foreclosures
Whenever I talk directly with people in the real estate industry, they tell me
that newspapers and television aren't helping them locally with all these
national stories about the terrible housing market.
found at heraldnet.com
March 19, 2007
Things locally have been doing pretty well, but plummeting prices and a drop
in housing demand in many areas really have crippled the national market and had
a major effect on the nation's economy.
Many of these areas had seen prices rise by 30 to 40 percent in a year and
were subsequently way overbuilt. They're still trying to sell those homes, and
prices have dropped because of the oversupply.
Again, the local market seems pretty good because conditions are different
here. While inventory is way up and sales are down, prices are still rising.
People still want homes and seem to be able to pay for them.
The Northwest Multiple Listing Service noted recently that there's only about
a three-month supply of homes on the Snohomish County market, so we aren't
facing a glut. And Bill Conerly, an Oregon economist who tracks the regional and
national economies, noted that home appreciation is slowing down in Washington
and Oregon.
"In both states, appreciation is slowing down but still above the U.S.
(average) because we've had less overbuilding and more population growth,"
he noted recently in his newsletter.
Homes here had been appreciating at double digit rates each year; now it's a
more reasonable 9 or 10 percent.
So the real difference here is that we still have people in Snohomish County
with decent jobs looking to buy a house. And since prices are so much higher in
King County, we also have people there looking to buy a house in Snohomish
County.
So I've now done my part in trying to explain that while the terrible housing
market is in the news a lot these days, it's the terrible national market, not
the local one.
While the local market is in pretty decent shape, there are some signs out
there that things aren't perfect.
The recent stats, for example, show that there's a lot of interest in
condominiums these days. Condo sales are at least as good as they were a year
ago, while sales of single-family homes have dipped. And condos have appreciated
by about 12 percent, significantly above the 9 percent for single-family homes.
While I have nothing against condos, I can't help but think that interest in
them wouldn't be higher if more people could afford a single-family home. With
median prices for single-family homes around $334,000 recently, I've got to
think that a good number of people are being priced out of the market.
Others are using risky loans, such as those where they're paying only
interest for a while, to get into homes they can't afford. That can only lead to
trouble.
In fact, it already has.
A recent article in the Puget Sound Business Journal quoted RealtyTrac Inc.
as saying there were 2,377 foreclosures on homes in Snohomish County last year,
a 35 percent increase over 2005.
That was lower than King County, where foreclosures rose 41 percent, and
Pierce County, which showed a 58 percent hike. But it was higher that the 25
percent increase for the state as a whole.
Such a sharp increase in foreclosures tells us there are problems in the
industry.
A local or national recession could trigger even more.
What am I trying to say here?
I guess that a rising local economy has kept the housing market relatively
strong locally, but that things could change rapidly if economic circumstances
change. Now, more than ever, home buyers should be careful about the types of
loans they're using and not expect home appreciation to bail them out of a
purchase they never should have made.
Mike Benbow: 425-339-3459
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