There's some reason to feel up even when the trend is down

Excerpts from the blog

When the widely watched Case-Shiller/Standard & Poor's home-price indexes for July were released Wednesday, few industry watchers, if any, were likely surprised to see prices had once again fallen from a year ago.

In the 20-city composite index, the median price fell 16.3 percent, making the Seattle area's 8.2 percent drop look pretty good — to buyers, anyway.

The drop brings the price for Seattle to the same level as May 2006. The price peaked in July 2007, which means we're down 8.2 percent from the market peak.

How high was the peak, you ask? Well, according to the index, the price was 92.3 percent higher than it had been in January 2000, when the index was created.

That's nearly double in 7-½ years, which I know I don't have to tell you is incredible.

When the August numbers are released Oct. 28, they will be compared with prices slightly off the peak.

Comments:

I see a dramatic overall drop from beginning of 2006 until now. The total drop in three counties looks like over 25 percent so far in home prices. That is a real burst of this housing bubble even in the Seattle "safe" market.

A drop in prices of 25 percent since 2006 equates to an annualized discount rate or depreciation rate of about 15 percent. That is about the same rate or capital asset growth or appreciation experienced at the peak times of the growth cycle. I don't the correction is out of line. Our inventory is running at about 7-8 months. Most economists say an equilibrium market is six months. We are barely into a buyer's market at 7-8 months. We are not nearly as bad as markets with 12-24 months of inventory.

Homebuyers face

'crisis of confidence'

In a poll for online home-search company Trulia.com, Harris Interactive asked 2,507 U.S. adults for their opinions about homebuying.

The results have lots of tidbits, but the one I glommed onto was this: 92 percent of those who owned homes and 70 percent of those who didn't said they had no plans to move. Only 12 percent of non-owners said they expect to buy a home in the next year.

That's a lot of would-be buyers who won't be buying — which should tell a lot of would-be sellers to sit tight. This isn't a market in which to test drive selling your home. If you don't need to sell, wait.

Comments:

Homes in the Seattle area and many other markets have been highly over priced for too long. So much so that what people think they should get for their house is a fantasy.

We are buyers patiently waiting for home prices to drop 20-30%. We'll wait 1, 2, even 3 years if we have to. Wake up sellers, your home is not worth what you think it's worth and more buyers are realizing this.

The homes are worth what people were paying in the past. In capitalist free market society price is determined when a willing and able seller and a willing and able buyer agree on price. If the house was not worth the asking price, then the house would sit on the market until the price decrease meets buyer expectations.

I seriously doubt an across the board price cut of 30 percent is warranted.

Can't escape

remodeling itch

Last Sunday, I visited a few Eastside homes on the Master Builders' Association's fall remodeled homes tour.

My husband and I just remodeled two bathrooms, and I couldn't wait to compare our new baths to those on the tour. Plus I was scouting for ideas for a kitchen remodel I'd like to do.

The remodels were amazing — not even close to what we did. Comparing them would be like comparing a Honda to a Rolls.

Here are a few trends:

• Bathroom counters are now higher, the same height as kitchen counters.

• Kitchen floors are mostly oak or some other wood.

• Counters are granite.

• Kitchen islands are different from the rest of the kitchen. They have different cabinets and different counters to set them apart.

I hadn't noticed it until a contractor in one house pointed it out. Then I couldn't stop looking at it.

This material has been edited for print publication.

Cindy Zetts' blog appears Sundays. Reach her at 206-464-2027 or czetts@seattletimes.com.