The last two weeks have been a crazy time for the financial sector. We had Lehman Brothers file for bankruptcy, Merrill Lynch rescued by Bank of America, the federal government taking control of Fannie Mae and Freddie Mac, and bailing out American International Group with a $85 billion loan. Closer to home, WaMu’s shares sunk to $2.01 this week. There’s no doubt this presents a challenging and discouraging time for America and obviously impacts those who have been considering buying a new home.
In Seattle, numbers from the NWMLS for August indicate that inventory has started leveling off with a total of 1,491 condos on the market, 9% higher than same time last year. On the bright side, back in January this year, we had ~65% higher inventory than January of 2007 so inventory trends are coming down.
Median prices for August ($310,000) have fared better than the previous month ($299,975) but are still lower than a year ago which was $327,500. This is a 5.34% drop versus the same time last year. Compared to other cities, we are still experiencing a minor drop in median prices but it’s unclear if Seattle will continue to be an oasis of fairly stable prices in light of what’s going in in the rest of the country.
Number of pending sales for August 2009 was about the same level as July 2009. However, there was a drop in pending sales of 42.25% compared to same period last year. With the current inventory on the market, we are looking at ~9 months of supply. On a nationally level, there is a 11.2 month supply.
Closed sales figures for last month still lagged behind a year ago by 52.42%. Put plainly, inventory is not piling up but what’s already in the market will take twice as long to sell versus last year.
With the fed announcement of taking control Fannie Mae and Freddie Mac, interest rates dipped close to 5.5% level for 30 year fixed and 5.375% for 5 year Adjusted. Home sellers who were able to capitalize on the market benefited from attractive refinancings — hopefully this will make it easier for them to stay in their homes while they wait out the market. Interest rates have since gone back up close to 5.87% for 30 year fixed and 5.75% for 5 year Adjusted.
With the tight credit market, unless the home buyers have good income and credit scores, they will need to come up with more down payment, pay higher loan fees, and provide more documentation to the bank. If you are not planning to buy for the next 6-12 months, this is probably a good time to clean up your credit and save up some down payment.
In summary, the Seattle market is plodding ahead but activity is much slower than last year. Prices are dipping but definitely not crashing. Everyone seems to be holding their breath to see what’s going to happen in Washington DC, New York, and the rest of the country since that continues to be the big driver of buyer hesitation so far.
Heads up guys. We just got the word that we a going down the tubes! Watch what happens over the next week or so. Just a heads up! Hope it helps!
Why doesn’t Seattle join Alaska and declare independence. Seems like all the crappy loans and lame companies are from outside of Seattle anyway. Our local market is — dare I say — fundamentally sound. It’s the rest of the country that’s fubar. Hmmm. What would Sarah do?
What would Sarah do? Well, why don’t we ask her. Oh, that’s right, we can’t….
“Seems like all the crappy loans and lame companies are from outside of Seattle anyway.”
WAMU is outside Seattle?
Since when did Moron train arrive on this posts’ comments?
Banks were giving out 40 dollars for every 1 dollar that they had. With this money ( read money that did not exist ) people all over the US including in Seattle bought houses. Now, most of the banks dont have money. if they do have they are giving 50cents if they have a dollar.
Now with 80 times less money in the market, who is going to buy these inflated home prices. With banks having no money, housing going down, how will people pay for the houses that they bought with 0% down. They cannot refinance, they cannot sell because they get less then what they bought for ( i.e if they can sell at all ).
No buyers around. Existing owners dont have the money to pay. In this environment its amazing that people keep on predicting that bottom is here.
Seattle markets are holding on simply because we have a better earnings ratio here. But the country weakness will catch in Seattle too. Today WAMU went down. How many people will lose their jobs and lose their homes ? There is lot of downside still.
Dont get encouraged to buy houses reading rosy posts by agents like Wendy Leung. They are agents. They want you to get scared that the bottom has reached and buy houses so that they get their 3% commission.
Try to understand whats happening and ask your self the question, who will cause the bottom, who has or will provide the money to buy houses to cause a bottom. We are far from bottom. Keep your money under that sleep number mattress or FDIC insured banks.
Who can argue with seatlite? i told you houses were falling, falling. now we have to wait til july to buy condos. plus if wamu gets money from the goverment why dont they call it washington dc mutual.
Oops! Sorry, Wamu. The greed got the best of you. Now you’re gone. The market adjusts.
not sure what blog seattlite is reading but i think the post above is actually quite skeptical of the market picking up anytime soon. in fact, since the bailout program just got approved a few minutes ago, i think wendy’s too pessimistic. my bet is we’re about to see the bottom and some gradual price appreciation starting in 2009.
um, Judy, judy, judy. Have you fallen down and hit your head? Turn on the TV honey, the just rejected the bailout! I moving over to B of A!
This is a common problem not only for the Seattle area. Most metropolitan cities have experienced stunted projects and/or major problems with some of the conversion projects.
Austin McDonnell
http://apartmentloanpro.com