House Prices Retreat, Inventories Fall but It's Still a Difficult Market

Two articles caught my eye today. The SeattlePI reported a drop in King County home prices to 2005 levels. Of particular note in the article were the following comments:

• Pending home sales were higher in January than a year earlier in eight of the 19 counties the listing service covers. But sales in Seattle and King County dropped 10.8 percent and 17 percent, respectively, from January 2008
• The median price, $382,500, was down more than 12 percent from a year earlier, 5 percent from December and 20 percent from its all-time high of $481,000 in July 2007, according to the Northwest Multiple Listing Service
• But the current state of the economy complicates any predictions about what could happen to the housing market, said Gina Ard, an agent with Windermere Real Estate, on Sunday. “We’re being hit from all sides right now, so I think it’s foolish to act like you know,” she said.

The Multiple Listing Service press release was interesting as well:

• “It’s pretty clear that the real estate train came to a complete stop over the past few months,” acknowledges NWMLS Pat Grimm, owner/broker of Windermere Real Estate/Capitol Hill, Inc. “The good news is that the train was moving pretty fast before and now people have an opportunity to get aboard.”
• Members reported fewer closed sales in January compared to a year ago, reflecting the slower pace of sales during the last few months of 2008. Prices area-wide slipped about 13.7 percent from a year ago.
• Officials from the National Association of Realtors® say “significant uncertainty” still clouds the housing market despite improved affordability conditions. “For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” stated Lawrence Yun, NAR chief economist.

That last comment truly amazes me. Finally, after 18 months of woefully inaccurate and misleading statements by the National Association of Realtors, their economist finally admitted that there is “significant uncertainty” in the market! You think?

I would encourage you to read through the two articles. The fact is, no one knows what’s going to happen in the next year. The new stimulus package may help certain sectors of the market; however, there are many who believe that as the year matures, a huge number of bank-owned properties (REO’s) may hit the market with the potential of driving inventories up and prices down.