Cross Currents
The stock market keeps gpoing up but down here at street level things feel different. While sales are up the buyer is cautious and if you have been following the Stats the per sq. ft. prices remain sticky. What I am seeing is a recovery but as strange as it may sound it is taking a top down approach. Sales of new upper end homes are picking up with over 5 sales in West Bellevue over 3 million in the June and July time frames. In addition the upper end new construction inventory in The Reserve at Newcastle is starting to get depleted. East Bellevue is seeing its new construction inventory also get depleted but it had fewer sales of new construction over a $1,000,000 in June and July than West Bellevue did over $3,000,000. Many of these upper end sales are being done all cash with no financing.
But it is a different story the farther down you go in price. East Bellevue still has great sales and the bulk of the sales is still under $500,000 but prices are really locked in on what people will pay. If you go to the southend of King County such as Kent, Covington, etc. there is another wave of foreclosures hitting and instead of stabilizing we are seeing further eroding of already low prices. In addition the local State Chartered banks are starting to have real problems and you will probably see more local banks going under. This will keep credit tight for those who have to borrow money. It just gives me a real uneasy feeling.
It appears that those buyers who have the resources to purchase without borrowing are starting to come into the market with a lot more confidence. Maybe the fact their stock assets have gone up is giving them more confidence. But let’s keep track and see if a top down recovery is really taking hold. This has many similarities to the early stages of the 1981 recovery.