It’s time for NWMLS statistics. Let’s have a look at how May turned out.
Update: The NWMLS press release is now live, with a headline that does not disappoint: Northwest MLS Brokers Report Buyers Slow to Take Advantage of Market Conditions. You can download the latest stats pdfs there as well.
Here is your summary along with the usual graphs and other updates.
Here’s your King County SFH summary:
May 2008
Active Listings: up 42% YOY
Pending Sales: down 39% YOY (new record)
Median Closed Price*: $440,000 – down 6.2% YOY (new record)
Here is the updated Seattle Bubble Spreadsheet, and here’s a copy in Excel 2003 format. Click below for the graphs and the rest of the post.
Here’s the graph of inventory with each year overlaid on the same chart. I had to adjust the vertical axis range to accomodate the fact that inventory continues to set new records monthly. Yowza.
Sales dropped from April to May, only the second time this has happened since 2000. However, sales from March to April increased, which is equally uncommon, so it would appear that the bump in April sales simply borrowed some buyers from May. Note that not only were May sales down a record-breaking 39% over last year, but they also came in 20% lower than the prior record-low sales volume for May set in 2000.
Thanks to the big drop in sales, months of supply (active listings divided by pending sales) jumped up a bit to 7.0. May is now the ninth straight month of MOS above 6 (considered a buyer’s market) for King County SFH.
We’re still quite a ways from a “normal” housing market here.
Here’s the supply/demand YOY graph.
Had to adjust the vertical scale on this one as well due to the record drop in sales.
Here’s the chart of supply and demand raw numbers:
Increased the vertical scale to account for the record number of listings.
Here’s the SFH Median YOY change graph.
And yet another one I had to adjust the vertical scale on, to adjust for the record-breaking decline in prices. Who could have possibly seen this coming?
Well, it doesn’t look like April was the bottom after all. I wonder if we’ll get to read some entertaining quotes from local agents about “foot traffic at open houses” and how the market is “set to rebound.” Stay tuned.
Update: Here are a few excerpts from the blurbs from the Seattle Times and the P-I.
Seattle Times: House prices fall again in May; Seattle condo prices up
…while real-estate firms tout this spring as an ideal time to buy because the selection of homes is larger than it’s been in years and sellers are ready to deal, buyers apparently remain unconvinced.
…
“Open-house traffic is picking up, and buyers are coming off the sidelines to make buying decisions,” Dick Beeson, broker/owner at Windermere/Commencement Associates in Tacoma said in a statement.Beeson credits the activity to buyers realizing that interest rates could creep up, canceling any gain they might see by waiting to prices to fall further.
Ha, sweet. Already with the “open house traffic” nonsense, plus some fear-mongering thrown in for good measure. I love it.
Seattle P-I: King County house prices drop
Area home sellers appear to be blinking first in what has been a months-long standoff with buyers.
…
The price drop has “already happened,” said Mike Skahen, broker of Lake & Co. Real Estate. “It’s a great time to negotiate with sellers.”He reported a noticeable pickup in close-in Seattle markets and blamed slowness on negative press reports.
Dick Beeson, broker/owner of Windermere/Commencement Associates, in Tacoma, blamed the gray weather.
“We still haven’t had summer hit us yet as the weather remains cool, wet and cloudy,” he said. “I expect both temperatures and the market to heat up as summer approaches.”
This stuff is seriously hilarious.
I bet MOM is up. There is no housing bubble and it’s always a great time to buy.
Sincerely,
Just about every real estate “professional”.
Also, if I may be allowed to “geek out” for a moment, I’d like to point out that in 4 of the 8 years between 2000 and 2007 (inclusive), May was the high point for sales. The most that monthly sales in a year ever got above the level set in May was in 2003, when July was 6.2% higher.
So most likely, the market is not going to “heat up as summer approaches.” Sorry Dick.
