 2 2002 in a usenet discussion. I also coined SmUGLER, NURB, NUTSO and many others.
Once again I am amazed that my inchoherent ramblings are read nevermind remembered. Thanks.
Robert,
You are being entirely too modest! Who among us can forget “Silent Spring”. You gave it a whole new meaning! I hope your daughter is well. DinOR
I’m sure you must be right. I remember when we started looking for a house in March 2003, having returned to the PNW after 5 years out of the country and were incredulous at what was going on with real estate. One of the agents who showed us some of the said crap-boxes, told us, “Well people are coming here, and they have money.” As you say, they must have been coming from CA.
I’ve been wondering what would happen here if CA slows down. I guess we’re about to find out.
Hey eleua - let me guess, you were living on the East Side, Madison Park or Queen Anne. The smug factor in these places is off the scale! I’ve lived in the area for almost 30 years and I I don’t think it is that bad in most places. But there most definetely are pockets of it.
deflation guy,
You should try “cold calling” these people. It will give you a whole new “appreciation” for them. Lovely, isn’t it?
BEN DADDY, THEY WILL TALK ABOUT THE COLLAPSING CONDO MARKET IN WASH DC ON “”" CNBC”" IN AT 12:45 EASTERN TIME.
OT, i don’t know if anybody noticed this already but after typing “housing” into Google you now get a little customizer to narrow your search. Looks like Google wants to piggyback on all those real estate web pages that want you to register and sign in before being able to view anything. I think a lot of those sites lose traffic. I know I don’t want to bother with registration if all I want to do is browse. A lot of properties are missing though.
There is a big WSJ article today discussing how GOOG and Craigslist are on the brink of ending the real estate industry’s information cartel:
“Web Sites Expand Into Real Estate” on p. D1
Thank you for your kind words. This has been such a difficult experience. This blog has helped to steady the nerves and stay the course.
Just last week my husband thanked me profusely for not allowing him to buy any of the myriad of depressings “homes” we nearly bought over the past three years.
“With more homes coming on the market, buyers don’t have to react as quickly to the home of their choice, resulting in fewer multiple offers for the same property, said (broker) Jeff Crandell of Lacey.”
“…resulting in fewer multiple offers…” They make it seem as if people are still rushing out there in droves to make multiple offers while the rising inventory directly contradicts even a possiblity of that happening.
“fewer multiple offers”
So sellers are only receiving three or four offers instead of the usual five or six.
huggybear,
You’ve got me thinking here. The realtors have shown endless creativity in what is rapidly becoming a death spiral. Could it mean that there were not multiple “below asking price” offers? Seriously, I’m not trying to be cute here. The only offers I’VE made in the last year or so have been WELL below asking. No takers yet, but I’ve gotten some calls back later though.
It is just a matter of time before all regions of the PNW report this. In the little area I watch, people are still saying all the classic bubble topping lines:
“It’s different this time.”
“We won’t be touched. We are special”
“We are all built-out.”
I have had blogger after blogger and neighbor after neighbor tell me that we will never get a price reduction, or that if we do, it will only be 5 to 10%. I keep telling them that 50% off will be the benchmark that all depreciations are measured. I fully expect to see 3/4 to 80% off the peak price.
Right now, I am compiling a list of all the different RE agents, brokers, builders, contractors, and loan sharks that live on our smug little island. What I intend to show is that our entire economy is built on the RE bubble. Of the 20,000 people that live here, how many are dependant on RE for their jobs? How many are new entrants? How many are in retail, and depend on HELOC money to keep going?
What will happen to price when THESE people have to sell?
20 cents on the dollar by 2010. You heard it here first.
I live in the Puget Sound and keep hearing friends and colleagues talk about how house prices can’t fall here due to tough zoning laws, and lack of supply. How true is this? Are housing starts in the Puget Sound pretty low compared to places like California? Has there been any trends with housing starts going up or down over the last 10 years?
I live here as well. I hear the same comments. The one thing that keeps me grounded with respect to housing prices are rents. If there were a supply problem then it would be reflected in rents. It is still much cheaper to rent than buy so I don’t think there is a problem on the supply side. I think a lot of the properties sold in the last 3 or 4 years were sold to speculators. This creates a phantom inventory because many of these properties are unoccupied. Once the pain of holding a negative cash flow property gets to be too much, the inventory will most likely be released to the market. In theory, this should drive prices down IMHO.
deflation guy,
“phantom inventory” I LOVE it! There has been much discussion on the bubble and this is the first I’ve heard of this term. It is SO appropriate b/c it says it all and yet leaves room for “mystery” and not the romantic variety either. Good on ya!
OK, my hotlink sucks. Here it is again:
http://www.clearcutbainbridge.blogspot.com/
Try this
10 yr at 4.91
Gold at $600
Oil at $67.80
______________
No inflation here - move along.
yup…bernanke is helpless against relentless rise in commodities..ha has NO choice but to keep raising rates to perhaps 6+….may be even higher…
the lag is notorious…producers digest high input for sometime (to smoothen out the fluctuations) and raise output prices substantially at a later time..i see that happening…
Now that would trigger bond sell off…TNX reaching 5 means a new world in “sur”real estate.
