Even the most bullish Seattle real estate watchers will agree that the market has slowed dramatically versus a few years ago when sellers were reviewing multiple offers, comparing escalation clauses, and essentially selling property sometimes in a matter of a few short weeks.
But it’s also easy to forget how things are going in Seattle relative to the rest of the country. Regardless of whether you’re expecting the market to go up, stay the same, dip, or crash — one thing that’s hard to dispute is that at least so far, Seattle has been holding up really well compared to the rest of the country.
Of course, it’s possible Seattle is just about to experience more of what our neighbors in other states’ have been through for a year or so; on the other hand, the longer Seattle muddles through this, the less likely we’ll see the magnitude of impact seen elsewhere (e.g. 20-30% price drops).
In fact, Business Week recently named Seattle one of the fastest selling housing markets in the nation (#9 to be exact).
The Seattle area is home not only to some of the world’s most famous companies, including Microsoft and Starbucks, but also to the Space Needle and Mt. Rainier. The real estate market has slowed in Seattle but hasn’t declined as much as in other major cities.
Yeah, I recently sold my Belltown condo. I could have made $175k in gains had I sold a 2 years ago. Ended up only making about $100k. Compared to my friends on the East coast, I guess I should be grateful.
Yeah, but as we’ve all been saying, Seattle lags the country in economic trends by about a year. We’re just getting started in our market’s deflation. We’re definitely going to see the 20%+ market drops/corrections at LEAST. We’ve already seen 7% and it just begun. Mark these words here today, okay folks? I AM UNBIASED – NOT YOUR LOCAL REALTOR.
Sounds to me like, once again, more SPIN to make buyers feel better about the Seattle market. Funny… I thought this was a website dedicated to completely unbiased input and opinion. Every time a new article is posted on this blog about the condition of the Seattle market, it seems to be completely spun around to elude that the Seattle market is going to rebound soon, or isn’t going to deflate very much at all. Those sentiments are completely false and highly irresponsible.
The conclusions in this article are VERY biased if you ask me. Its merely the sales tactics of another realtor in Seattle. Comical and elementary tactics.
For sure, some of us have different perspectives on how bad things have been and how things might develop in the future. But I think that’s to be expected. In my opinion, I’ve been pretty moderate in my posts referencing 3rd party data when I can and acknowledging macro economic risks that extend beyond Seattle but I do appreciate others sharing their points of view. I’m definitely more bullish than folks like my friend MD but I’ve considered myself more in the “market will go sideways” camp for some time now. Regardless, I think it’s great to share perspectives so that SCR readers can decide for themselves.
“You need to get over yourself” Says The MD. Hilarious! That is the best example of “projection” in recent memory. It gets better, he goes on to say: “Your conclusions … are very biased”. Ha! The most closed-minded, biased, doom-and-gloom, world-is-coming-to-an-end, chicken-little prognosticator on the blogs, projects his own faults onto anyone with a differing opinion. It is true that we are in a soft economy and it is also true that all markets go through fibonacci-like cycles seeking support and resitance. But no two markets are the same and anyone who claims to be able to predict the future, or a given market with any degree of absolute certainty lacks knowledge of the dynamic nature of cycles affected by the unknown, fails to recognize the fluid reality of a new global paradigm, and is certainly more than a bit too full of himself. GET OVER YOURSELF, The MD, or if you really feel that the world is coming to an end, crawl in a hole and pull your blankie over your head. You will most likely eat your words in time. Meanwhile, the rest of us will ride out this healthy market correction [yes, all market corrections are healthy and a good thing] knowing that it will bottom out in the 11-18 months or so. Meanwhile, FOR THOSE OF US THAT DO NOT OPERATE ON FEAR, this is a time of grat opportunity – one of those rare times in history when great fortunes can be made by smart, patient, entreprenurial people. Many great properties are available, and “on sale”, those that fail to take advantage will be regretting it when the tide turns, inventories shrink, supply dwindles, the good properties and deals go away. As the stock market gurus say: ‘when all the lemmings run to the cliff in fear, that is the best time to take the opposite course’. A great investor once said: “Even a broken clock is right once a day, but great opportunities are lost by those egotistical fools that are more focused on being right than on being rich”.
wow, what’s with all the CAPS? I didn’t see any biased conclusion. all she did was link to a Business Week article saying nice things about Seattle. to be fair, i happen to also be in camp sideways so i found the post spot on. irrespective of our predictions, can’t we all just give our 2 cents without getting personal? BTW, i find the freddie mac and fannie mae news very encouraging but i suppose the doctor of death will spin that as another sign of the coming apocolypse.
