Spring Season trends?

Asked by Pck, Seattle, WA Sun Feb 7, 2010

All agents, buyers, sellers,

what is the general sentiment about the upcoming spring season? Prices are steady in the Seattle area. No huge drops or raises. Houses are selling depending on location. There is plenty of foreclosures coming up for auction too. There are concerns that the 5 year ARM from 05 and 06 are going to reset this year and next leading to large influx of properties into the market. I am interested in hearing your pulse reading of the market.

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9
Karen Mcknig…, Agent, Kirkland, WA
Mon Feb 8, 2010
Dear Pck,

To answer your question, first, in Seattle we have a seasonal trend. Number of Pending sales, and more importantly, Absorption Rate, almost always peak in March, April and May. Absorption dips in mid summer - usually July and then goes up in August, September, and October and hits it's lowest point of the year in December and January. You can see this very clearly at my website, http://www.karenmcknight.com , if you click on Market Statistics and look at the 10 year Puget Sound graph.

On these graphs, you will also see that 2009 saw an improvement in absorption over 2008. I wrote a BLOG this weekend when I discovered that appreciation from 2002 to 2009 was 3.8% in King County. My BLOG is also accessible at http://www.karenmcknight.com / BLOG / Real Estate.

Yes, we are seeing thousands of homes auctioned per week in Snohomish, King and Pierce county together. The lenders are able to discount these homes now because they are being paid back some money from the feds due to the Stimulus Act.

Yes, the Option Arms will be resetting through 2011. The NAR economist predicts we will start seeing fewer Short Sales and foreclosures and that appreciation, on a national average, will be 3.7% in 2009.

The Washington state chief economist predicts our housing market won't be "turned around" until 2012. Moody's predicts the Seattle market is in the top five to recover from the recession and will see .5% depreciation, overall. Some neighborhoods, like West Seattle, are seeing some appreciation right now.

Now, what does all this mean? It means, if you want to invest, now is the time. It means, if you are a first time home buyer or a "move up" buyer, now is the time. It means, if you want to move to a more expensive area, now is the time.

If you are moving to a less expensive home in a less expensive area, now is not the time, in general.

The most important question is, based on your own unique location, equity, goals and problems you want to solve, what do you want to accomplish? The advise regarding whether to sell or buy, or both, which it looks as if you want to do, becomes very personalized. I am happy to consult with you on your best options.

Warm Regards,
Karen
Web Reference:  http://www.karenmcknight.com
0 votes
Rob Graham, Agent, Seattle, WA
Mon Feb 8, 2010
I expect prices to be mostly flat for the year. There will always be season fluctuations in activity, but I don't expect much appreciation considering there are still many foreclosures and short sales weighing down the market. The condo market should see some depreciation in price over the year but not as much as in the past years.

The first time home buyer tax credit will have a subtle impace on activity. I think it will be muted from what most expect. Most of my clients recognize that once the tax credit goes away, they can still negotiate a good deal that is in their best interest. If they were serious about buying a home, they will still be shopping after the credit expires.

Interest rates will drift higher. I don't expect the average 30 year fixed rate to be over 6% Until next winter or early next year more likely.

All in all a flat year. Not until the american public becomes convinced that we are not due for a "double dip recession" will consumer confidence return.

Keep an eye on unemployment and the stock market. As they go, so goes the public perception of how strong the economy is.

PS - Q4 of 09 saw an increase in GDP so officially the recession is over. Now the question is how long will it take for banks to work through their bad assets and loosen up lending, and how long until the american public believes it is safe to buy again.

I still think now is a great time to buy and those that do will look back on this time as a golden opportunity to by at fantastic discounts.
0 votes
Dan Chase, Home Buyer, Texas City, TX
Sun Feb 7, 2010
Seattle, that can be tough to answer. I can give you a few clues to put together to make your own choice.