Top Month for King Co. SFH Sales, 2000-2007
OVERPOPULATION IN AMERICA PRIMARILY CAUSED THE RECENT HOUSING PRICE AND SIMULTANEOUS WAGE COLLAPSES
Here’s an interesting NubersUSA thesis on birthrates in America and how overpopulation is directly related to immigration, not the Baby Boomers’ depopulation birth rate, states in part:
“…Cause #1: U.S. Fertility Dropped Below
Replacement-Level Rate in 1972
In 1972, the U.S. Total Fertility Rate fell to below the 2.1 births per woman that marks
the replacement-level fertility rate. By 1976, fertility had hit an all-time low of 1.7
and hovered just above that for years.
A common remembrance of aging population activists is their memory of the night in
1973 when TV broadcasters announced that the 1972 U.S. fertility rate had reached zero
population growth. The American people apparently were profoundly confused by this
announcement, with many believing the U.S. population problem had been solved. (In
fact, because of what demographers call “population momentum,” it takes a country up
to seventy years after the replacement-level fertility rate is reached to actually stop
growing. But by 1972, the fertility rate had indeed declined to a level low enough to
eventually produce zero population growth, as long as immigration remained reasonably
low.)
With zero population growth supposedly achieved (or at least approached), many
people in the population movement may have felt their activism was no longer needed.
Americans had reduced the size of the average family as far as was necessary. On average
they were living up to the rallying cry of “stop at two.” Many activists shifted their
former population energies into feminism, other aspects of conservation and
environmentalism, or moved on to other pursuits altogether. “Full-Formula”
environmentalism that dealt with both Individual Impact and Population Size factors
shrank to a small core constituency as quickly as it had burst into a mass popular
movement. The population committees of environmental groups lost popularity and
significance or disbanded altogether.
The neglect of the population issue within organizations surely influenced new
employees as they came on board during this period. Many of them probably never heard
of the “full-Formula” environmental approach. They worked only on the Individual
Impact side of the Formula. Many had little background in the natural sciences, resource
conservation, or analytical/quantitative fields. To them, population advocacy may have
looked like an external issue that could easily be left to external groups to handle.
Perhaps another factor was at work as well. The overwhelmingly non-Hispanic, white
leadership of the environmental movement may have felt it was defensible to address
population growth as long as the great bulk of this growth came from non-Hispanic
whites, which it did during the Baby Boom. But the situation changed dramatically after
1972. From that year forward, the fertility of non-Hispanic whites was below the
replacement rate, while that of black Americans and Latinos remained well above the
replacement rate.22 To talk of fertility reductions after 1972 was to draw
disproportionate attention to nonwhites. Certain minorities and their
spokespersons—with long memories of disgraceful treatment by the white majority and
acutely aware of their comparative powerlessness in American society—were deeply
suspicious of possible hidden agendas in the population stabilization movement. As the
Reverend Jesse Jackson told the Rockefeller Commission, “our community is suspect of
any programs that would have the effect of either reducing or levelling off our
population growth. Virtually all the security we have is in the number of children we
produce.”23 And Manuel Aragon, speaking in Spanish, declared to the Commission: “what
we must do is to encourage large Mexican American families so that we will eventually
be so numerous that the system will either respond or it will be overwhelmed.”24
During the twenty-six years after 1972, the non-Hispanic white share of population
growth declined significantly from the 1970 era.25 Thus, by the 1990s, a majority of
the nation’s growth stemmed from sources other than non-Hispanic whites (especially
Latin American and Asian immigrants and their offspring). Environmentalist
leaders—proud and protective of their claim to the moral high ground—may have been
reluctant to jeopardize this by venturing into the political minefield of the nation’s
volatile racial/ethnic relations through appearing to point fingers at “outsiders,”
“others,” or “people of color” as responsible for America’s ongoing problem with
population growth….”
The rest of the URL:
http://www.numbersusa.com/content/files/pdf/Retreat2.pdf
I find it insulting as a scientist type [and a Baby Boomer] that Seattle price growth preachers insist on “politically correct nonsense about racism” to keep our country from simply looking at pragmatic facts about the demography facts that overpopualtion has grown horrifyingly worse [Seattle's population has grown 5 fold since 1990]. The Seattle Price Growth Preachers are in complete denial over the cause of the subprime mess, as its clearly America’s overpopulation and primarily caused by uncontrolled legal/illegal immigration since 1980.