If Seattle lags by a year, didn’t prices in most of the country start dropping in 2006? If Seattle simply mimics Miami, then we should be already seeing 40% drops in the market here. What gives?
2@Jake the Snake: The post was directed to doom and gloomer “The MD”, relative to several of his recent vitriolic posts, not to Wendy whom is consistently a voice of reason and does not [contrary to The MD’s accusation] “hype” the market one way or the other.
Hi Einstein:
Yeah, we were commenting at the same time so I didn’t see your post till I submitted mine.
I feel like it was “spun” because of course the Seattle market is still one of the “fastest selling markets” in the country, but relative to what? Really, nothing is selling well out there right now. Also, there was no consideration that our economy does lag national trends. So, I’d like to see this same report about 9 months from now.
As for Einstein, I clearly have an enemy, even though I’ve never made any direct or personal attack towrard “Einstein.” I have rebuttled Einstein in the past. So, I think it is evident I touch on some very sensative points when I write.
I never said the world was coming to an end – that’s perhaps how you’ve twisted it. You seem to like to twist words a lot, Einstein. I said we are heading for a necessary correction and it is, in fact, going to exceed the 20% mark. We are in now way nearing the bottom right now. If you don’t agree, that is fine. I think you’ll want to revisit the discussion a year from now and re-evaluate your position. Doom and gloom, no. Realist, yes.
Curious – I never compared Seattle to the extreme of Miami. That is a conclusion you must have drawn on your own accord.
Jake the Snake – I also just don’t feel a “voice of reason” is one that would tell the market and potential buyers that we will vascelate + or – 5% from this point forward.
Hey guys. Looks like Mosler is selling again. This weekend I spoke with someone who works for the developer. They had one unit left for $429K. I was going to see if I could swing a deal for less but they accepted an offer today. Looks like sellers are indeed able to sell and those Mosler listings are for real.
Sorry to hear about the views Mark W.
{No Fear = No Brain. LOL If you only knew what I know…you friggin’ IDIOT! – THE MD}
Apparantly someone needs a time-out ;). Let’s bring some perspective to this issue. According to Case-Shiller, the greater Seattle aggregate market appreciated almost 100% from January of 2000 to June of 2008 [the peak of this last cycle]. To suggest that the market will drop another 20% on top of a recent 7% is possible, but its purely speculative, no matter what the science behind the prediction. It is also relative, given that the previous years were in double-digits. We are in uncharted waters and no one really knows where this market will go, how hidden inflation factors into the formula, where bonds and interest rates are headed, and when capital markets will shake out. Some technical analysts are speculating that [based on a parabolic double bottom followed by a plateau] we are very near the bottom [i.e. finding support] and about to go into a phase of consolidation and a sideways channel for the next year. Based on current supply [inventory] against demand [buyer psychology and constricted capital] we all know that it will be awhile before we see the next phase. Fortunately, Seattle did not get over-built like many other cities and our current and projected growth is favorable. I personally am more optomistic than many of my colleagues and look to the next cycle in 2010. Meanwhile I plan to take advantage of what opportunities are out there while things are on sale and before interest rates go up again, sales like this dont come along every day.
NoFear puts it well. No one freaking knows for sure. I have no idea why everyone is getting so angry. It’s like Sara Pailin started speaking in tongues over here.