Option arm resets to ~5+2 to 3 ~ 7 to 8. Refinance to 30 yrs? still face a big payment and shell out $$fees to broker.
My guess is when the FED pauses in their rate hikes, there will be a spike in the equity markets, and then a long selloff, with foreigners pulling the plug on our currency.
Once the FED is seen as a paper tiger (and I do mean paper), we will get a financial unwinding that kids will read about in 200 years.
Anyone want to run how much house you can buy with $3000/mo and 15% interest rates, and 1.75% taxes?
Oil is
Sorry. I was saying Oil is less than $40 a barrel if paid for with 2yr old gold. It’s the dollar that’s a piece of $hit.
Firstly, Ben thanks for getting us into print! It made me wonder though is the reason that the PNW doesn’t get more print b/c our bubble is less profound and other areas are more blatantly obvious? No our bubble is every bit if not more real. Not only are our wages/saleries anemic but we manage to turn away more business than you can shake a stick at. Recently the Oregon coast turned away a shipbreaker operation for being environmentally unsound. I’ve seen shipbreaking and it’s not pretty. However, had it been a salt water taffy factory the response would have been the same! People, not every place can be some kind of Disneyland, O.K?
Ben-
Thankyou for the post and for your kind words to us patient (and by now completely unnerved I might add) bubble watchers in WA.
At long last someone in the PNW is coming out and publicly stating that prices are falling here.
That fact has been obvious to anybody who has been carefully tracking the market in Seattle the past few months, as I have.
DOM’s, price reductions and, most importantly, final selling prices as recorded by the King county tax assessor site all point to a falling market.
there are some truly ridiculous comments in this thread. Thurston County inventory is surging (up 77%) and price is down slightly. Bad for Olympia. But guess what, King County is still AMAZINGLY healthy compared to most of the rest of the nation. Inventories in King County were 1.5x pending sales, and total inventory was lower than other March since as far back as I have data (2001). In addition, both King and Seattle surged to new record high median pricing. Things may change, but people rooting for a collapse in King County are definitely going to have to wait a little longer. Especially folks interested in buying starter houses… job growth was up 3.5% y-o-y in Feb… the marginal buyers are driving this.
“Inventories in King County were 1.5x pending sales”
i’m sorry i was late to this thread. you nailed it. do you know that based on the numbers in king county released yesterday, there is only a 1.5 month inventory of houses?? median price is up 20k over last month (yes its a crappy indicator, but it’s all we got). i want a bubble pop as much as everyone else, but it is not gonna happen here anytime soon. olympia and the south sound is NOT seattle metro area.
NWMLS press release
You are right. Today’s paper shows the price up and inventory is still low. And as you say, south puget sound is not the seattle metro area.
http://seattletimes.nwsource.com/html/localnews/2002916266_homesales07.html
We just closed on our home here in Snohomish county ( just north of Seattle) at the end of last month, and we got our offer in 3 days on the market and we had other people who wanted to buy it, too, and one man stopped by after the sign was taken down and asked if the house was for sale. His eyes had the glazed “investor” look that I have heard of from others on this blog when I told him how much we had sold it for; I think we could have priced it higher. This area is still bubbling and it’s a great time to sell because I think we are at the peak or will be at the peak within the next 4-5 months.
We are now renting.
I think there is a certain resiliance to the Seattle economy. We actually make or market things that lead their respective industries. Boeing, Microsoft, Amazon, Starbucks, Nordstrom, Weyerhaeuser, Wahington Mutual, Nordstrom, University of Washington, Amgen and T-Mobile are all solid organizations with thousands of employees in Seattle. Manufacturing, software and health sciences are solid industries with bright futures. I’m not saying that Seattle is immune from a recession but I think it has enough economic diversity to cushion the blow. Let’s face it, wages support real estate prices. Although house prices are presently high relative to wages, they do provide reasonable support at some level.
I sold in a semi-rural area west of Seattle at the peak last summer. I made 50%+ since the bubble got going in 2001. Sold to a SD couple who have yet to sell their one million plus place so the home as been empty. I rent now and waiting.
Our bubble was not nearly as bad as other areas & the locals say this is just a minor change back to normal. Thus far in my area 5 to10% reductions and the listing books growing as the builders keep building mucho more inventory. It will take more time up here I think, but the end will be the same………….back to 2001 prices…….IF we are luckly.
If the economy has been NOTHING BUT A BUBBLE ECONOMY since the middle of ‘98, and ‘98 would have been considered a peak in a real economy, I think home prices could easily drift back to early ’90s prices.
Unless you think we can keep our bubbles inflated…
I think the men behind the curtain will try really hard to do so…
where and what are they building near Seattle? I always thought that part of the world was so lovely, sad to think of new building wrecking the landscapes…
And I loved the city of Seattle too, but last I visited was 1994 and I didn’t feel an arrogance problem so much as a distinctly quiet aloofness and very poor fashion sense. It was like absolutely everybody chose to wear navy blue and brown together. Rents were really high back then as I recall…are they still?
cheers!
