New real estate data released this week shows signs of improvement, and one real estate broker is calling the Ballard housing market “hot” compared to a year ago. “I’ve been involved in a handful of multiple-offer transactions in Ballard in the past month, with one home receiving 9 offers on the first weekend it went on the market,” Seattle real estate broker Sam DeBord writes.
New MLS data released this week shows that sales are up in Seattle over last year (+14%) but median prices are down (-13.9%). With unemployment and foreclosures still at high levels, it’s too early to declare the local housing market has it bottom — but it may be close. “If we’re not quite there yet, I think we’re nearing it,” Ron Sparks of Coldwell Banker Bain told the Seattle Times.
I don't trust anything said by realtors or their organization, the NWMLS. You have to remember these people are salespeople. They will say anything to get a real estate transaction to happen. Otherwise they don't make a living. They will never say it's a bad time to buy, because if they do, they will go out of business.
I get all my real estate news from SeattleBubble.com. They provide the data and let me come to my own conclusion. Granted there are a lot of “end-of-the-world is coming” type commenters on there, but they can be easily ignored.
Heh, I was just going to post the same link. It's more than just the commenters on SeattleBubble that are doom-and-gloom; I think the whole site is built around the premise that no one should buy a home, ever. On the other hand, the predictions they've made have been a lot more accurate than the cheerier sources.
Wow: checking SeattleBubble's foreclosure map:
http://seattlebubble.com/blog/2009/08/06/google…
WTF, NW 83rd Street?
The world is about to end…
Seriously, they have to say something to keep the costs inflated.
Yes, they still are, imho.
That's not our premise in the slightest. From our About page:
FYI, it's Google's foreclosure map, not Seattle Bubble's. I just embedded the Google map in a post.
The Tim on Ballard Blog!!!!! wow
Yeah, I read that the first time I hit the site, a year or so ago. I like the site quite a lot, actually, on the days when I can take that much sheer negativity from a single point-source. You collect a lot of good information, and you present it well.
I think the reason that the overriding, saturating, all-encompassing impression that I get from the site is that no one should buy a home, ever, is bipartite:
1. almost every single piece of information and analysis presented is negative — no fault to you there, really; it's the times we live in, and that's your focus
2. a large number of commenters on the site are clearly there to pat themselves on the back about not having bought a house
Hey fair enough, I can't argue with the impression that you have. It is what it is. I will say FWIW, I have personally been looking a lot more seriously at finally buying a house myself lately. Currently I'm thinking the upcoming winter months might be the optimal time for me. It's definitely a way better time to buy than any time since I started the site in late '05, anyway.
Wow!! If The Tim buys a house in this market, can recovery be far behind? ;)
Tim – For what its worth, while its fun to occasionally check in on your site, the tone is so overwhelmingly negative, and arrogant, I've stopped visiting it on a regular basis.
Also, I recall about 2 years ago, there were some pretty harsh regular comments mocking the changes in Ballard. I think you go out on a limb to come here and comment. Back to the east side with you please!
Edog
The Tim helped me convince my wife not to buy back in 2006. Thank you Tim! We've held on to our nice little rental in Sunset Hill since then and have socked away some for a down payment when the time is right. I've always felt the the message of “the right time to buy is a very unique and personal decision” was well conveyed on Seattlebubble.com. For us it looks like that may be later this year but that's just my life and has very little to do with the market really.
No. There are a lot of people shopping thinking that the housing markets is rebounding like the stock market. More people are foolish reading that the US trend is a slightly recovering housing market but they are forgetting that Seattle's Bubble continues after the 2006 peek for the rest of the US. The average US home price has dropped 40% bellow the 2006 market values, that isn't the case in Seattle. We're clearly still in a bubble, we just have deeper pockets to resist foreclosure. It's does not mean that the bloated home prices are what they should be. In addition the governenment have been pumping up the amount of money that Freddie Mac and Fannie Mae are pumping out to home loans. This is just masking the fact that the rising jobless rate and over all trend of greater foreclosures is just going to make the home market worse. What might have been a 10 year problem is now looking like a 15-20 year issues. Not to mention that most Americans are underemployed (meaning that you are making less then you did or you can't find enough work to fill a standard work week. There are still TONs (millions) of homes on the US market that aren't lived in. (In fact you could house the entire Population of Great Brittan in the unoccupied homes presently in the US. ) Supply and demand will force home prices to fall for years. Individuals that are hoping to get a interest rate before they spike might be adding a little bump, after all this is summer time and like always there are always people that will believe the BS that the economy and housing market are recovering.