Well darn, that turned out to be a rather short selling season… one whole month… April.
softwarengineer, how comfortable are tin foil hats anyway?
Off topic –
Pacific northwest real estate news, including articles from the Bellingham HeraldNet, are referenced in Ben Jones HBB today.
The Light at the End of the Tunnel is Definitely There
"golly" newspapers ruining realtor’s careers.
maybe we should get the newspapers to print stories about how gas prices will fall, the environmentally will self-repair in the next decade, and world peace will be established.
“Seattle’s population has grown 5 fold since 1990″ -softwareengineer
No, actually the seattle area population has grown at about 1/20th to 1/16th of “five fold” since 1990. (depending on your definition of the area)
Seattle Metro (king, snoho, pierce)
1990: 2,559164
2007 3,203,314
25.17% growth
Seattle combined metro area (adds thurston, kitsap, skagit)
1990: 2,989,688
2007: 3,919,624
31.11% growth
1990 census #’s
July 1 2007 census estimates
softwareengineeringdisaster
“[Seattle's population has grown 5 fold since 1990]”
I don’t have a clue where you get numbers like that. I’ve lived on the east side since 1957 and have seen many changes in this area, but a 5 fold increase in the population sure isn’t one of them. Here are some stats from wikipedia for Seattle and King County population:
http://en.wikipedia.org/wiki/Seattle
1960 557,087
1970 530,831
1980 493,846
1990 516,259
2000 563,374
As you can see, Seattle population dropped for several decades and did not reach it’s regain its 1960 level until the late 1990’s.
http://en.wikipedia.org/wiki/King_County%2C_Washington
1920 389,273
1930 463,517
1940 504,980
1950 732,992
1960 935,014
1970 1,156,633
1980 1,269,749
1990 1,507,319
2000 1,737,034
2006 1,805,461 est population from the UW – google it if you don’t believe me.
Kings Countys population took 86 years to increase by 5 fold.
That’s the second time in the past couple of days that you have made this ridiculous assertion. Get a grip on reality! LOL
Interest rates have already risen over a half percent in the last few months.
They just don’t want you to know it.
Ooops, Seattle CSMA includes Mason and Island counties as well.. (mason? really?) so it was 3,088,224 in 1990 for 26.92% growth in total population since.
King county house prices drop
-Aubrey
House prices fall again in May; Seattle condo prices up
-Rhodes
“Last month’s in-city median house price, $475,000, was up significantly from the previous month’s $440,000, but still reflected a 2.7 percent decline from the previous May 2007.”
Wow. Seems like gas prices are making people want to stay close in.
why, pray tell, don’t the Realtors(r) get that the faster prices fall, the faster their sale will go up again? Isn’t cheerleading to prop up the market against their best interest. Do they have so may investment side gigs that they are compromised towards the upside? Are they worried about pissing off past clients who they counseled to buy?
Any help here, board?
“Wow. Seems like gas prices are making people want to stay close in.”
With pending sales so far down the noise in the MOM numbers for Seattle is going to get louder and louder. Don’t be surprised to see quite a few more dramatic shifts both directions in the months ahead.
“Any help here, board?”
They’re just trying to mitigate the disaster as much as possible. Every seller duped into buying helps.
There will be a time when prices bottom and people start buying again. I’m sure they’d prefer that to be at a 400k median than 250k median. 3% commission and all.
I agree with deeplennon, it’s difficult to pull meaningful macro-data like price changes out of such a small sample. April and May saw 516 and 549 respective closed home sales in Seattle proper, and the YOY pending sales drop was only slightly lower than the county as a whole: -34% vs. -39%.
ok. Mr Beeson sez:
Ooh. bad weather, but foot traffic is picking up. So the weather is not keeping out of open houses, it’s just keeping them from opening their wallets? OK, I get it. Then when the weather is good, they’ll go to the beach – but buy houses. right.
Seriously?
Oh, and Mr Beeson is from Windermere TACOMA. You know, home of Median home price continues to decline in Pierce County
April – June is when most families buy houses (work relocations notwithstanding). School is wrapping up, buy the house, move the kids, then have all summer for vacations and working on the new property. I thought that was common knowledge? I almost feel sorry for these RE agents who think July and August are going to be great selling months, and it’s going to pick up big time in the fall.
