Slog News & Arts

Line Out

Music & Nightlife

« And Now a Bill that Republican... | I Knew It! »

Thursday, March 6, 2008

Perky Headline for a “Perking” Housing Market

posted by on March 6 at 14:40 PM

The PI is most certainly not plugging the real estate industry’s rhetoric on the front page. Nope. The pendulum is swingin’ and now is the time for buyin’. And those naysayers? They’re “doubters.”


A statement accompanying the data highlighted increases in pending sales from January to February, with jumps of nearly 30 percent in Seattle, and slightly less in King County and the 19 counties in Western Washington that the service covers.

“In March, the real estate market is set to get its mojo back,” J. Lennox Scott, chairman and chief executive of John L. Scott Real Estate, said in the statement. “We’re already seeing the momentum build.”

So… the housing market “perked up” after January, one of the slowest months for home sales. Okay. But the meat of Aubrey Cohen’s solid article seems to conflict with the headline. The big picture ain’t very perky. Since last year, sales are down and inventory is way up.

But compared with the same month a year ago, February’s pending sales were down 22 percent in Seattle, 36 percent in King County and 31 percent in Western Washington.

The number of homes on the market in February increased 64 percent in Seattle, nearly 69 percent in King County and 39 percent in Western Washington from February 2007.

“Apparently the market is so bad that the only way they can make it seem good is to compare month-to-month stats from what is traditionally the second-slowest month of the year. Awesome,” said [SeattleBubble] blog editor Timothy Ellis, mocking the listing service’s news release.

Private to SeattleBubble: Mwah!

The market will eventually pick up again, of course, but it may continue to decline before that happens. The implication that people need to buy now before it’s too late is industry propaganda. And here, the PI is pushing that hype and reporting the dip in the housing market as a local tragedy. But slow sales and added inventory was overdue. It’s a dynamic that could reduce (over-inflated) prices, making homes more affordable to the people who want to live in greater Seattle but can’t afford a half-million dollar bungalow. That said, I feel bad for the struggling real estate agents and folks who bought a home that’s temporarily depreciated in value. But as bad as I feel for them, I feel better for the people who might be able to buy a house and won’t be stuck in the same mess as these suckers buyers.

The Mortgage Bankers Association reported Thursday that the number of loans past due or in foreclosure jumped to 7.9 percent, from 7.3 percent at the end of September and 6.1 percent in December 2006. Before the third quarter, the rate had never risen past 7 percent since the survey began in 1979.


RSS icon Comments


But see, houses are still selling. Why would anyone sell there house to someone who can only afford 300k when there are buyers willing to pay 500k. unlike other areas the Seattle market does not have tons of new construction or a huge problem with subprime loans.

Add to that the fact that people are very hesitant to sell for a lose and our strong local economy means that most can afford their payments and therefor will likely not be forced to.

Now high end condos might be heading that way as a ton are being build. Still I would not expect them to drop a whole lot but you will almost certainly see a transition toward building smaller and cheaper units, though probably not right downtown.

Posted by Giffy | March 6, 2008 2:46 PM

Housing is off by few percentage points. It's not like there are tons of people who can't afford $500k but can swing $450k without a problem. It's the same people; they're just holding back because the lever swung a little too far in one direction. It's far from a collapse.

And yes, down markets are, in fact, the best time to buy. Buy low, sell high, remember? Panic sellers are the easiest pickings, in any kind of market, even houses.

Posted by Fnarf | March 6, 2008 2:49 PM

I actually am about to sell my house and upgrade to a bigger one here on the Eastside, because the market is just right for us to do that right now. Interest rates dropped to the point that we could cash in our equity, and our starter home that we ended up staying in for ten years is (hopefully) going to still be attractive in the same depressed marker that will bring down prices a bit on our next home. Our tax refund is coming just in time for this step up in our lives, too -- we plan to use it to pay down debt in advance of the new mortgage.

Posted by Peter F | March 6, 2008 2:52 PM

It's disingenuous to quote the national statistic in a posting that ostensibly deals with the local market. It would be appropriate if you were discussing the national economy. But for insight into the local market, at least get a copy of the MBA delinquency survey and post the local trend.

Posted by nbc | March 6, 2008 2:57 PM

It depends on the type of house too - there are differences between condo sales and townhouses and single-family dwellings.

Price is a major factor, both at the top and the bottom.

Posted by Will in Seattle | March 6, 2008 2:59 PM

local papers are generate revenue from real estate ads in their classifieds. not a shock.

the point here is that NAR types are grasping at straws for good news.

