No, it can’t.

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!

I’ll start a forum thread on this, and people can fill in trends they are noticing.

And more buyers. What’s your point, Sherlock?

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!

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?

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.

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.

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. You can’t claim that inventory “should” be double, just because the population has doubled….

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.

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?

And don’t even get me started on commercial space for lease in the Lynnwood area. Things are getting UGH-LEE.

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?

I generally tend not to post “meaty” articles on weekends. I’ll get to these early next week.