Here’s the latest update on months of supply, or “absorption rates” for the 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post.
Remember our metric: less than 6 MOS is a sellers market and above 6 is a buyer’s market, meaning that buyers have better negotiating power, not that homes are necessarily priced attractively for buyers. Before this year, the longest that King County as a whole has sustained a MOS above 6 was 4-5 months in the winter of 1994-1995. March MOS for King County came in at 6.19 (slightly higher than February), bringing the current run to seven months.
In the graphs below, you’re looking at the MOS for the “Res Only” data from the NWMLS King County Breakout pdfs for the nine-month period of July 2007 through March 2008. The bar graph is centered vertically on 6.0 MOS, so that it is easier to visually tell the difference between a seller’s and buyer’s market (i.e. – shorter bars mean a more balanced market). Each graph again has the same scale on the vertical axis and has the King County aggregate figure plotted in red, so they can be easily compared.
For a description of which neighborhoods each area encompasses, as well as a map of the areas and a link to the source data, visit this page.
Note: Area 100 MOS was over 21 in January, and has been clipped.
Note: For Area 701 (Downtown Seattle) we’re using condo data.
The best markets for sellers continue to be North Seattle areas 705 and 710 (Ballard, Greenlake, Greenwood, Lake City, Northgate, Wedgewood, etc.), with 3.38 and 3.86 MOS respectively. One other area dropped slighly below 4 MOS, area 720 (Lake Forest Park, Kenmore) with 3.95 MOS. The Seattle city limits as a whole are definitely still the worst place for buyers, with a collective MOS of just 4.52. However, even Seattle is trending strongly toward a buyer’s market, as this March saw over twice as many months of supply as last March, which had just 1.85 MOS.
The condo supply and demand situation downtown took a sudden turn in favor of buyers, with MOS shooting from 2.21 in February to 6.02 in March. Again though, I would take the condo statistics with a grain of salt, considering how many new construction condos never make it onto the MLS.
Ten of eleven neighborhoods in south King County remain firmly in buyer’s market territory, with MOS also coming in higher than the county aggregate. The Eastside still doesn’t look too good for sellers, with a collective MOS of 7.38, and 6 of 8 areas coming in with MOS above the county as a whole.
Mercer Island took a sudden turn, as new listings flatlined and a few dozen sales cleared out a bit of the standing inventory, pushing MOS way down from last month’s staggering 13.18 all the way into seller’s market territory at 5.10. Vashon dropped as well, but remained well into buyer’s market territory at 9.44 MOS. Bill Gates’ stomping grounds in Area 520 (Medina, Clyde Hill, W. Bellevue) continues to be one of the toughest places to sell, with 13.76 MOS, it earns the distinction of being the only area to exceed 10 MOS for seven months now.
Here’s the bonus graph, which lets you directly compare each area’s MOS to one year ago’s value. March 2007 is in red, and 2008 is in blue.
There is still not a single area that isn’t more of a buyer’s market than this time last year. Again, only one area had less than double last year’s MOS, this time it was area 720 (Lake Forest Park, Kenmore), which increased from 2.21 to 3.95.
The three strongest areas as of last month were Ballard/Greenlake/Greenwood (705) at 3.38, North Seattle (710) at 3.86, and Lake Forest Park/Kenmore (720) at 3.95. Slightly fewer areas were in seller’s market territory last month, just 10 out of 30 areas county-wide came in below 6 MOS. The three weakest areas were Enumclaw (300) at 14.22, Medina/Clyde Hill/W. Bellevue (520) at 13.76, and Jovita/West Hill Auburn (100) at 9.65.
Nice data, Tim. Living in 720 and planning on listing my house on Monday, I can tell you it’s definitely a buyer’s market here, regardless of MOS being still healthy. Houses that are priced at last summer’s prices are just sitting.
Houses in the low-end, which is what I’m selling, which were selling at 340K-350K last summer are just sitting until they drop their price near 300K or below.
The market is changing so fast that it’s hard for the statistics to keep up. I have to limit my comps to the last 3 months, and even then they are stale and unreliable.
The flipper next-door told me a few weeks ago he was listing soon at $315K, assuming I was going to go significantly higher than that. When I told him I was thinking about around there or a little lower, he’s become increasingly speedy and surly. I think he’s starting to realize that he may not be making as much as he thought, or perhaps be looking at a loss when taking into account his labor and materials costs.
Nobody likes to work until midnight for free. Just ask me.
That’s the third swing of 5 months’ worth of supply in one month for Mercer Island. With sales this slow, and data broken down into small areas, drawing trend from a single month’s data point is pretty unconvincing.
I’m guessing that West Bellevue (520) sellers are holding firm on their prices in anticipation of all the office space coming online in downtown Bellevue. I’d be interested in some charts about the volume and timing of that, and some clues as to how much will be new jobs versus elbow room for Microsofties.
what happened to line graph?
The line graphs are in the inventory breakdown posts. I will probably update that later this week.
I don’t really consider a Seller’s advantaged market until the AR’s hit 3 months and below. 3-6 months AR’s are really a more balanced market.
Most Seattle and Eastside areas were improved from January, but more or less even with February AR’s.