I pay rent for a 2Br 1970s duplex in North Seattle. My original rent in 2000 was $795/month; it was raised in 2002 to $840/month where it has stayed until the present time. We re-upped our lease this year. I expect that our duplex neighbors are paying a similar amount. Zillow.com estimates our duplex at 360K. I’ll leave the gang to do the math; as for me, I’m saving money, biding my time and watching the show as it unfolds.
Was up in Seattle last month. The unraveling of their bubble hits you over the head with a drive through any neighborhood, which reveals a high density of “For Sale” and “For Rent” signs…
this is patently false, seriously folks, objectivity?!? I definitely think the nation is in for a world of hurt, and think things will likely hit seattle eventually, but you really need to look at the data… take a look at zillow or that berengeth site (http://www.benengebreth.org/housingtracker/location/Washington/Seattle/) if you want to see the trendlines….
Normally I worship data, but in this case I’m willing to make an exception. Portland and Seattle are ONLY “sub-markets” of CA and we’re “small markets” at that. We lean heavily on their state of economic health. Always have, always will. MSFT’s share price hasn’t budged in years, WAMU just laid off, guess, 2,500 LOAN OFFICERS! There will be just as much pain here as anywhere else.
Minutes ago Diana Olick on CNBC:
“The Crashing Condo Market”–that’s a quote.
Focus on Arlington, VA. Wide shot of cranes building new condos all around. The “hot” 1021 Clarendon building. A few early flippers made $50k (that doesn’t seem like a lot for the risk).
Now average time on market at 1021 Clarendon is 140 days. Sellers “are just breaking even” according to one uncomfortable-looking agent. The clear unspoken implication was that everyone still holding a unit in that building is screwed.
“The Crashing Condo Market”
Which one? There is no national condo market, you know…
OT, but I believe the housing bubble is on the cusp of outright capitulation, as now even the OC Register is reporting truthfully about the risk facing their overpriced market:
http://tinyurl.com/ocsxc
P.S. According to PMI’s housing market risk index, OC is second only to SD for the risk of future price declines…
The chart here makes it look like OC may fare even worse than SD…
http://goldcentral.com/qry/backgroundstories.taf?_function=detail&NEWS_uid1=6413
Mission Viejo, CA (OC) inventory at 704 today.
It started the year at about 480.
In August 2004, when inventory spiked above 800, I thought the bubble was coming down. There were letters to the RE section of the Register asking what was going on with the market, and lots of live-in speculators trying to get out at the top.
Inventory went down to the low 400s in August 2005 and slowly creeped up last Fall.
800 and beyond, here we come.
Is anyone else struck by this comment from the story?
“Ninety-five percent of the homes increased in value after seven years of ownership, and 92 percent had gains after five years.”
92% after five years? Has there been another time in recorded history where this has been true? (what happened to the housing cycle?)
Does this seem like bubble territory?
It does to me.
So, we have rising inventory, falling sales, falling mortgage apps, and softening prices almost everywhere. Spring was supposed to save the housing market, but with the look of things, that’s not going to happen. It makes you wonder, at what point, exactly, does a soft laning becoue a hard one? Becouse this could get a lot worse, fast.
-X
BubbleTrack.blogspot.com
SF is too smug. Glad to be out of that ratrace there. Watching the flooding in CA - I had said a long time ago that it was irresponsible to be building all these McMansions in flood plains. I think that will just be the beginning there. The LEVITATOR has a lot of work to do, since he promised to save the levees.
article on specuvestors pumping the bubble in the Seattle times:
http://tinyurl.com/nsj6x
Key quote:
“The bulk of the decline in home sales this year will come from investors leaving the housing market,” said David Berson, chief economist of mortgage buyer Fannie Mae. “If home price gains have peaked, as we expect, and financing is more expensive, investors are going to find someplace else to put their money.”
Chrisinpnw-
re your report on your “sold last summer and now empty” home:
It’s pretty astounding as you go through the MLS listings and see how many of the homes for sale are either empty to start or BECOME empty after several months on the market (complete with a roll back in DOM’s, new photos, new MLS#).
It’s beginning to seem that we are heading for a record # of empty existing homes in the US.
On top of the empty just-built condos.
Lots of empty buildings out there.
“It’s beginning to seem that we are heading for a record # of empty existing homes in the US.”
Where else will the new 11,000,000 guest workers live?
I live in a small town here in Nassau, NY. The town does not allow for forsale signs on the property, hasn’t sincethe last downturn in the early 90’s. There are seven empty homes within 2 blocks of my house. This neighborhood was built in the 50’s and 60’s. I am guessing a lot of spect buying here. RE tax carrying costs in this area one thousand dollars a month. Anyone who bought recently can’t hope cover expences buy renting.
A bunch of flippers bought McMansions in a private development near my apartment. I heard that they can’t use for sale signs or have open houses. That’s got to hurt your chance of making a sale.
SPD………I will check on this more in my area, several friends wanting to make a move in the local area are now afraid. Thus they will sell first. A big change in attitude from last summer & will effect the market big time IMHO.