Nationally Home Prices Fall But Seattle is Better Off Than Most
Throughout the US home prices are falling at the sharpest rate ever. The Office of Federal Housing and Standard & Poor's reported this week that Aprils 2008 home prices had a record decline over Aprils 2007 prices.
The Standard & Poor's/Case-Shiller index of the top 20 cities fell by 15.3% in April 2008 as compared to April of 2007. According to this report, Seattle was only down 4.9% from last year although for March 2008 Seattle was slightly up from March of 2007. We question this 4.9% figure as we think the decline in Seattle prices is closer to the 8% to 10% range, but that depends on the price range of the home as well. The hardest hit price range in Seattle at this time is in the over $750,000 to about $1.5 million range. We have seen a slight increase in sales activity for May and June however, but it goes in spurts. Two weeks will go by and nothing will happen with a listing, no showings, nothing. Then there is a spurt in activity and we'll get 3 or 4 showings in just a few days. Some agents report that they have no sales for a month and then 3 in one week. There are buyers out there, and this is actually the best time to buy a home in Seattle since 1990, but people are scared to buy because they read about all the bad stuff happening everywhere else. And, because they think the market may be still falling and they are trying to anticipate the bottom of the market before they step in. The problem is you never know you are at the bottom until your past it, and it's already gone up.
Some economists say that we are a year away from the bottom, and that may be the case, but where? Each market in the country has different factors affecting it. For most of 2007 prices in most of the US were falling and in Seattle they were still going up. Seattle has a strong economy and there are a lot of new people moving here for new jobs. It's anticipated that another 1 million people will be living in Seattle by 2020.
Seattle hasn't been effected anywhere as much as other areas, like Arizona, Southern California, Nevada, or Florida by all the foreclosures either. Seattle ranks about 27th nationally for the number of foreclosures and most of those are in Pierce County. In fact, we believe that the main reason for much of this huge "price drop" nationally is a direct result of so many foreclosures and Short-Sales. Some estimates are that 1 in 4 homes that sell in Las Vegas, Phoenix and Southern California is a Short Sale. Short Sales and Foreclosure sales can be as low as 60% or 70% of the market value, but most are about 75% to 85% of market value. Hum...85% of market value, isn't that about a 15% decrease in the home values? And the reported home price decease nationally was 15.3%! These distressed homes are selling at those prices and some people will be making "a lot" of money in some markets down the road when the market turns around, and it will. Some areas will rebound slowly and some rather quickly and we believe Seattle will be one of the faster turn-around areas in the country.
Here's the deal...I had a boss many years ago that said one day that "Success breeds success". I found that to be true, very true. So is the reverse true as well? I think so. We see all this bad news, almost every day now, for the past year or so, about how bad the real estate market is and about how bad the economy is. We hear that the world may come to an end because of global warming, we hear about how messed up the world is, and then we start to believe it whether it's affecting our city, our country, the world, or our real estate market. And believing all this stuff will eventually affect us. With the higher fuel and food prices, a knee jerk reaction in the credit markets for problems they often times created, consumer sentiment is pretty low, which perpetuates the problem even more. Living in Seattle we are living in one the best places in the US. And the US is the greatest country in the world. We are the most generous and innovative people in the world. You know we have our problems but overall we are pretty well off and I know we'll fix the problems we have, but the great thing is that we will always have new problems to overcome. Lets all have better attitudes and a more positive outlook, it works!!
The Standard & Poor's/Case-Shiller index of the top 20 cities fell by 15.3% in April 2008 as compared to April of 2007. According to this report, Seattle was only down 4.9% from last year although for March 2008 Seattle was slightly up from March of 2007. We question this 4.9% figure as we think the decline in Seattle prices is closer to the 8% to 10% range, but that depends on the price range of the home as well. The hardest hit price range in Seattle at this time is in the over $750,000 to about $1.5 million range. We have seen a slight increase in sales activity for May and June however, but it goes in spurts. Two weeks will go by and nothing will happen with a listing, no showings, nothing. Then there is a spurt in activity and we'll get 3 or 4 showings in just a few days. Some agents report that they have no sales for a month and then 3 in one week. There are buyers out there, and this is actually the best time to buy a home in Seattle since 1990, but people are scared to buy because they read about all the bad stuff happening everywhere else. And, because they think the market may be still falling and they are trying to anticipate the bottom of the market before they step in. The problem is you never know you are at the bottom until your past it, and it's already gone up.
Some economists say that we are a year away from the bottom, and that may be the case, but where? Each market in the country has different factors affecting it. For most of 2007 prices in most of the US were falling and in Seattle they were still going up. Seattle has a strong economy and there are a lot of new people moving here for new jobs. It's anticipated that another 1 million people will be living in Seattle by 2020.
Seattle hasn't been effected anywhere as much as other areas, like Arizona, Southern California, Nevada, or Florida by all the foreclosures either. Seattle ranks about 27th nationally for the number of foreclosures and most of those are in Pierce County. In fact, we believe that the main reason for much of this huge "price drop" nationally is a direct result of so many foreclosures and Short-Sales. Some estimates are that 1 in 4 homes that sell in Las Vegas, Phoenix and Southern California is a Short Sale. Short Sales and Foreclosure sales can be as low as 60% or 70% of the market value, but most are about 75% to 85% of market value. Hum...85% of market value, isn't that about a 15% decrease in the home values? And the reported home price decease nationally was 15.3%! These distressed homes are selling at those prices and some people will be making "a lot" of money in some markets down the road when the market turns around, and it will. Some areas will rebound slowly and some rather quickly and we believe Seattle will be one of the faster turn-around areas in the country.
Here's the deal...I had a boss many years ago that said one day that "Success breeds success". I found that to be true, very true. So is the reverse true as well? I think so. We see all this bad news, almost every day now, for the past year or so, about how bad the real estate market is and about how bad the economy is. We hear that the world may come to an end because of global warming, we hear about how messed up the world is, and then we start to believe it whether it's affecting our city, our country, the world, or our real estate market. And believing all this stuff will eventually affect us. With the higher fuel and food prices, a knee jerk reaction in the credit markets for problems they often times created, consumer sentiment is pretty low, which perpetuates the problem even more. Living in Seattle we are living in one the best places in the US. And the US is the greatest country in the world. We are the most generous and innovative people in the world. You know we have our problems but overall we are pretty well off and I know we'll fix the problems we have, but the great thing is that we will always have new problems to overcome. Lets all have better attitudes and a more positive outlook, it works!!
Labels: Buying Homes in Seattle, David and Karen Bell, Foreclosures, Seattle Real Estate Market Conditions, Short Sales
posted by David & Karen Bell at 5:34 PM
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