“Beg, Borrow, Steal”?… is housing really that affordable right now?
Yesterday both the Wall Street Journal and Seattle Times published articles (WSJ article) (Times article) citing information from Moody Analytics and Zillow regarding housing affordability and negative equity. According to Moody Analytics, the country has slid back to pre-bubble affordability levels (2003 and before). By comparison, the Seattle metropolitan area has fallen back to early 2005 prices according to the NWMLS, while the greater Seattle area (including King, Pierce, Snohomish counties) has slid back to 2004 according to Zillow.
How’d they come up with these numbers?
Moody compared household incomes to median home sale prices in 74 markets. By September of 2010 47 of those 74 markets had “returned to or surpassed the average reached between 1989-2003”.
Zillow uses public records to acquire loan information on properties and compares the information against their estimate (or Zestimate) of the home’s value.
What do the companies have to say about their findings?
Moody Analytics has this to say, “Based on incomes, this is as affordable as it gets,” said Mark Zandi, chief economist at Moody’s Analytics. “If you can get a loan, these are pretty good times to buy.”
Regarding Seattle, Zillow chief economist Stan Humphries says “We’re kind of where L.A. was in early 2009”.
What does this mean for Seattle?
Seattle is always 6-18 months behind the nation’s real estate curve. We will see more foreclosures this year in Washington. We are most likely not quite at the bottom of our local market here, although we are scraping pretty close to it.
What does this mean for buyers and sellers?
If a third of the home owners in our area are underwater on their homes, it can’t be good for Sellers. It doesn’t mean it can’t be done just know that this isn’t 2005-2007 and you can’t just stick a sign in your yard and get 20 offers. That being said, if you have equity in your home and want to make a move up to something else this would be a great time to do it.
This goes for all buyers. In March we will see a lot of homes hit the market as the proverbial inventory flood gates open. There will be a lot to choose from at good prices, with good interest rates. I know that sounds like some slimy real estate sales mantra, but it’s true.
As for timing the market, it’s never a good idea. A buyer’s timing should never be determined by trying to buy at the market’s exact lowest point. Nor should they be bullied into buying by so-called experts and pundits (like me). Do what ultimately makes sense for you.
So yes, if you are gainfully employed, credit worthy, and want to buy a house, conditions are fantastic to do so. Beg, borrow, steal – just get out there and find a great deal!