From the Everett Herald

Home prices fall, but sales down as well

Tight credit and low consumer confidence are keeping many away from the hunt for houses.

Yoshiaki Nohara and Mike Benbow (11/7/2008)
Herald Writers

Home sales fell hard in Western Washington during October as concerns about a worldwide recession stopped many potential buyers in their tracks.

Nathan Gorton, director of the Snohomish County Camano Board of Realtors, said the industry was slammed with a slew of bad news last month. October saw pending sales drop nearly 30 percent and closed sales fall by 27 percent in comparison with last year.

"I think consumer confidence was very low, the market now is one where credit can be difficult to come by and it's almost the kickoff of the dead season in the real estate business," Gorton said. "What usually is kind of a slow month was influenced by all these other factors."

Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University in Pullman, expressed similar thoughts.

"We were focusing on the financial market and what's happening with stocks," he said. "It didn't surprise me that people were not engaged in buying houses in the month of October."

The county's median home prices also fell by about 10 percent, similar to the drop in September. That's comparable to other counties in the region. In King County, median prices dropped 7.48 percent; in Pierce County, prices dropped 9.45 percent and in Kitsap County, they fell 12.28 percent.

"Price weakness will continue, and prices will go down," Crellin said. "I don't know how long. My crystal ball isn't that clear."

Bob Maple, broker and owner of John L. Scott Real Estate Office in Everett, said that the new data was predictable.

"It was disappointing, but not surprising," Maple said.

October saw a combination of historic events such as the financial crisis and the U.S. presidential race, Maple said. Those factors caused uncertainty, he added.

"It's going to take some time to rebuild consumer confidence," he said. "I don't know how long. I'm very optimistic."

Maple noted that the housing market in the Puget Sound region is still faring OK.

"Each market is different, just like weather," he said. "We are a little bit better than other parts of the nation. Our inventory is dwindling. And Boeing workers are back to work."

Crellin also said that shrinking inventory is a good sign. He said it's proof that the market is restoring some balance after excessive supply has driven down home prices.

"My expectations are that conditions will be improving," he said. "It will take some time."

Rich Sweum, a branch manager and senior consultant for Homestead Mortgage in Everett, noted that lenders have tightened the guidelines for borrowers, which has also whittled demand for mortgages.

The market continues to suffer from what had been lax lending standards that inflated demand and created bad loans, he said, adding that it will take some time before the market becomes steady.

Sweum noted that while the headlines have focused on some of the major financial institutions needing government bailouts, local lenders are faring better.

"We haven't run out of money," he said. "Most lenders in Washington have plenty money to lend," he said.

WSU's Crellin said mortgage rates remain low, around 6 percent.

That could help people buy houses, he said, adding that government entities are putting pressure on lenders to renegotiate loans with homeowners to keep them out of foreclosure. The fewer foreclosures happen, the more stable the market will be, he said.

"I am more optimistic than I was a month ago," he added.