Below is a housing predictor site.
http://www.housingpredictor.com/washington.html
Foreclosures are increasing in Seattle as more homeowners become unemployed due to the decaying economy even though the area still has one of the nation's stronger local economies. Seattle's strong technological hub coupled with a dynamic aerospace business should boost future prospects in the recessionary economy. Seattle homes are forecast to (decline) an average of 9.1% in value in 2010.

That gives an idea of what prices are likely to do and why.

The federal reserve has been buying Mortgage Backed Securities because no one else was. When they stop in March interest rates are expected to go up by 1/2 to 1% based on that alone. Some people have said mortgage rates could go much, much higher.

A different way to look at interest rates and their impact on being able to buy a house at a given price.
http://www.trulia.com/blog/dan_chase/2010/01/do_low_interest…
What I think could happen when the $8,000 buyers credit goes away and why.
http://www.trulia.com/blog/dan_chase/2010/01/what_will_or_co…
A way to look at your numbers and see if it makes more sense to rent or buy economically.
http://www.trulia.com/blog/dan_chase/2010/01/does_it_make_mo…

For myself I am still waiting on the sidelines. In my situation I can see how having cash to buy prices falling will help me. BUT if you have to get a 30 year mortgage, the numbers might change. If you are going to live in a place for under 7 years I do not think it is a good time to buy. Nationwide I can see prices falling until 2013, maybe 2014. After that, I have no idea what is going to happen.

If we have some kind of recovery, and all of the freshly printed money (almost doubled the money supply) gets into circulation we could have hyper-inflation. That alone could change ANY calculations anyone would make. I have given you some tools to make up your own mind. Consider everything and then take a chance and make a choice. I wait thinking it is right for me.
0 votes
Seattle, Home Buyer, Seattle, WA
Sun Feb 7, 2010
Dan, your answer makes sense. So should I wait or jump in to buy? It is the million $$ question!!
0 votes
Dan Chase, Home Buyer, Texas City, TX
Sun Feb 7, 2010
Expect steady sales until 4-30. Then the $8k goes away and interest rates will rise.

Then expect most buyers to have bought or wait to buy.

The combination of higher interest rates and no free money will hurt sales when they hit.
0 votes
Courtney Coo…, Agent, Seattle, WA
Sun Feb 7, 2010
It seems that interest in all listings has picked up and there are definitely buyers out there taking advantage of lower prices, lower interest rates, and the tax credit on top of that. I think 2010 is going to be good for some neighborhoods and bad for others...
Web Reference:  http://www.cooperjacobs.com
0 votes
Scott Seppi, , Bellevue, WA
Sun Feb 7, 2010
The realtors I've been speaking with tell me that the bulk of the action and interest is in the distressed market.

My impression is that any pricing strength in the housing market will be countered by increased inventory.
0 votes
Dan Tabit, Agent, Issaquah, WA
Sun Feb 7, 2010
I can only speak for myself, but I see a more "normal" market for this spring. No major raises or drops in prices unless some unexpected event happens. Many people anticipate rates to go up sometime after March, but again this is conjecture. If they do, a home listed sooner, while rates are fantastic and the tax credits are in play make sense to me. The deadline to be under contract for the tax credit is April 30th, so if you qualify on your purchase, bear this in mind.
A lot also depends on your specific neighborhood, some are experiencing an uptick in activity and pricing while others are steady to slightly declining. Check with a knowledgeable agent about your area and market segment for specifics.
As to the ARM resets, these should not be a problem. 5/1 & 7/1 ARM's tied to the LIBOR may actually reset lower than they started, so don't look to these as the problem.
Good luck in your pursuits.
0 votes
Jerry Lorenz, Agent, Strongsville, OH
Sun Feb 7, 2010
Pck

Even is a tough market when a house is positions properly in the market it will sell. “Build It and They Will Come”

Jerry A. Lorenz
Russell Realtors
Cell: 440 724 4402
Blog: http://jerrysrealestateblog.blogspot.com
Web Reference:  http://www.lorenz-543.com
0 votes
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