real estate foreclosures
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Concerns creep into real estate foreclosures
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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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