Local Real Estate Markets

[haha]

I would like it if people around the country might post a bit about the state of residential real estate in their cities.

As best I can tell, in Seattle sales have slowed somewhat and inventories are perhaps climbing, but prices have continued to rise albeit more slowly. My son who is in the market for a home says that there is some softness but no real distress. It is hard to get a clear picture, at least in part because so many powerful interests want the boom to continue.

Here are some pieces excerpted from: http://seattlebubble.blogspot.com/

"First up, it's Mark Trahant of the P-I with yet another thoughtful, well-reasoned take on Seattle's housing market.
What if housing prices decline by 20 percent? That would solve Seattle's affordability problem, right? Most folks would say this is impossible. The data from last week show that house prices keep increasing no matter what. Our boom continues, just slower and steadier. But both our region and our country have boom and bust cycles as predictable as weather. It's as much of our history as innovation, military might or baseball. One minute we're panning gold, the next we're trying to recoup our investment in those nifty machines that pluck gold dust from stream beds.
...
Just think about what those higher credit standards will require: A significant down payment, good credit and, in Seattle, a high income.

More than likely, what it will really mean is that the supply of homes will grow — and prices, sooner or later, will fall.

On the opposite end of the spectrum, we have the Seattle Times encouraging first-time homebuyers to "learn the fine art of compromise."
Rolf Johnson and Kerrie Cooley had different jobs, different priorities and different resources, but on their brave hunt for a $250,000 home in the Seattle area they both learned it came down to what they were willing to give up.

Cooley let go of any notion of buying a house or living in downtown Seattle to find the modern, two-bedroom condo she wanted.

Johnson spent more than a year, bumped up his budget and moved farther from work to find the house, property and studio space he craved.

Compromise is definitely the name of the house-hunting game in the Seattle area, especially for first-time buyers who often can't come close to the $450,000 or so that it costs for a typical single-family house in Seattle and are looking more realistically at prices around $250,000."

Ha

[justin]

Raleigh, NC.

The last NAR report I saw said we are up something like 14% year over year. That is in accordance with what I'm seeing anecdotally. My neighbor's house just sold at asking price in 4 days (and boy was I dumbfounded - I thought it was 10-20% overpriced). The REO up the street must have sold nearly immediately as well (and 5% above asking price). My bud's house down the street sold in 1 day at asking price.

I've noticed other "for sale" signs on my street coming down lately too. 6 months ago, demand didn't seem that great.

New construction is still going strong so far in the new neighborhoods. Don't know what kind of profits the builders are making, but I haven't heard any grumblings from in-laws all in the residential construction industry.

[brewer12345]

In my area of central NJ I see sales definately slowing, but no real distress is obvious. My area is not a subprime hotspot, although I am sure ARMs have been plenty popular. Night and day if you look at Newark, though: foreclosures for sale all over the place.

I think that we are just beginning to see the real effects of the mortgage market suddenly exceeding the pucker factor. Here is what I was told by a mortgage broker recently:

"I spend half my day checking, double-checking and re-checking lender guidelines. What before was a given could be anyone's guess now.

I saw this on a rate sheet: One appraisal 650K-1.5M (to 80 LTV) comps: 6 closed, 2 listing and 1 pending sale. I couldn't believe my eyes...NINE comps?! I called two other lenders offering the same program and couldn't get the same answer from any of them as to what, if anything, could be used other than NINE such assorted comps."

This was amid comments to t he effect that gidelines have been dramatically tightened, exceptions are suddenly verboten, and max CLTVs are significantly down for all but the squeakiest clean borrowers.

[wabmester]

Some anecdotes from our sleeply little burb near Seattle.

20% of the inventory is priced over $1,000,000. Enough inventory in that segment to last a few years. Realtors have told me that over half the buyers are coming from California.

I've watched three of my neighbors sell in that price range. One sold to a Megacorp exec who still hasn't moved in after several months. Another sold to a CA dentist who still hasn't moved in and is currently renting the place out. The third sold to a rich old lady in the next county who still hasn't moved in and is currently renting the place out.

3 million-dollar homes bought as rental properties!?

Anecdotal evidence of an unhealthy market. We're mostly catching the final wave of California equity locusts at this point.

[haha]

This is from a WSJ article--

"Thomas Lawler, a housing economist in Vienna, Va., expects an even steeper fall, of 4.3%, in the median price of houses this year.

Prices won't fall throughout the country, of course. Home prices generally have been falling in parts of Southern California, Arizona, Nevada, Florida, the Rust Belt states and Massachusetts. But they have continued to rise in some cities, including Houston, Portland, Seattle and New York, where job growth has been relatively strong and supplies of unsold homes generally lean."

http://online.wsj.com/article/SB1176...ml?mod=mostpop

Wab- You think these people were trying to be flippers?

Ha

[wabmester]

Quote:

Originally Posted by HaHa Wab- You think these people were trying to be flippers?

I doubt it. Most of the flippers around here buy lower-priced fixers. I think the buyer mindset in our locale is still something like "I've got money burning a hole in my pocket, and I want my little piece of shangri la while I can still afford it."

Once the California equity locusts first began to descend upon us a few years ago, everybody wanted to target them specifically. So, both the resale market and the builders are competing for the high-end dollar. It's a very lopsided inventory, and it *will* correct.

Once the high-end segment collapses, there's a domino effect on the rest of the segments.

