Seattle home prices drop in latest report

Puget Sound Business Journal

Date: Wednesday, November 30, 2011, 6:31am PST

Seattle home prices are down 6.5 percent from a year ago – worse than average for the U.S., according to the S&P/Case-Schiller Home Price Indices.

Nationally, home prices fell an average of 3.6 percent in 20 cities tracked by the Case-Shiller Index. In Seattle, prices fell on a month-to-month basis as well. They dropped 1.1 percent between August and September, compared with 0.3 percent between July and August.

Housing News from the Northwest REporter (January 2012)
Although the housing market struggled to maintain an even footing in 2011, gradual improvement is expected in 2012 and beyond, according to projections by Lawrence Yun, chief economist of the National Association of REALTORS®. “Tight mortgage credit conditions have been holding back home buyers all year, and consumer confidence has been shaky recently,” Yun said. “Nonetheless, there is a sizeable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can’t continue indefinitely. This demand could quickly stimulate the market when conditions improve. “Yun projects growth in Gross Domestic Product to be 1.8 percent this year, then rising moderately at a rate of 2.2 percent in 2012. With job growth of 1.7 to 2.2 million next year, the unemployment rate is expected to decline to 8.7 percent by the second half of 2012. Mortgage interest rates should gradually rise from recent record lows and reach 4.5 percent by the middle of 2012.

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How much impact does a short sale have on FICO® Scores? How about a foreclosure?

The FICO study simulated various types of mortgage delinquencies on three representative credit bureau profiles of consumers scoring 680 and 780.  All consumers had an active currently-paid-as-agreed mortgage on file.

Results are shown below. The first chart shows the impact on the score for each stage of delinquency, and the second shows how long it takes the score to fully “recover” after the fact.

Real Home Prices: A Metro-Area Look

In our latest Housing Chartbook, we mentioned that a definitive bottom for home prices is within sight.1 Even though nominal nationwide home prices are still about 15 percent above their long- run trend, on a trough-to-trough basis, home prices have now fallen back down to trend in real, or inflation-adjusted, terms (Figure 1 and Figure 2).2 Real home prices could certainly break through their long-run trend in the coming months—as distressed sales continue to account for a large share of total existing home sales—but any further price depreciation from current price levels will likely be relatively modest.

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Helping you see risk and avoid it…

The economy is still growing, but it has slowed sharply and confidence (both consumer and business) is in the dumps. Rising concerns about a debt default in the European Union (or even a breakup of the E.U.), the difficulties in getting a U.S. federal budget agreement and debt ceiling extension last month (and the resulting downgrade of U.S. government debt by ratings firm Standard & Poor’s), and the inability of the economy to catch fire more than two years after the end of the Great Recession have combined to reduce risk-taking – and thus have slowed economic momentum.
• Although the economy should continue to grow, the current slow pace of expansion and the chances of a policy error in the E.U. that would rock worldwide financial markets have certainly increased the odds of a near-term downturn. A quarter ago, those odds would have been under 10 percent – now they’re between 30-40 percent. The unprecedented nature of the fiscal and financial problems facing the E.U. and their unknown (and unknowable) impacts on the world and U.S. economies add to the weight of uncertainty – and are helping to hold the economy back.

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Robert Kelly WRE BROKER   robertkelly@windermere.com   206-890-1796