Locally (Ballard), there are still condo's that are going to be built adding to the demand. These condo's aren't being built because there is demand, but because a huge investment and over 2 years in Seattle Permitting makes it stupid for the company to abandon the project. This is also true for the government. There are tons of construction workers that have jobs because of this last surplus of money from the boom (economic momentum if you will). This money will dry up and more people will be out of work. As the money in people's bank accounts dry up they won't be able to save face and avoid the embarrassment of losing their homes. (Foreclosure is a horrible, embarassing, and heart breaking thing to go though.)
All of this plus other companies which have already tightened their belts (pay cuts and the like) are actually running out of their safety money. A lot more businesses that have been trying to squeeze out budgets are going to be laying off more people and the unemployment rate will continue to rise.
All and all the housing markets if going to be down for a LONG time… (years). The quirk about Seattle being one of the richest area's in the US is that those Deep pockets will cause our market to take longer to fall. Not because it hasn't dropped in value but because people will try to ride out the storm. Area's like Ballard are not going to see a lot of foreclosures but as resident pass away you will see some homes sit on the market for a long time. Rents will drop more and more as more people rent to try to keep up with mortgage payments. Property taxes will also likely increase due to out bloated local government. Instead of a quick drop that much of the US has been experiencing we'll have longer term stagnation of prices. Homes values will most likely not beat inflation. So home prices might not drop very much but compared to inflation homes will be depreciating slowly over time.
Great homes will always attract lots of interest, the same goes for homes with amazing views. It is more subjective and at the end of the day you only have to find one buyer that agree's. For the rest of us you have to obey the laws of reality, supply and demand, and accept that most of us bough high or missed your opertunity to sell. Even most people that made money lost it when then purchased their outragiously expensive retirement home that is never going to sell for what they paid.
Most homes in Ballard are not worth what they cost. There are also a TON of Ballard homes that have tons of DIY remodel work that is really sub-standard and not up to code. Buyers, Banks and lending institutions (and the city) are going to be much more strict and about the homes that are not up to code. Older homes like the ones in Ballard are going to cost more and more to insure.
Over all, I expect a little spikes here and there but homes are still going to be on the downward trend for some time. I suspect that we'll be seeing interest rates climb to double digits in a couple years once the stimulus money has dried up. In general it will take close to a decade for much of the funk to clear. Seattle, it's construction labor, and real estate markets just have to adjust to the fact that Seattle isn't BOOMing any more (and really hasn't been for some time.) The party is over and this is the sobering headache.
That was good advice.
To say that NWMLS is biased and Seattle Bubble isn't, isn't fair. I love the guys at Seattle Bubble and read their work daily, but numbers are numbers, read other's interpretations with a grain of salt. Even when you look at numbers, the ones being presented to you aren't all the numbers. Just the ones they want to show you that present the writer's point.
The biggest thing is, look at historical housing data for the Seattle area:
http://www.trulia.com/real_estate/Seattle-Washi…
It's very cyclical. Meaning, yeah housing purchases are up, it come be any reason, but also, don't forget it very well could be natural.
Here's a link for housing market data that is specific to Ballard: http://www.redfin.com/neighborhood/121/WA/Seatt…
Only real downside is that the data only goes back to August 2007.
While I agree with your bias I think your the Graph you are showing doesn't go back very far. A lot of people forget that Microsoft, Real Networks, and a lot of other Seattle startup brought a ton of money to the area very fast. A lot of people who became instantly wealthy spent much of that money inflating the local Seattle economy. Much has settled down but the reality is much of the work is fading away and salaries are much lower. The housing bubble has not been connected to reality, but just mindless spending based on miss-information and general hysteria. Peoply who benefited from this don't want to hear the truth.
Real-estate, construction, and architects don't want to accept that they are going to see times similar to the 70's and 80's where work was slower then slow. Instead you see a lot of spin tactics which sometimes work on new buyers but rarely work on older buyers.
Advising people about finance is always touchy subject for responsible people. People who's industry is effected love to preach sunshine and this is honestly true in any business. The sad part is that home industry is usually the largest purchase that most people will ever make and bad advice can ruin a family. Buyer and Seller agent nor construction companies have any liability if they lie to a client and cause financial ruin. They just want to get you into a place and make their commission.
I forgot to mention that you need to look at Seatle's Pre-2000 historical data to see the real picture along with the area's GDP and median salary.
blaaa
Still inflated.
Of course, Mr. Bubble could tell you that.
BT – in any desirable market such as Seattle, of course the house isn't worth what it costs — we're paying the big bucks for the land underneath, not for the house. On the good side, that means that even if the house burns to the ground, you've still got most of your value intact (and maybe better, because you don't have to pay to knock down the old house :) ).
