The Seattle King County Association of Realtors brought in Dr. Lawrence Yun, Chief Economist for the National Association of Realtors for their annual Broker Summit last Friday. He prefaced his presentation with the long run postulate, “everything is going to be just fine in the long run “(OU Delt house, ’71) He reiterated how we got where we are (credit bubble = housing bubble), presented an overview of the housing stimulus package (let’s hope it works as it is a one shot deal) and gave us his analysis of the short term outlook for our region.
The data he used for his short term outlook surprised me because he made a direct comparison of Seattle and Orange County, California. He noted that historically as California goes, so goes the West Coast. He cited that California has a net loss of population (citizens and legal residents) while our region continues to grow (with many new residents from California). He also cited that California was losing jobs and the Seattle area was relatively stable.
He displayed a graph that showed that the rise in home values in Orange County was far steeper than our region and hence, the downward correction was far more drastic. He went on to say that the sale of existing homes in Orange County is up 100% from the same period one year ago and that the trend is likely to continue.
He then cited three things in our region that added together spell a recovery in home sales. Median income in our region has been relatively steady, median home prices have fallen and that combination coupled with the affordability (a calculation using median income, median home prices and current interest rates) should spell a housing recovery. In fact, the affordability index in the entire country has never been this favorable according to Dr. Yun.
In spite of this the sale of existing homes fell dramatically from January to February of this year. It is obvious that current demand is driven by buyers looking for bargains. Lower mortgage rates in December drove new sales and closings in January. January’s very modest rise in rates caused buyers to step back, waiting for the return of rates in the 4’s.
So there is the pickle. Unless rates fall back to December levels or buyers figure out that rates today are as low as they will be for a long time, buyers will stay on the sidelines.
2 thoughts on “Greater Seattle. Home Sales in a Pickle”
I am quite familiar with the LRP(Long Run Postulate) referenced in the ‘Greater Seattle. Home Sales in a Pickle’ article by real estate expert,fraternity brother, and LoanTek CEO,Craig Goebbel. This tried-and-true bromide was in fact my original thought long since passed on to generations of optimists and believers of the existence of the silver lining. This Postulate was in fact born and first spoken by me in 1970 out of necessity of living next to George Koury, former district attorney of Loraine County,Ohio, in the Delta Tau Delta Fraternity House at 4 University Terrace,Ohio University,Athens,Ohio. My roommate and I(Jeffers and Kelly) tested fraternity president George Koury’s patience to the breaking point and when all options for resolve had expired the LRP was in effect. Dennis Jeffers Ohio University 1971
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Don’t know a thing about Seatlle real estate. But I do have some experience with the Long Run Postulate. I, along with everyone at the Delta Tau Delta fraternity at O.U. was both a victim and a student of the LRP. None of us believed it could be true. Now I’d guess none of us doubt its veracity.
Dave Hackel, O.U., ’71