The Truth about Real Estate

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Real estate statistics and news often remind me of the new movie Vantage Point. Where you live, what your needs are, or what your perspective is, determine what questions you ask and what answers you get.

If you are looking for the TRUTH you better be prepared to deal with a more complicated answer than "the market is great" or "real estate is in a tailspin".

Let's take the Wenatchee Valley in Central Washington for example. This includes the communities of Wenatchee and East Wenatchee on the Columbia River up the Wenatchee River to Cashmere and Leavenworth. This is my area of expertise and one that has been in the national news the past year for being a leader in YOY appreciation.

Last week the Office of Federal Housing Entreprise Oversight published their report for 4th Quarter of 2007. For the fourth quarter in a row, the Wenatchee area has lead the nation for real estate appreciation. Homeowners in the area tend to think of this as good news. From an affordable housing standpoint or someone looking to move to the area, rising prices probably are bad news.

A few days later the Wenatchee World, the paper of record in the region, published an article based on local statistics from Pacific Appraisal. The focus of this article was a huge increase in inventory in the local real estate market. "Lots of homes and lots of choices for buyers" was the cry from the chorus. Is high inventory good news or bad? What flavor do you like your spin?

Simultaneously, I posted an article about the Leavenworth real estate market on my blog. Inventory in Leavenworth, a subsection of the greater Wenatchee market, is nearly half what it was at August's peak. Pending sales are up substantially from this time last year and some types of inventory (Lake Wenatchee homes condos at Kahler Glen, mountain cabins) are absent from the landscape.

Bloggers and mainstream media alike feed off of shocking headlines. Consumers owe it to themselves and to our economy to do a better job at asking questions to filter through the layers of grey in this not very black-and-white-world. Real estate professionals owe it to consumers to move beyond sound bites and into conversations.

Posted by at February 29, 2008 3:52 p.m.
Category: Market Watch

Comments

#103367

Posted by Kary L. Krismer at 2/29/08 4:55 p.m.

I wouldn't view the inventory as good or bad news. You can have rising inventory and rising prices. You can have rising inventory and declining prices.

The bad news probably was their appreciation was leading the country. In the past we've looked for a leading indicator of declining prices, and didn't find one. But I think we missed it. If there is a leading indicator, it's possibly leading the nation in appreciation (or even coming close), assuming the appreciation is in the double digits.

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#103668

Posted by Dugald Allen at 3/1/08 2:53 p.m.

Congrats to Wenatchee!

It's more about the absorption of real estate than the inventory. Taken alone, inventory stats are only a piece of the story. A market is buyers and sellers, not just sellers.

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#103671

Posted by Mack McCoy at 3/1/08 3:15 p.m.

- Bloggers and mainstream media alike feed off of shocking headlines. Consumers owe it to themselves and to our economy to do a better job at asking questions to filter through the layers of grey in this not very black-and-white-world.

Citizens, too.

Great article, Geordie; you give a good first-hand take on a part of the state that a lot of Seattleites have ties to.

As you allude to, grownup life is complicated, but intelligent people who can figure out a way to get their hands on the kind of money that real estate requires should be up to the task.

At heart, of course, I'm like everyone else - I'd like to have a simple reference source answer my questions concerning value. That's the hope people have for sites such as Zillow, after all.

- Homeowners in the area tend to think of this as good news. From an affordable housing standpoint or someone looking to move to the area, rising prices probably are bad news.

Ain't that the Truth!

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#104287

Posted by Mack McCoy at 3/3/08 4:12 p.m.

Geordie, I wish you'd gotten more feedback, in terms of comments, for your excellent report. Thanks for keeping us informed!

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#104488

Posted by Kary L. Krismer at 3/4/08 8:14 a.m.

On more thing about inventory. Standard economic theory predicts that you would have rising inventory with rising prices. But people try to spin that into a leading indicator.

If you look at the "Funky Little Graph" thread, listings in the Seattle area started skyrocketing about the same time prices did. They're still high, but our median is basically the same as last year at this time. We're off the high in the interim, but I think it's hard to argue that's due to the inventory level.

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#104656

Posted by geordie_romer at 3/4/08 2:28 p.m.

Mack-

Thanks for your kind words. Sometime I'll have to join you and BB around the campfire for some mac and cheese while I listen to you both whine. (Was that a different discussion??)

We have so little data in Leavenworth and no Case-Schiller in Wenatchee there aren't any bubble analyzers to play with. The newspaper prints some number now and again, but no one really cares to look behind the curtain to see what if anything they mean.

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