Inventory Reaches Big Round Number
As some astute readers have noticed, as of noon today, the number of single-family homes on the market in King County passed the big round 10,000 mark (see the left sidebar—which I am continually working to improve based on your suggestions). Since surpassing the previous confirmed high (Sept. ‘02 – 9,176) last month, inventory has grown at an average rate of about 26 homes added per day, despite decreasing by over 150 during the days leading up to Independence Day.
Also worth noting is that in my recent research of the historical Seattle Real Estate Research Reports mentioned by Steve Tytler, I was able to obtain inventory information for King & Snohomish (combined) back through 1988. The highest level of inventory in these reports was in August 1991 at 26,646 (that includes SFH, Condo, Land, Mobile, Commercial, & Multi-family). In breakdown data that was provided from 1993 to 1996, approximately 59% of total listings were SFH. This translates to a record of roughly 15,721 SFH on the market in King and Snohomish counties in August 1991. As of this post there are 15,648. I’m betting we break the all-time record here really soon.
Guest Posting at Get Rich Slowly
Tomorrow I have a guest post going up over at the excellent personal finance blog Get Rich Slowly. As you might expect, the subject of my post is how renting vs. buying affects ones personal finances. Head over there tomorrow to check out my post, and bookmark J.D.’s site or add it to your feed reader. I highly recommend it.
Seattle Civil Defense Manual
I mentioned this before on here, but it was way back when there were a few hundred readers a day instead of a few thousand, so I thought I’d throw it out there again. Check out the Seattle Civil Defense Manual from 1951. It has nothing to do with real estate, but it is probably of interest to anyone living in Seattle that enjoys a bit of history.
The Civil Defense Manual is a 25 page booklet that instructs local residents on how to be prepared for an atomic attack. A coworker discovered it in his garage, and it was so interesting I had to scan it and share it online. Be sure to check out pages 10 and 11, which contain pictures of Seattle and other Puget Sound points of interest as they existed 54 years ago. The entire publication is both interesting and amusing in a twisted sort of way.
Dragonfly
Lastly, check out this picture of a cool dragonfly that I took in our flower garden on Friday:
What would be fantastic (if possible) would be to track inventory at a more granular level (maybe by zip code?).
Why no posts on the articles that appeared this weekend about the 37 year olds buying $2.2million houses and renters paying 9% more year over year? Cricket. Cricket.
Mike, I assume the rent article you’re referring to is this one, but I don’t know that I’ve seen the other one you mentioned. Could you provide a link?
I generally tend not to post “meaty” articles on weekends. I’ll get to these early next week.
Lizzie Rhodes wrote an article about rising rents? No! You’re kidding me!
Seriously…buddy of mine just found a 1br place on top of Queen Anne for about $900 a month (less than he was paying for his old place). How much would it cost him to own in the same neighborhood?
Rents going up = farse. I have never seen so many For Rent signs in Kirkland/Kingsgate. That isn’t the sound of crickets Mike, it’s the sound of crackling wood – BURN BABY BURN!!!
I have to second Dade. In south Snohomish County, there are LOTS of for rent signs. I’ve lots of houses this summer especially. Perhaps flips gone bad?
And don’t even get me started on commercial space for lease in the Lynnwood area. Things are getting UGH-LEE.
Just came back from my annual pilgrimage to Washington. Wow; it’s getting prettier every year. But I do agree that employment drives the market. Beauty does not pay mortgages. Spent 3 days in Bremerton; military families can afford those prices?? Kitsap is closing 2 elementary schools for lack of enrollment. California plates all over the place (of course, it’s summer – probably tourists). 2 Florida plates in 2 days in Kirkland (definitely not tourists). A lot of “For Sale” signs pretty much everywhere; of course, looking at the asking prices proved depressing (Kirkland is unreal). My old townhome in Bothell (1050 sq.ft) at Regentwood (Waynita Way – NOT Juanita way) which I sold for $154K in 10/01 is now being offered for $297K. South of that complex, there were 4 or 5 old houses in big lots on the hills (in pretty bad shape). Now, big construction. I asked the flag lady (the most polite and feminine construction worker I’ve ever seen) about the project. She replied, “over 200 condos/townhomes”.
Flew back to Florida this past Saturday; this morning on my way to work…a Washington license plate!!! Yeah; one out of there!!!
SNAPSHOTS OF THE SEATTLE AREA ECONOMY THE LAST 3 WEEKS
I’m keeping track of the local economy with surveillance “snapshots” too. The first snapshots aren’t scientific, but ya know….I’m seeing a definite trend….
