August Update

There has been a great deal in the news to cover lately with the stock market’s wild swings, unemployment ticking up slightly, down grading of US debt to AA+, housing market news and the Fed’s announcement to not raise rates for 2 years.

We have been extremely busy over the summer (hence no blog since June), and the MLS has reported similar increased sales activity. Sales were up over 36% in June from the prior month but still off from the same time last year. What we are experiencing is that new listings that come on the market that are priced right, in great show condition and packaged and marketed properly are selling within 30 days or less. Those homes that have something unique or peculiar about them or not updated, not in good condition have to be priced well the below the market in order to attract a buyer.

The news of last week with the US debt being downgraded may have negative effects on consumer confidence which in turn could affect their house buying habits. The fact that the Fed now has said it won’t raise interest rates for 2 years in an effort to stabilize our week economy may or may not have an impact on the housing market as the Fed Fund rate and mortgage rates don’t always move in sync. http://economistsoutlook.blogs.realtor.org/2011/08/11/an-ultra-loose-monetary-policy/#more-3348 for the full story.

In terms of prices in our Seattle Metro market, it still feels like we are bumping along the bottom although we said that earlier in the year and we have continued to slide this year another 5-8% depending on what part of town you live in. There was however a recent article put out by the Wall Street Journal with information saying the Tacoma area and some parts of Seattle were poised for a rebound in prices next year, according to the financial-data firm Fiserv. “Residents of Tacoma are in for a 25% increase in home prices by spring 2013″, according to a report released Tuesday (8/9/11) by Fiserv Inc. Seattle and Portland’s prices are expected to stay flat through next March and then record double-digit gains of just over 10% each over the following 12 months. “Homes are undervalued in the Pacific Northwest,” said Stiff, “the economy is diverse and the demographics strong. It has tech, manufacturing and extractive industries (like lumbering and mining) and people are still moving into the area.”

In actuality, who knows if that is true. I remember the economist saying that the Seattle area was never going to have its bubble burst like other markets that were experiencing corrections of up to 50% as early as 2006 and 2007 when our market was still appreciating. After all, we didn’t have the issues that lead to those markets crashing like over building, buy and flip by overseas investors and mass unemployment; then the financial markets crashed and it all came down like a house of cards. Never say never.

What would help the housing market recover is to return to normal underwriting standards (not the wild no income verification, no down scenarios but less stringent guidelines); that would have a positive impact more than interest rates being at 4.2% versus 4.9%.
Please contact me if you would like a current assessment of your home or would like more information on anything discussed here.