Posted by Bellevue Ave | March 6, 2008 3:02 PM

Folks in the Bay Area wish they could find a half-million dollar bungalow down there. Things ain't gonna crash here.

Posted by DOUG. | March 6, 2008 3:23 PM

just pray that there isnt a recession that affects the northwest harshly.

Posted by Bellevue Ave | March 6, 2008 3:26 PM


You can find a 500k bungalow in the Bay Area. Perhaps you mean San Francisco?

Posted by keshmeshi | March 6, 2008 3:28 PM

good news drill down

Monthly Appreciation
YoY Appreciation
YoY Sales
Monthly Sales Comparison

Posted by Bellevue Ave | March 6, 2008 3:41 PM

Thanks for the link guys. The interesting thing about the P-I headline is that when the article appeared online last night, the headline was originally "Spring housing surge? May be too soon to tell." I suspect that's the headline Mr. Cohen put in, but the headline writers didn't feel it was "perky" enough to put on the front page.

Posted by The Tim | March 6, 2008 3:57 PM

"And yes, down markets are, in fact, the best time to buy. Buy low, sell high, remember? Panic sellers are the easiest pickings, in any kind of market, even houses."

fnarf: buy anytime in the next three years and you'll be buying high. Seattle's only 8 months into this mess, there's a lot of blood left to be shed. Also, a few percentage points is misleading, though correct for 'year over year'. Prices are now down 10% since last July. "Buy low" also assumes we are at the bottom, with 10 year high inventory, and 10 year low sales, both trending worse and worse, we are nowhere near bottom.

Posted by bubba | March 6, 2008 4:10 PM

@9. East Bay too, in Seattle-comparable neighborhoods vis-a-vis schools, transportation, retail, etc.

Posted by DOUG. | March 6, 2008 4:24 PM

bubba's probably right. Plus, you want to time for the bottom six months of both the interest rate cycle and the housing market cycle.

Posted by Will in Seattle | March 6, 2008 4:24 PM

Are you advocating timing the market? That always works great. Are you saying that there are houses for sale today that are priced 10% lower than the same house sold for in July?

If, like most people, you buy a house to live in, none of this market crash stuff matters a bit. If you need a house, buy a house. Lots to choose from.

Meaningless data point: a friend of mine bought a house last week, against five other bidders. They had to write letters saying why they deserved to win -- just like the boom days. The sky is not falling.

Posted by Fnarf | March 6, 2008 4:27 PM

#9 - it's possible. Antioch, Richmond, Benicia, maybe Pittsburg are probably the only way you're getting a single family home within 50 miles of San Francisco. It's doable if you can get within reasonable driving distance of a BART station, but even then...

Posted by Dougsf | March 6, 2008 4:33 PM

"Are you saying that there are houses for sale today that are priced 10% lower than the same house sold for in July?"

King County Median SFH sale prices:

July 2007: 481k
February 2008: 429.9k

I'm not advocating timing the market, I'm advocating realising we're nowhere near a bottom. To be honest with you though, timing a housing market isn't as difficult as you want to believe it is. Macro housing trends move as slow as molasses and supply and demand is always available for anyone to see. Anyone with half a brain could see what is happening now coming back in 2005. Housing prices historically have always reverted back to their mean appreciation which barely beats inflation.

For any individual buyer, sure now may be a fine time to buy if they can afford a house that they want. But if that person has to move anytime in the next five years (job change, loss, kids) they'll likely end up owing more on their house then they can sell it for.

Posted by bubba | March 6, 2008 4:46 PM

Median house price is not the same thing as a particular house selling for less.

Posted by Fnarf | March 6, 2008 4:54 PM

I'm not going to believe the housing market is perking up until I see the nipples.

Posted by Greg | March 6, 2008 4:58 PM

@ #4 - Why would Dominic ever let facts or good journalism get in the way of one of his posts?

Posted by Real change | March 6, 2008 5:06 PM

fnarf, anecdote isnt data.

Posted by Bellevue Ave | March 6, 2008 5:07 PM

@15 - for a first-time home buyer, yes, you should try to time the market to get in at a low interest-rate portion of the cycle when the house price is at a low point.

If you already own a house, the market usually is not as important as the interest rate cycle, however.