Cramer calls the market bottom:
http://nymag.com/news/businessfinance/bottomline/49938/ . Of course, no one really knows where the bottom is, there are too many variables and unknowns on the economic and political front, but its probably not a bad guess. Summer of 2009, interest rates will be going up and everyone that sat on the sidelines waiting for the prices to collapse in Seattle, will be – yet once again – left in the dust. Buy good property at reduced prices when demand is down and you will be thanking yourself for the rest of your life.
NoFear writes: “Fortunately, Seattle did not get over-built like many other cities and our current and projected growth is favorable.”
I don’t think the overall Seattle housing market is overbuilt, but I’m not so sure about the downtown condo market, especially now in the new context of tighter lending requirements and lost equity.
The average household income is better here than in a lot of places, but most downtown area condos are studios and one bedrooms. That pretty much eliminates people with kids, leaving us with singles, pre-kid couples and empty nesters. The pre-kid couples and many singles tend to be younger, neither in their prime earning years nor having had much time to accumulate much equity. The new normal will shut a lot of them out of a condo market that seems to have been targeting them.
The empty nesters will likely be in better shape, but I wonder what the psychology will be for them given how they might have regarded their home equity w.r.t. retirement savings. Chris at the start of this thread noted losing $75K in profit by having sold recently instead of two years ago. For retirees, that’s a chunk of security that will be hard to make up.
And if appreciation returns but at a much lower rate in the new normal, demands from the flippers will mostly disappear.
And with a couple new rental towers coming online soon vs. the high-end condo market-targeting Olive 8, Ava, Four Season and Escala, and renting+investing the difference may be a better choice for a lot of folks who want the downtown lifestyle but can’t swing the 20% down payment.
It’ll certainly be interesting to see how it all shakes out.
The other big elephant in the room is the drug users and pan handlers. I’m all for urban living but parts of Belltown are getting really out of control. Even if the economy picks up, some buyers will not consider downtown living if they can’t buy a cup of coffee w/o tripping over a used IV needle or declining multiple requests for money.
Jake the Snake wrote, “BTW, i find the freddie mac and fannie mae news very encouraging but i suppose the doctor of death will spin that as another sign of the coming apocolypse.”
The government just seized the biggest players in the mortgage market and you see this as “spin”? Banks are failing, with more on the way…most likely one of the largest employers in downtown seattle, but you see rainbows and unicorns. The action of the government does not indicate the end of hard times, it shows that the breadth and depth of trouble is greater than we could have ever imagined. Now tax payers will pay billions for the irresponsible actions of the past decade.
Hey, “Einsten” so you REALLY believe we should all just go out and snatch up these “deals” right now? LOL Your’e quite a transparent realtor/marketer. You’re suggestion is that as rates rise in 2009 people will regret not having bought today? Are you kidding me? As rates push up in 2009, consumer buying power will decrease, therefore pushing prices DOWN. That means the deals will be in the future, just as I’ve been saying.
You are quite the double talker and really like to confuse people with half-truths and scaring them into buying today because “[we’ll] regret it.” Talk about using scare tactics to artificially manipulate prices and use fear of “regret” as a last resort to keep them high.
I think its obvious you’re scared and concerned as the market deteriorates and you lose sales and sales commissions, and that is okay. Hey, I’d be concerned too. Just don’t “pee on our legs and tell us its raining,” okay?
One more thing, Jake the Snake… The Government seizing Freddie Mac and Fannie Mae is NOT A GOOD INDICATOR of things to come. In fact, you’re going to see credit standards and lending practices get even tighter. Yeah, now follow me here, okay? That means it will become more difficult for consumers to receive loans. Last time I checked, that has a tendency to push market prices down and reduce market sales and increase market inventory and increase days on market about 100% of the time. That isn’t spin, buddy. That’s a fact. Again, it sure does seem to me you’re trying to spin the situation that the Government taking over Freddie Mac and Fannie Mae is an indicator of a good thing to come. HA! Laughable.
Noted Rudy: “The other big elephant in the room is the drug users and pan handlers. I’m all for urban living but parts of Belltown are getting really out of control.”
