The standoff between sellers’ nastalgia for the glory days and buyers smelling blood in the water is going to be an interesting battle. It will be decided by the banks.

If you take the sales in California, exclude the sales to banks (REO), and put inventory held back by banks into the mix, you have somewhere in the neighborhood of 50+ months of inventory. If banks find themselves in a position where they no longer hold REO in hope for a rebound or gov bailout, they will flood the market in such a fashion that most homes will not have a bid at any price. The bids will simply be exhausted.

I don’t see any reason that will not happen here. WaMu is circling the drain (about time, I might add) and as soon as the halo effect wears off of Wells Fargo, the bulk of real estate financing on the West Coast will be in serious distress.

The Federal Reserve has consumed half of what it took 80 years to build in the last 6 months, and at the present burn rate, the FED will be tapped-out by late summer. The burn is to the banks, as the bulk of them are insolvent and have been running on injections from the central bank.

If I am a seller, and I have a copy of the latest H.3 from the FED, I would take any semi-reasonable offer and be grateful for it.

Losing money stinks. I can’t tell you how many dollars I have lost by chasing dimes that were not there.

Denial is the most difficult stage to complete.

Best wishes. If you can move real estate in this climate, you are a better man than I am.

You’re too talented to be down in the dumps, man. Don’t give in to the craziness. Seriously, don’t express those thoughts. Have a different loop into your head.

-Chris

BWAHAHAHA

Next Housing Market to Crash? Seattle
May 29, 2008 05:01 PM ET | Luke Mullins
Few American cities have weathered the national housing crisis better than Seattle. According to the recently released S&P/Case-Shiller Home Price Indices, home values in the drizzly gem of the Pacific Northwest have fallen a modest 4.4 percent over the past year—a cakewalk compared with former housing boom hot spots like Las Vegas (-25.9 percent), Miami (-24.6 percent), and Phoenix (-23 percent).

But that may soon change. In a recent interview with U.S. News, ZipRealty CEO Pat Lashinsky predicted that Seattle’s so-far resilient housing market would suffer big losses relatively soon.

In Seattle, if you look at it right now, on a year-over-year basis, you will see that inventory levels [of unsold homes] are up between 45 and 50 percent. And then if you looked at prices—in the price report that just came out—it would say that prices are down in Seattle by 4 percent. This is exactly what we saw in the rest of the country six to nine months ago. We saw inventory levels starting to spike [and] properties were taking longer to sell. But the sellers were not willing to [reduce] the price; they were holding the line. And so you get into this scenario where buyers don’t buy, because they have too many choices and they are trying to get a good value, and sellers are trying to hold on to their value. So now, nobody buys a home today, and then more homes go on the market tomorrow. And then all of a sudden, people have to sell or foreclosures come in. And all of a sudden it pops because everyone is competing against a significantly lower price.

Only time will tell us if Mr. Lashingsky’s predictions are true. They seem very extremist to me. But, I’m just a small town local writing useful (hopefully) tips for a small county.

I’ve got to tell you though, the circular logic, generalizations and incredibly poor grammar in this paragraph keeps me from viewing the speaker as any sort of authority.

“…‘And so you get into this scenario where buyers don’t buy, because they have too many choices and they are trying to get a good value, and sellers are trying to hold on to their value. So now, nobody buys a home today, and then more homes go on the market tomorrow. And then all of a sudden, people have to sell or foreclosures come in. And all of a sudden it pops because everyone is competing against a significantly lower price.’”

“In a recent interview with U.S. News, ZipRealty CEO Pat Lashinsky predicted that Seattle’s so-far resilient housing market would suffer big losses relatively soon. What makes you think the Seattle housing market is going to crash?”

“‘In Seattle, if you look at it right now, on a year-over-year basis, you will see that inventory levels [of unsold homes] are up between 45 and 50 percent. And in the price report that just came out-it would say that prices are down in Seattle by 4 percent. This is exactly what we saw in the rest of the country six to nine months ago.’”

“‘And so you get into this scenario where buyers don’t buy, because they have too many choices and they are trying to get a good value, and sellers are trying to hold on to their value. So now, nobody buys a home today, and then more homes go on the market tomorrow. And then all of a sudden, people have to sell or foreclosures come in. And all of a sudden it pops because everyone is competing against a significantly lower price.’”