OK, that’s a lie, I don’t feel at all sorry for them, especially the ones who had to remind us constantly how much money they were making the last few years.
The breakouts are live. The area I just sold in is showing 21% declines YOY. Phew!
“Don’t be surprised to see quite a few more dramatic shifts both directions in the months ahead.”
True, but housingtracker.net has been showing the high end increasing in most expensive areas. So it may also be the effect of the new limit on conforming loans.
Yowsa.
Look at the blood oozing from the walls into the spacious lawns of Issaquah. Down nearly 24% YOY.
And West Bellevue. Up nearly 19% to a whopping 1,350,000 median, but only sold 23 houses vs the 60 sold last May! The uber-rich are still buying and paying too much, but it appears they are lonely at the escrow office.
Housing tracker show list price (i.e. fantasy), not sold.
Burien down 21%. I guess it wasn’t the “New Fremont” after all.
“Northwest MLS Brokers Report Buyers Slow to Take Advantage of Market Conditions”
That is too much! Tim, are you sure a Naked Loon fake headline didn’t bleed over to this site by accident?
And Kitsap leads the way with Res + Condo YoY closed sales prices down 14.33%.
“Interest rates have already risen over a half percent in the last few months.
They just don’t want you to know it.”
What I find interesting is that there is STILL a 1-1.5% PREMIUM for jumbo loans. That CAN’T be good for the upper end of the market, and it must also slow the trade-uppers (yes, there still are some), who are stuck then as well.
I know, I was thinking along the same lines… “Dang NWMLS, muscling in on my local parody news territory.” :^)
Speaking of parody, perhaps when the ‘bubble’ is done you can change the focus of this site.
http://www.waltlockley.com/manhattandome/domeappendix.htm
It might be very popular in a few years since I hear the land support glaciers are getting ready to melt.
This was in one of the articles and seems really true, especially in city
On my street two houses have sold recently for what I considered very high prices, while two other houses sit on the market for considerably less money. One of the “stuck” houses has a dubious remodel on a busy corner, and the other has not seen anything new since the 70’s. Both of the houses that sold were tastefully redone without any glaring problems.
People who are buying right now are not investors, and only seem interested in quality properties that are complete.
The only issue they have is no one wants to buy them
There are 2 or 3x the number of houses on the market as there were 2 years ago, and those were selling faster than they are today. Even the dubious ones
I know only the bare bones about the hypothesis that house price trends lag a year or 2 behind sales volume trends.
In the Sales Pending table in the NWMLS article, the upward monthly YOY volume trend was broken in Nov, 2005. From then till now, monthly YOY volume has been negative every month except Feb, 2007. Does anybody out there know enough about this hypothesis to comment on when it would predict a halt to the current price drop trend?
If I understand it correctly, it’s predicting falling prices at least through mid-2009.
6.2% down for an asset that was touted as bullet proof in a bullet proof market and the best investment you will ever make ( I heard this one of 1000AM as late as of today ) is serious business. The local re-industry is about to experience the very powerful psychological aspect as well as the financial aspect working against them instead of for them. At this stage it’s unstoppable, finally.
deeplennon // Jun 5, 2008 at 2:10 pm
Well darn, that turned out to be a rather short selling season… one whole month… April.
Look at interest rates during April. There were some good deals on mortgages driving this “high” (cough, cough) sales volume.
Now that the Fed has signaled no more rate cuts, average rates have crept up above 6% again.
Flotown brings up a confounding question which I can’t stop asking. Are these perma-bull real estate agents so stupid that the don’t understand the sooner prices fall, the sooner volume will pick up, and the sooner they see a respectable paycheck again? I am sure some will say they are doing great, but when you look the decline in sales volume, it is obvious that most are not.
Heck, way back in a prior life when I was a sales chump, I always looked forward to when my company got desperate and allowed me to chop widget prices. The increased volume always overcompensated for my lower commissions and I had my best months ever.