I moved to downtown Seattle (Met Tower Apts) in 2002. For awhile now, I’ve noticed a group of scruffy looking “kids” routinely gathered at Westlake Park, and at night many of the benches in front of the new fed courthouse are now filled with people sleeping. I’ve never had a problem with any of these groups, but I doubt the visuals will do much to encourage suburbanites to make the move.
How much does parking matter? City gov seems to be increasingly anti-car downtown. Because I work at home, I rarely drive in-city, but without rail the region’s mass transit leaves a lot to be desired, and as someone who came here in part for mountain activities (not served by mass transit), and I like my car for its spur of the moment convenience for when I want to hit the hiking trails etc.
Will city attitudes towards cars and parking discourage enough folks from downtown living that it could make a difference in demand for downtown housing?
DDurn,
I highly doubt that Mosler has sold any units. The developer was still holding a few units as they entered their legal troubles.
Here is a list of the oustanding liens against the building:
JE Dunn $6,740,789
Long Painting $100,000
Holiday Parks $1,300,000
Veca Electric $651,366
Hensen $114,824
Belarde $79,956
Banks require that they are in the first lien position on a loan…not 12th.
S.Data > Chicago Title has insured around all of the liens for the homeowners in Mosler. Not sure about the most recent sale, but the liens are not that big of a deal with the title insurance covering, and the situation should not prevent a unit from closing provided that it goes through Chicago. According to Redfin and CondoCompare.com there are five active listings in the building.
Mosler HO,
It is my understanding that a lien is a hold against a property for money owed. The title will not be cleared until liens are paid. As a purchaser, I cannot recieve the title until all liens are cleared. It is also my understanding that a bank will not issue a mortgage unless they are in 1st or 2nd lien position.
Your insurance may protect you financially, but it does not release the property.
Most banks won’t even issue a mortgage now unless they are in 1st position.
So, hopefully, i won’t get into trouble for this, but the lien’s at the Mosler Lofts have not been paid, or cleared by the city. Title will NOT be cleared until either they 1. expire or 2. are cleared. The potential buyer has to secure clear title in order to close or financing will not be given. So, basically, nothiing can change hands until title is cleared, and in order to do that the liens have to be removed. Yes, going through our comapany MIGHT help secure financing, but two attempts have come across our desks for the building recently, and although we did everything we could to assure title, the banks pulled out of the deal. I hope this is helpful.
Thanks for the
clarification, “IworkatChicagoTitle”. This is not the story that we are hearing from the developer, who has stated in writing that the title insurance through Chicago “provides protection against damage or loss of title to property” and that “our company purchased title insurance…in order to provide free and clear title to all homeowners.”
Question:
How many other items were given “in writing” by the developer throughout the development of this project, at closing of this project, and after the project was closed that haven’t come to fruition for the home owners of Mosler?
They are telling you the truth. You have title to your property. I assume you have a mortgage on the property and your bank is in 1st lien position. If you try to sell your condo, your bank gets paid and the new bank will have to get in line behind the lien holders. They will not do this, so you cannot sell.
S. Data…I think that is where the problem came in for the two contracts that we tried to close. The banks, where the potential buyers tried to get financing, did not like the idea of getting in line. At least that is what it looked like from our point of view. They never come right out and tell us EXACTLY what happens when a contract does not close, and they might have gone and got financing from another institution…that is another part that we never really hear about. There are usually only a handful of reasons that contracts don’t close, and right now, the bigges one is that the banks end up pulling out. A lot of times the bank will also do a last minute credit check, and final document review, and they find something that does not look right, and pull the deal off the table at the 11th hour. We are absolutely seeing more of that happening now, than we ever have before.
http://seattlepi.nwsource.com/local/378803_foreclosure12.html?source=rss
…Seattle lags and above is the proof.
