Housing market in Washington remains strong!

SPOKANE, Wash. — While the housing market tailed off across the state in the third quarter, prices continued to climb, with the median price topping $300,000, the Washington Center for Real Estate Research at Washington State University reported Tuesday. Director Glenn Crellin said median home prices continued to hit record highs even as the number of homes sold fell.

“While sales rates are no longer setting records, the overall housing market in Washington remains strong,” Crellin said in a news release. Rising inventories mean buyers have more choices and more room to negotiate, but there is not a glut of houses on the market, Crellin said. In the third quarter ended Sept. 30, 43,050 homes were sold across the state, 16 percent fewer than a year ago, the report said.

Statewide, the median sale price of a home in the third quarter was $300,900, an increase of 14.9 percent from the median recorded in the third quarter of 2005. Among the urban areas, King County’s median was $432,600, up 16.3 percent from a year ago.

The Housing Affordability Index, which measures the ability of a middle income family to buy a median price home, slipped by 2.8 points in the third quarter to 85.1. That means a typical family has only 85 percent of the income required for the purchase of a median price home using a 30-year mortgage at prevailing interest rates. Buyers in 15 counties faced index values below 100, moving two more communities into the less-affordable category compared to three months ago.

Affordability is especially low in San Juan, Jefferson, and King counties, which had index values ranging from 53.6 to 69.2. “Home ownership depends on the ability to purchase the first home, and too often that is more a dream than a reality,” Crellin said. “Only two counties (Columbia and Adams) offer the typical entry-level buyer the opportunity to afford a typical starter home, and neither is in an urban area.” The first-time buyer affordability index for the third quarter stood at 49.7, the sixth consecutive quarter of record low affordability. Among urban areas, first-time buyer affordability index values ranged from a low of 38.8 in King County to a high of 96.4 in Benton County.

By NICHOLAS K. GERANIOS
ASSOCIATED PRESS WRITER

Bubble-Bubble

Is the Seattle housing market bubble-proof? That’s what a new analysis suggests. Business 2.0 Magazine says Seattle is one of five cities where the longer term housing trend is positive. The real estate market has had plenty of negative numbers as of late. Sales of single family homes are down for six straight months, falling 1.9 percent in September. Median home sale prices are down as well, the largest drop in nearly four decades. But apparently that’s not the case here. The magazine calls Seattle one of five bubble-proof markets. San Francisco, Boston, and New York are also on the list. The magazine says the “Fab Five” may suffer dramatic swings but long-term trends are strongly upward. “We’re in the middle of a job expansion here so businesses are hiring, there is demand for housing, so we’ve got that going and we also have the constraints on land, so we don’t have existing supply to meet demand,” said Suzanne Britsch, an analyst who tracks real estate trends. Business 2.0 says limits on available land in Seattle and the other cities is a big factor. But so are trends in household income.

Seattle’s strong job market, which includes well-paying tech sector positions with companies like Microsoft and Amazon, also skews housing prices. The magazine says people with more money are chasing fewer properties, helping inflate the market and put it in the bubble-proof class. The magazine also puts 10 cities under a banner of “where not to buy” because of economic conditions. None are in Washington State. A majority are in agricultural areas in California and the desert Southwest. The business magazine also says home prices appreciated in Seattle an average of 3.2 percent a year since 1949. That’s above the national average of 2.3 percent.

ZILLOW IN TROUBLE II. ?

NEW YORK (CNNMoney.com) — Zillow.com, a real estate valuation Web site, has been named in a complaint filed with the Federal Trade Commission by a consumer advocacy group, which charges the site’s home valuations mislead consumers, real estate professionals and lenders. According to the National Community Reinvestment Coalition, an alliance of more than 600 community-based groups working to ensureequal access to credit services for underserved communities, Zillow knowingly provides inaccurate estimates in posting valuations on more than 67 million homes around the nation.

“Zillow is placing the American dream of homeownership at risk for countless working families,” said NCRC president John Taylor. “For a company that represents to consumers that they are the ‘Kelley Blue Book of Homes,’ this is a very dangerous situation” He said people rely on Zillow “Zestimates,” believing that they had the equivalent accuracy of an appraisal. “The biggest concern is that consumers are being misled and injured by this system that uses appraisals that are not actual, independent assessments,” said Taylor.

An FTC spokesman said the agency does not comment on an open investigation other than to say a complaint has been received. The remedy that the NCRC seeks is for Zillow to improve the accuracy of the site, to make its disclaimers even more prominent, and to ensure that homes in lower income communities are not routinely undervalued. Zillow, for its part, has requested a meeting with the NCRC. Web site spokeswoman Amy Bohutinsky said, “We want to talk to them and figure out exactly what they’re looking for.” She added, “We were never contacted by them before they filed the complaint.”

How it can hurt

Relying on inaccurate appraisals can hurt consumers in several ways, the NCRC’s Taylor said. If the estimate is too high, home buyers may overpay, convinced they are getting a more valuable house for less. They may buy a home supposedly worth $300,000 for $250,000, for example, when, in reality, it’s only worth $220,000. Taylor also said predatory lenders can use high estimates to induce home owners to borrow on non-existent equity. Taken to extreme, a homeowner can wind up owing more than the property is worth. Low estimates can depress prices in entire communities if both and sellers rely on the site when pricing or shopping for homes. Taylor said an examination of Zillow’s site convinced the NCRC that underestimates are more common in low-income and working-class neighborhoods. Zillow uses a proprietary software program to crunch huge amounts of public data to come up with its estimates. The company posts disclaimers saying that Zestimates are not appraisals, but it also states that buyers can use the estimates “to avoid overpaying” and sellers can use it “to arrive at the right price.”

By Les Christie, CNNMoney.com staff writer
October 27 2006: 2:15 PM EDT

ZILLOW IN TROUBLE?

The Federal Trade Commission said Tuesday it has received a complaint from a Washington-based advocacy group that Zillow.com, an online real estate valuation service, was misrepresenting home prices based on race. The FTC would not confirm whether it would investigate Seattle-based Zillow following the complaint from the National Community Reinvestment Coalition, which the agency received last week. In a letter to the FTC, the group said that Zillow undervalues homes in black and Latino neighborhoods because of a higher risk for “discriminatory and predatory lending practices.” The group also says the site has a less than 30 percent accuracy rate. Claudia Bourne Farrell, an FTC spokeswoman, said: “First, there is a determination made whether to investigate, but investigations are not only based on complaints we receive from organizations like that one.” Zillow denies the allegations, saying it does not obtain demographic data on its housing data and offers accuracy assessments on a county-by-county basis, according to Zillow spokeswoman Amy Bohutinsky. The company claims the median margin of error on its home estimates is 7.2 percent and that 62 percent of its estimates fall within 10 percent of the actual sale price of the home. The Web site, which was launched in February, reminds users in several places on the site that “Zillow is not an appraisal, but a free research tool for consumers.”
Zillow acknowledged that there is more work to be done to “tweak” algorithms used in its accuracy estimates. TeAnne Chennault, a spokeswoman for the National Community Reinvestment Coalition, said the allegations against Zillow were based on an audit it did of the site’s estimates. It is reviewing that audit to decide whether to file additional complaints with other government agencies.

By DONNA BORAK
AP BUSINESS WRITER SEATTLE PI