I think the simple answer is that many of these clowns are heavily vested in real estate on a personal level and risk to lose their shirts if even a moderate downturn materializes, (and based on these numbers, we are getting close to that)
I live in Maple Leaf and drive through Ballard on my way to work each morning. There is a lot more sale signage in front of the townhomes and many more houses on the market than there were a couple of years ago that is for sure, but I have been in snohomish recently as well, and there is not nearly the for sale / land use notice density in city as there.
The Real Estate industry is going to contract by at least whatever portion of the industry served flippers, small investors and people on the “property ladder” my guess is that at least 20% of the transaction volume is gone, never to return.
9 mark The only (slightly) mitigating factor to the lack of population growth in Seattle proper from 1960 to present is that the actual square mileage of the city declined since then. I can’tremember the exact % change off the top of my head but it was around 15% – still, it is amazing that the population has remained so stable over 50 years, even if the boundaries were re-drawn a bit.
wreckinbull, I think most are not smart enough to value their income more than their assets. It’s seems incredible that anyone could do that but I think it’s true in many cases.
wreckingbull Are these perma-bull real estate agents so stupid that the don’t understand the sooner prices fall, the sooner volume will pick up, and the sooner they see a respectable paycheck again?
They also know that the vast majority of second home buyers and move up buyers depend on equity to make that purchase. I’d even say that a number of first time buyers are dependent on equity – their parents equity – to make that purchase.
Where I’m at, certain areas have already seen prices plunge 40%+, and the reality is that the people buying these properties aren’t first time buyers. They’re investors that continue to leverage equity.
Lots of knife-catching going on as the market falls. Still, it IS overwhelmingly equity driven. The Relitters know this. Expect to see the same in Seattle. The correction is still in its infancy and I don’t expect a bottom until the first few waves of knife catchers have lost their ability to double down.
wreckingbull -
I think its just cognitive dissonance. A lot of used house salespeople got into the game in the last 5 or so years when the market was hot and they likely really do believe the hype. You can see it in action over at RCG, older agents seem to have adopted to the new market dynamics whereas the younger ones are in a futile fight against them.
When will Seattle move from Denial to Panic…How will $5.00/gallon price combined with increasing interest rates, much tighter lending standards affect pricing and finally move local mentality into panic…we should closely watch the increase in new listings and compare them to previous down cycles…just a thought.
I just can’t wait until they change the name of this blog to the “Seattle Interest Rate Bubble”.
Bernanke is done cutting rates. The European Union is contemplating a rate hike, which will put further pressure on Bernanke to hike interest rates to stave off the already cripling inflation. Banks are hurting for cash and are already feeing people to death, they have stricter and costly credit score-based interest rates, and will need to raise interest rates to keep afloat. Our 40-year low in interest rates will be a story we tell our grand kids.
When will be the best time to jump in based on price alone? Who knows. I look forward to the day when this blog declares “NOW IS THE TIME TO BUY!” and everyone buys a home and drives the prices up.
Betting that you will be able to “Refinance at a lower rate in the future” is exactly what caused the “ARM-People” to sign on so blindly and foolishly. Now that there is even more of a premium associated with your credit score, you best hope that you are one of those statistical outliers of a renter that happens to have a 720+ credit score. The fact of the matter is most renters do not… especially the newly foreclosed on and now renting individuals. This in turn will put more renters in the market and upward pressure on rents price.
Most Americans do not and likely will never save 20% to put down on a house. I keep seeing that assumption plugged in to many of the theoretical scenarios on this blog. For realistic situations, I think you should plug in 3% -5% down payment to any of your pricing scenarios. Then run the interest rate up to 18.1% like it was back in the 80’s. When you do that, things look completely different.
My advice, research and know exactly where you stand. If buying a home is right for you, and you find a home you can afford, and you plan on staying there or renting it out when you are done, then buy one. There are a lot of stressed sellers out there, some are biting on low-ball offers why not go fishing for one? Another tip is to look for homes that are in the lower end in quality in comparison to the other homes in the neighborhood. You can put in some “Sweat Equity” and you still have tremendous upside. Lastly, look for neighborhoods in transition and think long-term.