(caveat - I worked for Century 21 Real Estate Canada Ltd when I wrote software for the agents - so this is based on courses we taught there)

Posted by Will in Seattle | March 6, 2008 5:16 PM

@17, but absent a forced move, or an inability to make their payments, a person will not likely sell for a loss. I know I wouldn't. My payments are reasonable and I'll be damned if I am going to loss the money I put down on my house just to pay in rent what I am paying for my mortgage. Thats why housing prices are 'sticky'.

unlike the national market, which is weighted down by the speculatively bubbles of places like Miamis and California, the local market is pretty strong. It probably peaked around July 2007 when the usually strong summer season corresponded with the height of the credit bubble, but that does not mean dramatic declines are a given.

Posted by Giffy | March 6, 2008 5:21 PM

If prices are only "inching" up... what idiot would buy?

Posted by treacle | March 6, 2008 5:31 PM

@17...what's that saying? Location x 3?

Seattle prices are up 2% from this time last year.

In-city condos and row houses are staying on the market longer. As are homes outside of the city. But a single family house in Ballard? Still on the market for less than 30 days and getting near asking price.

Posted by gnossos | March 6, 2008 6:47 PM

Maybe I've lived too long, but do you know how shocked and dismayed I am by home prices being expressed in terms of a fraction of a million dollars?

Posted by Bauhaus | March 6, 2008 7:15 PM

actually national problems with lending can affect housing here. fact.

Posted by Bellevue Ave | March 6, 2008 8:12 PM

As long as the cost to rent a place is substantially cheaper than the cost to buy, I'll continue to rent. The two bedroom, two bath apartment I rent on the hill would cost nearly twice as much in PITI (principal, interest, taxes, insurance) to buy in condo form. It doesn't make sense to buy until that number is less than about 1.2 or so. Housing prices are going to drop and rents are going to go up until a sane balance has been restored.

Don't forget that with an inflation rate approaching 5% now, staying flat is basically losing 5% in real terms.

Posted by Jeff | March 6, 2008 8:15 PM

When there's a Seattle housing related thread on Slog and everyone in the comments section agrees that it's a bad to buy, the market will have already turned.

@23 my point was that it is a risky transaction to buy a home right now because there are many thinks that can force a sale, job relocation, divorce, medical emergency and other increasingly unlikely situations... First time home owners on average only own their first home for five years. Buy now and you could be stuck there much longer than that unless you're willing to pony up the cash to the bank to make the difference.

@25 yes, Seattle proper median for an SFH is 2% higher than February, and down almost exactly 10% since August, (501k to 450k). And FYI inventory in Ballard is 104.87% higher than last February (MLS area #705). If you divide inventory (547) by pending sales (135) you get 4.05 months of supply in Ballard. Your view of the Seattle housing market is hovering somewhere over 2006.

Posted by bubba | March 6, 2008 8:23 PM

bubba @ 29: I don't disagree with your overall points at all. But, just out of curiosity how many of the units that you cite are single family residences?

Based just on my observations (not that reliable I grant), the units that I see staying on the market longer are condos and row houses. The single family ones tend to sell pretty fast.

On the other hand, I can use my own situation as an example of market collapse. I live in a single family unit on Phinney Ridge. It's zoned multi-unit and for the past several years I've gotten anywhere from two to five letters per month offering me cash for the place. I've gotten maybe two in the past four months. So it certainly seems the developers are pulling way back.

Posted by gnossos | March 7, 2008 12:30 AM

When I worked Ballard, I noticed a lot of houses staying on the market longer than 30 days, and even showing the dreaded "price reduced" and "bring offers" signs.

Now that I'm down in Columbia City, I'm seeing a lot of houses for sale, but they still seem to be moving.

Personally, I think the price adjustment is a good thing.

Posted by Catalina Vel-DuRay | March 7, 2008 6:52 AM

actually national problems with lending can affect housing here. fact.

Posted by Bellevue Ave | March 7, 2008 7:20 AM

@30 The stats exclude condos but include townhouses/rowhouses.

Condo inventory in Ballard is currently at 259, and was 150 last february, so a 72.67% increase.

If you want to check out the numbers yourself you can go here:

Then click on the King County Breakouts link at the top right of the page which will take you to a PDF. The first page is condo & SFH combined, the second page SFH only (includes townhouses), the third condos only.

Posted by bubba | March 7, 2008 8:13 AM

Bubba, thanks for the information.

Posted by menelaus | March 7, 2008 10:21 AM

Comments Closed

In order to combat spam, we are no longer accepting comments on this post (or any post more than 14 days old).