Prices rise and fall with supply and demand.

In any given NWMLS area, different price ranges — and neighborhoods — have their own supply and demand dynamics.

It is quite possible, better said probable that we will see prices appreciate in some of the core NWNLS area price ranges / neighborhoods, yet in the same area, other price ranges will erode.

Generally speaking, as I see it, the biggest price erosion in the core areas will be in the high end — not the low end. In the core areas we may see continued pressure on low end affordability.

I have also observed that median prices somewhat lag current supply and demand numbers both going up and going down.

I am also seeing house style dynamics. On the Eastside, split entry houses appreciated at an unreal rate, because supply was so tight. Now that there is more selection, split entries are lagging the market.

This is a fun market for a professional to work in!

This is exactly why I don’t put much stock in county-wide home price stats.

The only truly meaningful stats are for comparable home sales within a given neighborhood, because we all know that the the key to real estate is “location, location, location” and the rate of home appreciation and depreciation varies widely from neighborhood to neighborhood because of the effect of location.

The reason Seattle homes have not fallen as fast is because they are located near the downtown Seattle job centers.

Homes located far away from the major job centers of Seattle and Bellevue are being hit much harder than the close-in neighborhoods.

For example, homes in the Puyallup area are taking a beating right now, while home prices close to downtown Seattle and Bellevue have not fallen as much — yet.

Another reason why the outlying areas are harder hit is because they have a much higher percentage of subprime mortgage borrowers. People with poor credit typically have lower incomes and theferore they bought houses in outlying areas where the home prices are cheaper.

So the outlying neighborhoods have a double-whammy of a less desirable location (based on commute times to the major job centers) and a higher percentage of homes for sale and foreclosures due to the subprime borrowers trying to bail out of loans they can’t afford.

The bottom line is that the median home price stats constantly referenced in the media are pratically meaningless except for capturuing very broad trends in the home sales market.

That’s why I have consistently stated that home prices will drop by an “average” of about 10-20% by the end of this year — because there are so many variables from neighborhood to neighborhood that stating an overall number for King County is highly inaccurate.

While the high end is still quite slow on the Eastside, lower prices are absorbing. The Eastside’s percentage of closed sales in Feb., as I see it on the The Tim’s charts, is consistent with the previous year.

The rate of sale is obviously higher in Seattle and the Eastside than the south end, which caused the south end to slip significantly by percentage. To me this stands to reason as outlying areas lose significant volume before core areas.

Your thoughts?

20% make up the full time professional. The agents who make real estate their living are the agents who are most likely to take education seriously and learn how to analyze and understand the market. An agent can have people skills and be able to analyze :)

wasn’t trying to stereotype.. That’s pretty much exactly my point: bunch of part-timers, and some of the full timers who are analytical. I have seen enough meyers-briggs results to know that most NT-types are not in sales! it’s the rare mix.

I am trying to wrap my head around this but am struggling. If the high end of the market is having difficulty absorbing, then why are South King County sales a lower portion of the total sales in Feb 08 than they were in Feb 07?

Approx. 80% of the real estate agents are part timers and hobbiest. 20% make up the full time professional. The agents who make real estate their living are the agents who are most likely to take education seriously and learn how to analyze and understand the market. An agent can have people skills and be able to analyze :)

I understand your frustration about not having easy access to demand numbers.
We both have an interest in accuracy. That’s why I come around now and then. I am more interested in contributing to the conversation than fighting. (I use my cairn terrier Kona for my avatar to keep the self-promotion down over here down)

Ira,
We generally see Seattle’s demand numbers pick up before the rest of the region. The slowest segment of the market, as I see it is rural high end.

One problem for those of us w/o access to the NWMLS is that we can’t get a granular look at the demand side of the equation. IMO, that’s a reason why there is much discussion of inventory on this site. Its easy to pull data on what’s listed from any one of a number of public sites. Few here have the ability to look at what sold (or for how much).

To see what the charts look like:
http://blog.seattlepi.nwsource.com/realestate/archives/133957.asp

I also have a paid subscription with Trend Graphix that can give me general market info / break down to a zip code/ see accurate price/sq foot info/ original list price, list price, sell price/ market time breakdowns, etc.

It’s been awhile since I studied Altos’ format. I’m sure it’s a cut above what most people see. I hate to say this, but you’re seeing better information than the vast majority of part time real estate agents see. There are a lot of agents that don’t really know what AR’s are and how to use them.

Question for you. I tend to agree that absorption ratios are a good measure of market activity. I follow the “Market Action Index” over at Altos – which seems to be exactly that (% of listings selling in a month).

I was comparing your post the other day of markets with rising vs. falling weeks of inventory – and all these areas show up as sellers markets on Altos – with MAI LT 25 (most in the range of 15-17)

Do you look at these? thoughts?

http://www.altosresearch.com/research/WA/MERCER+ISLAND

In the last 7 weeks, 1 out over 50 homes over 1.5 mil sold in Area 500. 1 out of 38 in 550 Redmond. The low end is absorbing, the high end is not. This affects both median and mean.

I am convinced that sales ratios (AR’s) give the best data on the strength or weakness of a market.

pretty images > boring text.

one suggestion though, create a simpler version of these charts with less variables so that david losh can understand it as well.

You showed us trend charts, then gave us a good dose of reality.

The statistics can mask the truth.

The CPI statistics they use to calculate our tiny wage increase COLAs at like 2-3% the last several years are another complete joke.

Thank God for places like Seattle Bubble, its a breath of fresh air!