The Economy and the Seattle Area Housing Market
Washington State Real Estate, Spring 2008.
I'd be lying if I was to say that I wasn't a bit concerned about the lack of activity I'm experiencing here in our western Washington real estate market. I am a Christian woman who knows firsthand that God provides, that He is faithful. After all, he cares for the sparrows and I know I am much more precious in His sight. Yet, I can't help but question how long things will remain the way they are, and is it going to get worse before it gets better? I know some believe this to be true. How long will those of us Realtors who are ethical, knowledgeable, hard working and authentic about providing a good service, going to be able to weather the storm? I've heard some are looking at getting a second job.
Everyone probably knows by now, the bubble has 'popped' in most parts of the country yet until recently, I thought here in Washington, we were in a bullet proof bubble. I know the mortgage industry fiasco triggered the 'pop' and I being more of a conservative type, believe that people need to be able to legitimately qualify for loan programs and be able to afford their monthly payments. I could see the light at the end of the tunnel initially and I think we all benefit from accountability. Anyway, shortly after all this began, we were moving into the holiday season, ordinarily a slow time of year here in this business anyway. Several sellers I spoke with were waiting until after the first of the year to put their homes back on the market. Well now it's spring, and the inventory is increasing.
Where are all the buyers? Sitting on the fence. I have a condo listing here in my town and had a brokers open last week and 7 Realtors honored me by coming to preview the property. We were talking about the current market and they began to sing "oh where or where have all the buyers gone?" to the tune of that oldie song "Where oh where can my baby be?"
I know firsthand from having encountered a couple buyers over the past handful of months, many feel they need to wait and see what's going to happen. There is fear in this nation, surrounding the notion of buying at the present time (which was the past, and they are still trying to gauge when in the future they should make their move). My question to these types of buyers is "how long do you intend to stay in your home?" If a person answers 3 -5 years, they should not hesitate to pursue a home purchase. In my opinion, real estate is a better investment than the stock market, yet like the stock market, it is cyclical with it's profit periods of highs (gains) and lows (losses). Interest rates are good. Most of all, OUR LOCAL ECONOMY HERE IS STRONG! Don't forget this is where Bill Gates and his Microsoft corporation resides....think again if anyone thinks he's no longer buying land and building-buildings (if you've never witnessed for yourself, there are so many Microsoft campuses, to me - it's astounding!). Boeing is also here and yes, even though we recently lost a contract, there is still more than enough work to be done. It's true, there have been layoffs in the past but consider the present, the orders have been coming in and I have a couple clients who are Boeing employees who can't work enough overtime. There are some airlines of course that have recently shut down or filed bankruptcy - I'm sure it won't be long before we see what kind of affect this may have.
At least I attempt to look at things objectively. Something that really bothers me is all the power and influence our media has and how most 'generalize' and paint a very gloomy picture. I wish they would be more thorough and attempt to balance all the negative w/ some positive in an attempt to provide information so that people can make their own informed choices.
It is true, sellers here today don't have as much equity as they would had they sold a year ago (for most areas, about 5% less) but in time, it will come back and then some. There are some bargain properties currently offered through pre-foreclosure or the short sale process (though again, not to the degree many other states are experiencing) and yes, part of the reason is a result of approved loans to people who could not afford the payments; and or the adjustable rates having adjusted and people freezing from fear, not knowing who to turn to or how to get themselves out of a bad situation, running the gamut of emotions - such as anger, shame, depression just to name a few.
Having a 14 plus year history in Hawaii, I know in the 1980s, the Japanese came and bought a lot of property there. There are foreign markets that may be looking at us here and eventually the prices will come back up. Right now, buying a 3 bedroom, 2 bath stick built home an hour from Seattle can be realized, at a price tag in the low $200,000's to about $300,000, depending on location. I realize in other parts of this great country, (yes, I am a patriot!) that might be a lot. The average single blue collar person here makes approx. $40K a year (butchers or meat cutters for example). I hope that if people continue to try to time it right - acting later rather than sooner - there won't be any regrets. There are still some 100% programs available, but the credit scores have to be mid 600's. FHA requires 3% down. I enjoy working w/ first time home-buyers and I hope that rather than paying someone else's mortgage or living w/ mom and dad well beyond the time most fly the coop, all will take that leap and experience the part of the American dream which includes home-ownership. An instrument not only for comfort and enjoyment but also, a good investment.
The days of fixing and flipping are (or should be) pretty much over for a while but they'll probably be back at some point. It will be interesting to see when the market reverts back to a sellers market, seeing the multiple offers and bidding wars that we did from 2003 through at least 2006.... In the meantime, I do hope people will take advantage of it being a buyers market and connect w/a Realtor who has their best interests at heart. One last positive note about the market change from the perspective of a Realtor: Several got into this business when it was an easy time to make money (and seller's were asking themselves, "what did my agent do to earn that commission?" perhaps the reason so many have attempted to go FSBO, or "for sale by owner.."). Almost everyone knew someone who was selling property. Several individuals out there didn't get to know the industry the way they should and some are unwilling to learn, not wanting to "work it" the way it needs to be. Many are now - and will be in days ahead - getting out. Hopefully those who are unconcerned about putting their clients needs first will also decide it's time to leave, regardless of whether they are experienced and knowledgable or not. May those of us who do remain, be ethical and able to provide outstanding services to those who need and recognize the value of a good Realtor.