>>For the last twenty years demographers have been revising population projections down.<<
Well those demographers are like Wall Street analysts they're full of bull shit.
>>Puget Sound-area home buyers continue to snap up houses, surprising economists and academic experts that the recession has yet to snag the housing market.
The number of pending sales completed in King County last month jumped 11.3 percent compared with May 2001, and the median home price hit $277,500, a 6.7 percent gain, according to data released yesterday by the Northwest Multiple Listing Service.
Pending sales volume inched up in other parts of the region, too, growing 8.1 percent in Snohomish County and 7.6 percent in Pierce County, according to the service.
"Sales have been awfully strong given the recession that we've had," said Dick Conway, co-author of The Puget Sound Economic Forecaster. "In general, we've seen strong sales nationally, and I think that it's being reflected locally."
Across the board, real estate agents, brokers and industry experts said that low interest rates are propelling the housing market.
Mortgages rates -- which have hovered around 7 percent -- are the lowest they've been since the early 1970s, Conway said, making buying a home more affordable.
"Most people, even in a recession, are unaffected," he said. "They don't lose their jobs and they don't see pay cuts, though the increases may not be what they were a few years ago. For them, the low interest rates present an opportunity to buy a house."
Real estate agents say the low interest rates are a particularly strong motivator for first-time buyers.
"The monthly payments on a $200,000 loan are staggering low," said Denny Bullock, vice president of sales for Prudential MacPherson's Real Estate. "Take a husband and wife who are both working and even with a modest debt ratio, they can clearly afford $200,000 and $250,000 mortgages. ... It's a much better investment than the stock market's been."
But Bullock and others said any growth in the housing market is coming from sales of more affordable homes. In this region, that can be defined as homes priced under $350,000.
"The market is being pushed from the bottom up, rather than the top down, as you saw in the past few years," said Edward Krigsman, an associate broker in John L. Scott's Belltown office. "That's why you're seeing so much activity in the entry-level-priced homes."
Home prices outside King County also rose, with the median price climbing 4.2 percent in Snohomish County to $217,250 and reaching $168,500 in Pierce County, a 6.7 gain.
Though prices and pending sales activity picked up in the three-county region last month, the Multiple Listing Service's numbers also point to a few weaknesses in the market, most notably in the amount of time it's taking to sell homes.
In King County, the average time on the market jumped to 45 days, from 37 days last May and in Pierce County it took 66 days to sell a home, up from 59 days a year ago. Snohomish County, however, was nearly unchanged, as the average market time fell to 49 days from 50 days.
With fewer people moving to the Puget Sound area, economists and academics said they are worried that the housing market is destined to slow down.
"With an economy that is not really creating jobs, there is less incentive to migrate here," said Ron Throupe, associate director of the University of Washington's Runstad Center for Real Estate. "When household formation dries up or slows down, there is less demand for housing."
At least one major home builder said despite the strengths of the housing market, the overall weakness in the economy is causing the company to proceed with caution.
"We're being careful in our land purchases that we don't get too far out ahead of ourselves," said Steve Dennis, president of Bellevue's Quadrant Corp.
Though the company is still building four homes a day in King, Snohomish and Pierce counties, Dennis said Quadrant is protecting itself by preselling homes and carefully managing land purchases.
While brokers prepare for the typical summer slowdown in sales activity, Conway, the economist, said he expects sales volume to decline beyond the expected seasonal lull.
"I've been forecasting that home sales would decline this year about 10 percent, and there's evidence that it will still decline," he said.
"But I'm not sure, the way it's going, it will be 10 percent."<<
P-I reporter Marni Leff can be reached at 206-448-8142 or marnileff@seattlepi.com |