Saturday, 6/30, 730P-11P, Tukwila/Renton area. Traffic was very light (like almost no one going out spending money on a prime Saturday night), as I was coming from Covington and my friend observed the same light traffic phenomena coming from Bellevue. The Keg is usually a 30-60 min wait for a table with a jammed paring lot on a 730P Saturday night, not so that night, it was 3/4s full. You walked right in got a table with no reservations [I called them for reservations and they said you don't need them lately], with free appetizers at the door too. Weird for the Keg. Went to the theater across the street, Valley 13, NO LINE AT THE TICKET COUNTER, just bought tickets and walked right in to watch Evan Almighty with only about 10 OTHER PEOPLE.
July 7, Saturday Evening Primetime too, this time downtown Seattle waterfront. Light traffic and plenty of open parking. Red Robin on the water was about 3/4s full with no wait for a table by the water [there were several still open]. The only folks out spending money were ALL tourists taking pictures (not many of those either), as I saw very little evidence of locals out on a Saturday evening. We then went to Paul Allen’s Seattle Center’s music museum’s old Liquid Lounge, as its usually packed with people and live music [pricey drinks too]. We got there and the old familiar Liquid Lounge is out of business, replaced with New Century Lounge I believe. THERE WERE ONLY 5 CUSTMERS IN THE PLACE FROM 830P-1030P, with 6 workers serving us drinks [they gave us drinks for 50% off too]. THEY CLOSED THE PLACE DOWN BEFORE 11P. A very GRIM SEATTLE ECONOMY indeed.
7/13, Friday Night in Covington’s Las Margaritas at 930PM. This place is normally packed with Kareoke crowd until 12AM, but last Friday it was 20% full with 8 waiters with nothing to do. Kareoke was cancelled.
Do you see a pattern?
I believe people have generally stopped eating out in the Seattle area, perhaps ENTERTAINMENT MONEY in general now goes to fill the gas tanks?
Where’s the MSM on this news?
If you have historical inventory data, it’d be interesting to plot it alongside sales prices. Washington home prices shot up during 1989 and 1990, and while they leveled off with no nominal decline in 1991, inflation caused a real decline.
Inventory numbers should probably be “inflation” adjusted as well… passing a record that was set 16 years ago doesn’t mean much to me…
Inventory adjusted for inflation? Sure.
1990 King + Snohomoish census pop was: 1,972,947
2007 WA state estimate for same two counties: 2,547,600
Adjusted Aug 91 inventory for SFH (close enough to 1990 right?) would be 20,300. So yeah, we’re not even close yet.
“Adjusted Aug 91 inventory for SFH (close enough to 1990 right?) would be 20,300. So yeah, we’re not even close yet.”
Number of households has more than kept up with population growth since 1990. You can’t claim that inventory “should” be double, just because the population has doubled….
Not to put too fine a point on this, but comparing gross population numbers probably doesn’t tell the whole story either. The way the current 2.5M live is probably not the same as back then. I’m sure there are a lot of factors, some that perhaps off set one another (greater numbers of people sharing apartments vs. small family size). One possible other way to “adjust for inflation” would be perhaps to compare total number of existing SFHs in 1990 vs. total number of existing SFHs now. Then you could calulate a ratio of homes to homes for sale. This might be a better way to calculate and compare inventory levels.
What say you The Tim, is the total number homes in existence a factoid that one can know reliably?
–Greg
“Number of households has more than kept up with population growth since 1990.”Reply – Quote
Yes, so?
Cool dragonfly. I once saw what I think was a dragonfly trying to mate with my car’s radio antenna. The little ball at the end of the antenna shaft must have looked like the head / body of a hotty to the amorous bug.
Read past the first sentence, Jesse. It helps.
Comparing sales to inventory (months of inventory for example) is a better way to see if inventory is high. Population size might indirectly real this, but you might as well just cut to the chase and look at sales. In truth the months of inventory is not very high right now. Last I calculated it was a hair above three months.
Also, realize that “number of households” in census-speak means “number of separate homes”. Ergo, you can’t have an increasing number of households without homes for those households to live in. And that’s the point.
Re-reading my own posts, I realized that I’m being terse (serves me right for doing too many things at once):
I don’t think it’s valid to calculate the “inflation-adjusted” sales inventory for homes — certainly not with regard to population. Inflation-adjustment makes sense for money, because the central bank actually creates money over time, and that extra money leads to inflation.
That direct, causal link doesn’t exist between population size and housing. There’s a market in the middle.