Keep in mind that “Seattle” is being defined here as all of Snohomish and King counties. Relative to Stockton, California where there is one foreclosure per 50 households, or Nevada where one in 91 households, the foreclosure rate of one filing per 906 households is not so bad. If you look at King County alone, or better yet, Seattle Metro, the rate is significantly less. Will it get worse? Probably a bit, but nothing like other parts of the country where there were significantly more NINJA sub-prime loans and unemployment is rampant – whereas growth and general economy is much better here than elsewhere. It all how you look at it, for some, the sky is falling. For others, this is just another healthy market correction that we will work through, and on the other side will be the next up cycle.
Thanks for the insight, NoFear (a.k.a a realtor). GREAT “unbiased” perspective. There is absolutely no “the-sky-is-falling” mentality going on with many of the posts you see. Its merely a fact that I and most other consumers in the Seattle metro are tired of hearing people like you trying to downplay the reality and severity of the situation. Perhaps if your lively hood didn’t depend on prices staying high, we could all take you seriously. But, obviously we are right given the already 11% YOY market correction. That’s the same 11% YOY correction that you discounted only a while back. The market is indeed declining, and it will indeed continue. We just want to make sure consumers stay informed and don’t go out and do something stupid like buying a home at asking prices of today. As I’ve said before, get back to me in about a year. You’ll see how much more it will have corrected itself at that point. To say we’re only getting started here is a REALITY of the situation – not “the-sky-is-falling” tactics. I have nothing to gain from that.
However, I would like to point out that you, on the other hand, continue to elude that the economics of buying a house today are well in line with being sensible. It sounds to me like you have a lot to gain by keeping prices artificially high. Otherwise, you wouldn’t care so much. Perhaps it isn’t me having a “sky-is-falling” attitude, but rather you are manipulating (aka lying) consumers. The same manipulation that got us all into this mess in the first place.
Looks like it’s still a seller’s market: http://stroupecondoblog.com/2008/09/15/condo-king-county-weekly-sales-ratios-for-september-10th-2008/ . Anybody want to comment on this?
Seems like the only important piece of data on the chart is the 7 week average which is 28 weeks supply, hardly a sellers market. Weekly data is too small of a sample to draw any conclusions from.
under 500k = sellers market
over 500k = buyers market
There was an article on CNNMoney.com today that looked at why it is hard to find buyers in spite of the price drops, including big drops in some areas. Some of its points –
Even though prices have dropped 8% nationally, many potential buyers still see them as high-priced or over-prices. But the 8% off the peak is still 39% higher than 2001. And in spite of the huge slump in Miami, average prices there are still about double what they were in 2001.
Some forecast that the 8% is still mid-slump – some, like Wachovia, forecast a 20% drop nationally, so there’s still plenty of fear of a purchase now losing more value.
Tighter lending requirements, e.g., those with credit scores below 600 generally no longer can get loans, have cut 13% (21 million people with credit records) from the pool of potential buyers. That’s a big hit on demand at at time when supply is still increasing.
Theshold scores for interest surcharges are also going up, impacting another 20% (33 million) of those in the potential buyers pool, adding as much as $100/month to the payments for a $300K/30yr loan.
To avoid the extra fees, 5% down is heading for 20% down, meaning a family wanting to buy a $400K house would need $80K up front rather than $20K.
Mortgage rates are up – by less than a point in the last couple years, but it makes a difference. A 5.87% 30-year fixed $300K loan translated to a $1774 monthly payment. At today’s 6.57%, that $1774 monthly payment supports a loan of only $278,500.
In the boom, banks allowed PITIs of up to 45% of the buyer’s income. That’s fallen back to about 32%. That means that before a family needed an income of about $80K to buy a $395K house, whereas now the income would need to be about $92K.
Of course there are variations in different cities, including in Seattle. But when things get back to normal, the new normal will have a smaller buyer pool with a lot more expected from them in terms of down payments and household income, and that will put further downward pressure on prices. People who want to sell will have to respond to this new normal for buyers.
Mark W, AMEN! Best and most accurate post I’ve read in a long time.
What worries me is EVEN IF you were to find a good deal on a nice condo now and EVEN IF the market started appreciating again, once they start building those super highrise concrete condos like Ava in Belltown and South Lake Union, you’d find it hard to sell later on.