I track AR’s weekly and I’ve seen sales rate increases in most Seattle and Eastside areas in the last 2 weeks.
High end sales on the Eastside (particularly rural Eastside) have almost stopped which are affecting overall Eastside AR’s. The Eastside is seeing Seller’s markets (<3 months) in many of the lower price ranges. Certain price ranges in Seattle are Seller’s markets.
Lack of sales in the high end will affect median prices. I don’t see how we can accurately compare YOY medians in areas affected by the lack of high end sales.
Large Eastside areas like Area 600 is producing the majority of sales in the western, core part. The further east, the slower the market — in all price ranges.
This market is all over the board.
I’m never sure what to think of these numbers. I often hear that Seattle is balanced at under 4.5 months of supply, but I understand why you are using the more bullish 6 months.
Are any of these numbers rolling averages? It’s been pointed out that the values are real small, but maybe if we used a 3-6 month rolling average they would look more reasonable…
Greg (#5), what does AR stand for?
Absorption rate.
Right. Absorption Rates are basically just a slightly different way of looking at the same data as Months of Supply. For MOS you divide the total month-end inventory by the pending sales. For AR you just go the other way around, divide the pending sales by the month-end inventory to get a percentage. So 6.0 MOS = 16.67% AR.
The “Market Action Index” over at Altos is basically the absorption rate – and their page shows that anything less than 25 is a “buyer’s market”. That’s 4 months of inventory. Most of the Puget Sound is tracking at ~15-17% over there.
I use the term “absorption rate” and MOS “months of inventory” interchangeably (how long it takes inventory to absorb). I refer to the percentage number as the “sales ratio”.
Nonetheless, whatever the terminology, AR’s give us the measurement of supply and demand, which in my mind is the best of all market indicators.
Here’s a link to an article that I wrote around AR’s and sales ratios.
http://workingforyou.typepad.com/feature_article_pricing_t/
Bili, I wish you well on the sale of your house!
Thanks, Greg. We may need it.
I think that large scale changes in way residential real estate is transacted makes these historical statistics less useful. We are all familiar with the securitization of mortgages (in many cases, poor mortgages) – this explosion of financing opportunities is what allowed prices to rise so dramatically. As with any trend, it overshot the peak significantly and now we’re seeing the correction. So, during the period of rise we saw much higher transaction rates, but – when we reach a new stable plateau (which hasn’t happened yet), my opinion is that we’ll return to the pre-boom levels of appreciation and sales rates. However, the securitization of (good) mortgages will continue to exist, which will support overall prices at a higher level than before the “boom”.
jonI’m guessing that West Bellevue (520) sellers are holding firm on their prices in anticipation of all the office space coming online in downtown Bellevue.
Yeah, the sellers in Herndon, VA were saying the same thing 2 years ago. Today, homes within walking distance to the new VW north american headquarters and several million square feet of brand new Class-A office space are selling for 40%+ off peak market values. And this is in an area where median household incomes are over $100K and unemployment is under 3%.
Office space built during the bubble is what it is – mis-allocated capital.
I’d love to see the AR and corresponding MOS for $1,000,000+ homes and condos.
Those would be some ugly statistics that nobody could spin.
I heard the same thing about .com companies in 2000. “It is different now.”
EconE: take a look at the second page of this:
http://www.alanpope.com/Mar08/All_NWMLS.pdf
Thanks jon…I checked it out and also compared it to my own redfin searches showing the last 3 months of sales. The 3 month numbers are about the same as the total of Jan, Feb and March numbers for sales…however…the numbers are actually much uglier than those charts show. I’ll point out whereI feel the spin is on these numbers.
For example…ahhh…I’ll throw a few examples out.
Here’s a couple from the most egregious offender of those numbers. It is an apartment complex in Bellevue that is actually listed as 102 different sales on Redfin. I won’t link every one for times sake…but yes…you read correctly…One Hundred and Two “counts” for that one sale.
http://www.redfin.com/stingray/do/printable-property?external_id=61120
http://www.redfin.com/stingray/do/printable-property?external_id=31344
Plus there are quite a few “whole” apartment complexes listed too….such as…
http://www.redfin.com/stingray/do/printable-property?external_id=2068963
http://www.redfin.com/stingray/do/printable-property?external_id=2060240
http://www.redfin.com/stingray/do/printable-property?external_id=2060775
and many many more.
Then there are the parking spots that are listed as sales…such as the ones that came with this condo…
condo …
http://www.redfin.com/stingray/do/printable-property?external_id=61201
parking spot (or storage?) #1 & #2…
http://www.redfin.com/stingray/do/printable-property?external_id=51457
http://www.redfin.com/stingray/do/printable-property?external_id=68679
See what I mean?
U G L Y
thanks jon…i replied but my comment never made it out of tims filter
one 1mm+ sale was listed 102 times on redfin. Once for each unit in the apartment complex that sold in bellevue
thanks for digging that comment out of the trash Tim. :o)
No problem. I try to check the spam bin once a day for false positives. But that still usually means a delay of at least a couple hours if comment gets wrongly flagged as spam.
Anyone know what’s happening to rental supply right now? Is all the overpriced crap out there renting? Or is rental supply building for another crash?
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