“I don’t think it’s valid to calculate the “inflation-adjusted” sales inventory for homes — certainly not with regard to population.” -MisterBubble
Frankly, I can’t think of a better way to adjust historical inventory figures then to do so with population. In fact, “OCrenter” at Bubble Markets Inventory Tracking has been doing it for over a year now. Is it perfect, of course not. In general though it’s seems rather to odd to think that a larger market wouldn’t have more inventory than a smaller one. More houses total, more houses likely to be on the market, etc etc.
If you have a better way of calculating historical inventory levels relative to current levels, I’d love to see it. Otherwise all your argument against it seems to be of the ‘because I say so’ variety. I’m not following your apples to oranges comparison with currency inflation.
Oh, and for clarification I should have originally wrote in reply “I don’t see how your first statement, which is obvious, supports the second”. May yee rest easier in my reading comprehension skills.
Interesting observation Jesse.
FWIW, The peak appreciation during the last boom was fall of ‘89 at about 28% YOY. Inventory peaked two years later in the fall of ‘91.
This time around, peak appreciation was fall ‘05 at about 18%. Now here we sit going in the summer of ‘07 – almost two years later.
Will inventory peak this fall, or will it run up into next year? Note that the peak month for inventory is usually somewhere between July and October, so its a pretty safe bet that inventory will drop as we head into the holidays. But what do you think about next year? Anyone betting it will grow through another year?
“In general though it’s seems rather to odd to think that a larger market wouldn’t have more inventory than a smaller one. More houses total, more houses likely to be on the market, etc etc.”
You can think it as odd as you want — you’re making a lot of assumptions. As I said above: there’s a market in between population and inventory. Given that prices are known to fluctuate in proportion to supply and demand, there is no rational argument to be made that unsold inventory will rise and fall in proportion to population size.
And for the record? Appeals to authority are meaningless. I don’t care who does this already. I could “adjust” inventory numbers to worldwide CO2 output — it wouldn’t make it a valid adjustment.
“If you have a better way of calculating historical inventory levels relative to current levels, I’d love to see it.”
Assuming that it can be done at all (which is not a given), Alan’s suggestion is the closest thing to a standard in the real-estate industry: normalize inventory by current rate of sales. That should compensate for any effects due to population size.
“your argument against it seems to be of the ‘because I say so’ variety. I’m not following your apples to oranges comparison with currency inflation.”
Those are funny words from a guy whose argument begins with “it seems rather odd to think…”
I’m arguing that it doesn’t make any sense to “adjust” housing inventory to population, because there isn’t a necessary relationship between the two. That’s logic, not opinion.
But you’re right on one point: comparing currency inflation to housing inventory “inflation” is an apples-to-oranges comparison. I believe that was my original point!
“It’s seems rather to odd to think that a larger market wouldn’t have more inventory than a smaller one.”
And more buyers. What’s your point, Sherlock?
I’m late to this party, but I love your observations softwareengineer. I can’t place my finger on it now, but I’ve been feeling like there are less people going out lately as well. I just assumed that it was related to summer time. I.E. people on vacation or hiking in the mountains.
I’ll start a forum thread on this, and people can fill in trends they are noticing.
Is there any way to know the average time this inventory is sitting out there? The press brings it up (in slow cities) every so often. What’s the average in Seattle for a SFH?
Dear MisterBubble, the point of the population conversion is to create an ‘adjusted’ all time high inventory for a specific geographical location. That is all. Is it perfect? Of course not. Obviously, Seattle of August 91 is not the exact same market as Seattle of July 07.
I agree whole heartedly that month’s of supply for a given market is a much more meaningful statistic, but it is not ‘inventory’, aka the number everyone is focusing on in the upper left of this front page.
Taken to an extreme your argument could be used to contend there’s no good reason that Spokane shouldn’t have more inventory than NYC. In the real world however size of the market does factor into it’s inventory numbers (and yes Peckhammer, sales numbers too!), conversely King county currently has more inventory than Pierce which has more than Snohomish. It’s not really a bizarre concept. Yes, there is a local market in each and as such each county’s inventory is not correlated perfectly to population (especially Pierce), but isn’t that obvious?
It’s just a statistic. If you need to believe that we’re at an all time high inventory in disregard of past market size, don’t let me burst your (Mister)Bubble!
“Taken to an extreme your argument could be used to contend there’s no good reason that Spokane shouldn’t have more inventory than NYC.”
No, it can’t.
No, it can’t.
yes it can. as you’ve made no contention for market size in your argument, wait, that sounds weird, like, size might be part of a market? very weird indeed.
[...] Tim & Jeni (via Seattle Bubble) comes this amazing 1951 Seattle Civil Defense Manual. Note the bizarre KVI advertising/propaganda [...]