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Rebound talk is big at Realtors annual gig
By Elizabeth Rhodes
Seattle Times business reporter
LAS VEGAS — At the National Association of Realtors convention here this
past week, the big question on everyone's mind was: When will the
real-estate market rebound?
Economist John Tuccillo predicted the end of 2008 or beginning of 2009 for
the nation as a whole.
However the Virginia-based consultant and former NAR chief economist
stressed that "there are hundreds of thousands of real-estate markets, so
it doesn't matter what the national picture is."
What really matters to buyers and sellers is what's occurring in their own
area.
Here's what Tuccillo says they should watch for. It could be as simple as
keeping an eye on neighborhood "For Sale" and "Sold" signs.
• The number of homes on the market. A decrease means more buyers are
buying.
• How long homes stay on the market. Faster turnover is another sign of a
market pickup.
• The ratio of sales price to asking price. Disappearing price cuts signal
a turnaround.
When the market does rebound, Tuccillo says, it will bring "a tsunami of
first-time buyers." They're Gen Y'ers born after 1976.
Larger in numbers than Baby Boomers, Gen Y's will generate tremendous home
sales between 2010 and 2015, Tuccillo said.
The Seattle perspective
Lennox Scott gave his perspective on how things are playing out in the
Seattle area.
He is the CEO of John L. Scott, the real-estate firm founded by his
grandfather.
Lennox Scott has worked through many market cycles in the decades he's
been in real estate and predicted many months ago that the Seattle market
would slow.
So he's not surprised that it has. Nor is he particularly worried about,
calling it no more than "an adjustment phase."
Currently there is a five-month supply of for-sale homes within the
Seattle city limits, Scott noted.
Last year some neighborhoods had a month or less.
In South King County there's a six-month supply.
If that inventory sounds high — and Scott says it's not — consider this
for some perspective.
Florida's Palm Beach County, north of Miami, currently has a 50-month
supply of homes for sale.
Las Vegas is also in dire straits for sellers with a two-year supply.
Both had market forces Seattle never had: runaway homebuilding plus
thousands of investors who flooded those markets hoping to get rich quick
by buying and flipping houses.
When prices in those areas flattened, many simply walked away from their
properties.
In Las Vegas, foreclosures and excess for-sale inventory have led to a 13
percent dip in prices. So Scott doesn't see last month's slight decline in
year-over-year Seattle prices as worrisome at this point.
Still, things can be done to help buyers and sellers, he said.
Both Fannie Mae, the congressionally chartered company that funds a large
share of the nation's mortgages, and the Department of Housing and Urban
Development, which offers FHA loans, are trying to get Congress to
modernize their programs.
At a seminar here last week, Scott pointedly asked top officials from the
two entities why Congress seems to be dithering despite widespread support
from Realtors, lenders and others.
He didn't get a straight answer. But he made it clear that increasing loan
limits, which both Fannie Mae and FHA are trying to get through Congress,
would be a huge help to Seattle buyers.
"The FHA modernization bill to raise loan limits is all to the good,"
Scott said.
In particular it would help borrowers with subprime loans and blemished
credit transition into more favorable FHA loans, which they currently can
rarely do in Seattle because home values generally exceed FHA loan limits.
Ditto with Fannie Mae. Its upper threshold for loans is $417,000, which
means anyone who needs a larger loan — and in the pricey Puget Sound area
many buyers do — must get a more expensive jumbo loan.
"We want a healthy Fannie Mae," Scott said.
Meantime, he says the current slower market is providing a window of
opportunity for Seattle buyers.
"After the first of the year we'll get a little momentum boost," he
predicted.
Elizabeth Rhodes
Copyright © 2007 The Seattle Times Company
Saturday, November 17, 2007
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