If you think you can buy a house and flip it in six months at a huge profit YOU ARE NUTS!
There are always great deals in any market. Being fixated on price alone without considering the dozens of other factors is short-cited. Higher fees, higher interest rates, and tighter lending standards can have a drastic impact on the “affordability of a home” regardless of the price.
SEATTLE INTEREST BUBBLE HERE WE COME!!!
The only issue they have is no one wants to buy them
Oh sure someone will want to buy them IF THE PRICE IS RIGHT.
Price a house – any house – right and IT WILL SELL.
“Burien down 21%. I guess it wasn’t the “New Fremont” after all.’
Actually, Burien is the new Ballard. Just not as insanely overpriced.
Now I see why they call you “economist”
:D
Garth —
I’d say 40% of the volume is gone, never to return…..
You’ll also notice that most realtors don’t get that higher interest rates also drive down prices. All they know is that higher interest rates means lower affordability, but that’s where the thinking usually stops.
Question –
Is there are relationship between county revenues from taxes and housing sales? If so, what do people make of the projected budget cuts in King county through 2011? Are they saying that the market won’t recover until 2011?
The most scientific way to keep track of this real estate market before the NWMLS releases its information is the appearance of the FOR SALE sign wavers at intersections.
About a year ago I would only see them out of town. Then, on the edges. Now they are everywhere. Once they hit your neighborhood you know prices are dropping.
Once you see the signs waving it is a sign that it’s a bad time to buy.
The foreclosure numbers seem to indicate that if Seattle is chock full of investors holding highly leveraged loans, their arms have not reset yet or they still have enough cash flow to stay afloat.
I have heard from a couple mortgage brokers that they think there are many, many arms that are resetting locally this month. We will know soon enough, as there are few protections to save a second home from foreclosure and the whole process goes much faster. Tacoma seems to be experiencing this currently.
I think Portland is going to get hammered. I have been to Phoenix and Portland recently and Vancouver / Camas looks exactly like the suburbs around phoenix with long straight roads with too many stoplights and brand new houses as far as the eye can see. Portland may have had a plan for growth, but everyone I know who works in Portland lives in Vancouver.
I STAND CORRECTED
I heard on this Bubble Olympia had grown 5 fold, so assumed the same for the Seattle area, sorry for the confusion.
But give me a break, our same freeway systems in 1990 were totally clogged in the Seattle area with say 32% less people [although counting everyone that is undocumented with no social security card of their own becomes impossible], and Mayor Nickels wants to double our population in a couple decades. I still think being a Seattle alarmist on environmentalism with the Orcas near extinction and our Puget Sound dead areas from over-growth is way too late anyway.
Interest rates dont rise in a depression. This energy bubble will soon eat dirt. If europe thinks its going to raise interest rates into a recession, then let those arrogant morons do so, it’ll just drive the nail deeper in their coffin of inefficency. They have their own bulbbes to contend with. In the last stock market debacle in Feb, the dollar started going up, and it will again. The Europeans are behind our eonomic adjustment as well, although their lifestyle is better planned than ours. We can catch up, though, and once we do, we’ll be the Kings again. The energy market is being manipulated by the Repubs as a last-ditch money-making effort. They will be strung up for it very soon.
Dill Weed,
Your post was brilliant up until the partisan political rant, but otherwise you are a voice of reason.
Bubbles are like fashion… once it becomes uncool… it becomes uncool fast. Remember parachute pants and big hair? Poof… gone overnight. I miss those days. Trans-ams were still cool. Sophisticated women had big hair and big shoulder pads. Mullet wasn’t just a fish, but a hair style. Mmmm… mullet.
While Seattle and mnay other cities around are sl;owly unshackling themselves from the “We are special” attirude, Redmond still thinks it’s special:
http://www.pnwlocalnews.com/east_king/red/news/19569619.html
Propaganda parading as objective front page news in “Redmond Reporter”
AS
[...] just released a couple of days ago from the NWMLS, and there weren’t too many surprises here. Seattle Bubble gives an in-depth analysis on King County stats, along with the following King County SFH market [...]