Except you need to pay for your new house. Whoops. Too bad since your Ballard “Cape Cod” (aka shack) was stretching you to the limit.
You make some good points, but you also need to consider some factors that Seattle has.
1. Bad traffic. Less incentive to move to the 'burbs.
2. Increasing population. More people equals more demand. Enough to keep a bubble going? Who knows, but it's not like the population or supply was stagnant while the prices went up.
3. Geographical limits. Water boundaries mean that if you want to live in the city you can't just keep spreading out.
4. Diverse economy. There's more than just a construction boom feeding most families here. Everything from hi tech, biotech, Boeing, MS, media, retail, and all the services mean that as nasty as a downturn is it is a little less nasty here.
All these factors that I just listed off the top of my head are a big part of why the housing downturn hasn't impacted the city nearly as much as most of the country, and though I'm no expert, I don't see the 40%+ dropoff in home prices in town coming any time soon. Maybe in the far exurbs if we have another gas price shock, but not in the city proper.
if i had taken that advice, i would have been paying rent for the last 4 years vs having a house worth $100k more than it did 4 years ago. glad i didn't take it.
You clearly you have never dealt with construction in Seattle and how much it actually costs to build a house. The average 2000 sq/ft home in Ballard is $45o,000 housing. Maybe worth about $250K for the land and $200K for structure. Your lucky if you can get construction in the city for around $400 sq/ft (usually much higher). So if you do the math the insurance company would pay you around $200K say have a nice day. A construction company would say we can build you 500 sq/ft house for your 200K not including the 10% sales tax, the 10-15% architect fee's (if it's custom) and builder 10-20% construction fee's and most likely 1 year in DPD permitting and 4-6K in permitting fees.
I pray to god every day that my house never burns down because I would be screwed.
I used to think the same thing for those reason but they are a bit out of date and they don't really equate to the size of the bubble. Plus, they are always been present so those factors existed.
Horrible traffic: You would think this is true but it's always amazing how people will continue to choose home size and big yards over sitting in hours of traffic. But in some cased you can have tons of traffic by just living in the city. It can still take 30 minute to get from Ballard to downtown even when not in rush hour conditions. The other issue is that Seattle offers very few new jobs. It's actually easier to make jobs in Shoreline or other places where there is cheaper commercial buildings. Plus, there are area's of the city that now HAVE mass transit in area's that have less expensive housing. (That really hurts the value of an area like Ballard that have lots of traffic and NO mass-transit).
Geographical limits encourage density, but if people can't afford the homes and business can't afford the people both will leave the area. You can see this just in the little 2000 recession where Seattle population dropped as people choose cheaper housing. The geographic issue just means that we need to build up in some situations, but with much of our work being digital we really don't have a good reason to come to a central place of work. Geographic limitations help retain value but the PNW isn't really close to being dense (in term of housing). The ferry system also seems to undo much of this “limit”. There is a lot of Seattle sprawl that is just moved to other area in the region.
The Diverse economy is true, but that just means Seattle won't have a ghost town issue like small towns in middle America where the only place that hires people closes. Our homes won't become worthless, but that doesn't mean that they will retain a bubble value. At the end of the day if people can't afford homes they won't be buying them. What people like to forget is that the salary for the average American has not increased in years and when you compare it to inflation many salaries have dropped. Yet home prices have gone off the charts. So where is the money that is going to pay for these homes? While not always the norm you also have little issues like job benefits dropping for increase salary but employees spending the added cash instead of saving that money. So you have a huge number of individuals that put far to much of their income into mortgages which also bloated home sales.
You might be right about the 40% but I think that we can expect very close that amount we just don't want to accept that. 40% is the average for the states, not the worst cases. There are places in Florida that home value dropped 70%. You can purchase some homes for 1/3 of what they were listed for a couple years ago. There are so many homes in Seattle that were flipped for insane prices that really lacked any value or quality. Some of those homes may see much larger then 40% losses. A lot of the Seattle McMansions will also really pump up this figure. Some of the huge properties and various vacation lots will be worth 1/5 of their once asking price.
So… I disagree. We are going to have to unwind almost 10 years of false value.
Hey The Tim, we're buying now (it's the right time for us) and have followed your blog for years. We love it and don't think it's negative at all… just rightfully wary of the all-too-prevalent real estate hype monster. Keep up the good work!!
There is not a house in Ballard that is worth $100,000 more than it was 4 years ago. Saddest of all are those who think they have a chance of getting back all the money they spent in cosmetic upgrades.
S___Rose, you're wrong again.