[ats5g]

fyi - Have you checked out:

S&P/Case-Shiller® Home Price Indices

pretty sweet.

- Alec

[aenlighten]

In my neighborhood of SoCal, inventories are double normal, one home is now bank owned, and asking prices have fallen ~4%, but nothing is selling. I think we will scrape by without a recession, but it will get close.

[brewer12345]

Quote:

Originally Posted by aenlighten I think we will scrape by without a recession, but it will get close.

IMO, the Fed will be chopping rates later this year precisely to avert a nasty housing-lead recession. All we need to put that outcome in the bag is a few mor upticks in the weekly unemployment claims number.

[dex]

In the Atlanta area builders are giving "Builder Bonuses" of up to 5% on selected homes - they usually jack the price up on the selected homes equal to the discount. Otherwise housing is doing well from what I can see - builders building and buyers buying. I think this great decline talk is a bit overdone once you take into account the price increase of previous years.

[al_bundy]

Quote:

Originally Posted by brewer12345 IMO, the Fed will be chopping rates later this year precisely to avert a nasty housing-lead recession. All we need to put that outcome in the bag is a few mor upticks in the weekly unemployment claims number.

are you sure about that? inflation is still a little high. the Fed has a long history of letting people lose a lot of money and only getting involved to avoid a total collapse

foreclosure rates aren't up to early 1990's levels and people are talking rate cuts. back in the late 1980's the fed raised rates to almost 10% and let housing collapse before lowering them

[brewer12345]

Quote:

Originally Posted by al_bundy are you sure about that? inflation is still a little high. the Fed has a long history of letting people lose a lot of money and only getting involved to avoid a total collapse

Yep, pretty sure, although I would not care to bet on a specific date for the start of the cutting. The summer selling season is likely to be pretty crappy for RE, which will have a knock-on effect for the general economy. Plus it is suddenly a LOT harder to use one's home as an ATM machine. GDP growth estimates for the back half of the year are now in the low 2% range, which is well below "potential".

But what we really need is a sustained uptick in employment. That will take a good deal of inflationary pressure off the Fed. Plus we are heading into an election year, so the second half of 2007 is about the right time to start goosing up the economy again...

[JustCurious]

Prices are dropping fast in central Florida.

http://www.orlandosentinel.com/orl-h...,2183136.story

"The number of homes for sale by local Realtors rose to a record 23,547 in March from a revised 22,055 in February, a backlog that would take 14 months to clear at the recent sales pace."

"Also, new homes are competing with many existing homes, pressuring prices even more. Shelly and Justin Braniff recently relocated to the Apopka area from Jacksonville, and a Watson Realty agent found them a new home from a builder's inventory that they snapped up within three days. They discounted it over $100,000, and it has lots of upgrades," Shelly Braniff said. The four-bedroom, two-bath home listed for $429,000 but sold for just less than $300,000."

[wabmester]

Quote:

Originally Posted by brewer12345 Yep, pretty sure, although I would not care to bet on a specific date for the start of the cutting.

Let the pros guess.

link

90% probability for no cut at the June meeting. 75% probability for no cut in August.

[Brat]

As a Portland Xpat I have been watching that market with interest, particularly the condo market because there is so much in the pipeline in the city center. This is the most interesting slice & dice I have seen: http://www.repdx.com/2007/04/10/port...te-april-2007/

I have been trying to figure out what is supporting the prices in North Portland. Perhaps it is the condos on Hayden Island (on Columbia River).

[brewer12345]

Quote:

Originally Posted by wab Let the pros guess. link 90% probability for no cut at the June meeting. 75% probability for no cut in August.

Yeah, we'll see. I'd guess any cut will be August or later, since it will take taht long for the writing to be clearly on the wall.

[lazygood4nothinbum]

as badly as florida is supposed to be doing, so far, not so terrible depending on where & what product.

in my immediate area (within a few block radius), realtor.com shows 7 sales since december 28, 2006 averaging $628,833 (sale price). medium asking price in my area was $629,000 in february 2006 (according to realtor.com data i was collecting then.) i was surprised both by the sales figure and the amount of houses sold and i only looked it up after a friend told me i was nutz because i thought my house was still worth at least $400k when he has more than 10 houses for sale around him. but he's in an established "family" area. i'm in a rehab gay area. it pays to live with the gays.

inherited house not doing so well. we listed house $100k under peak & have reduced price $50k since then, only to placate the realtor. my feeling is the $50k reduction does nothing. according to realtor.com, no houses have been sold there yet in 2007. end of 2006 saw sale of the only two under $1mm each.

in feb 2006 medium asking price there was about $4.5mm with 34 houses for sale. feb 2007 medium asking price was $4,950,000 with 22 houses of this product in this area available.

i'm presently in daytona beach, taking a break from the sun beach & fun. will be posting a separate topic on this area and the real estate here.

[Bikerdude]

In the Hartford, CT general area, sales are somewhat slower than last year but prices are firm or slightly up. Fairfield county near NYC is a totally different market and I don't have any information on it.

[Callie]

Boston suburb pricing is falling heavily. I would say at least 15% less right now, maybe more. It was listed by forbes as the most overpriced market.

[al_bundy]

Quote:

Originally Posted by wab Let the pros guess. link 90% probability for no cut at the June meeting. 75% probability for no cut in August.

do you have any idea how much these probabilities change? there was a 90% probability of a rate cut by the pro's for a long time now and it keeps getting postponed.