NWMLS: Sales, Prices Bump Up Ever So Slightly in June

Posted by The Tim on July 7th, 2008 at 1:05 PM · 107 Comments

It’s time for NWMLS June statistics.

Here’s the NWMLS press release: Housing Market Becoming More Balanced as Sales Climb to Highest Level in 10 Months.

Here is your summary along with the usual graphs and other updates.

Here’s your King County SFH summary:

June 2008
Active Listings: up 25% YOY
Pending Sales: down 27% YOY
Median Closed Price*: $449,700 - down 4.3% YOY

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.

Click to enlarge

The only other year we have detailed data for in which inventory dropped from May to June was 2003, when May was the peak. Has inventory finally peaked? Time will tell, but I think it probably still has a little ways yet to climb.

Click to enlarge

Pending sales also moved in the opposite direction from their usual pattern in June, jumping up noticably. However, this still was not enough of a boost to keep last month from having the fewest sales of any June on record.

Here’s the supply/demand YOY graph.

Click to enlarge

Some moderation on the inventory front, but sales are still in the gutter.

Here’s the chart of supply and demand raw numbers:

Click to enlarge

Months of supply dropped slighly, but stayed above 6.0, making June the tenth straight month of a “buyer’s market” in King County SFH.

Here’s the SFH Median YOY change graph.

Click to enlarge

We’ve already had a number of little upward spikes in appreciation during this rapid ride to price drops, and until we see what happens through the rest of the summer, we can’t say whether that little upward tick at the end is just more noise on the way down.

Was May the bottom for the local housing market? I doubt it, but I fully expect that these slightly positive numbers will bring all kinds of bottom-calling spin out of the woodwork.

Here are an excerpt from the blurb in the Seattle Times: Puget Sound home prices fall 6% in June

Getting move-up buyers to actually commit is a challenge, says Windermere agent Tim Lenihan.

“They’re the hardest to convince to move because they’ve lost so much equity,” Lenihan says. “I tell them it’s all relative. The house they want to buy is also down. But they’re waiting a few more months to see what happens.”

Meanwhile some buyers are waiting to see if prices fall more. John L. Scott agent Michael Orbino says he tells them that even a small uptick in mortgage rates could wipe out any sticker-price savings.

Nothing like a little bit of fear-mongering to move your product.

The Seattle P-I blurb just quotes the numbers: Value of houses in county down from 2007

Categories: Statistics
Tags: NWMLS, Statistics

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107 responses so far ↓

1 Rob Jellinghaus // Jul 7, 2008 at 1:19 pm

Tim, any chance you could dig up some stats on the local option / alt-A / subprime ARM reset rates? I’ve heard that the Seattle area has a remarkably low proportion of ARMs (something like 148th out of 229 major metropolitan areas), but I haven’t been able to find much detailed information.

It definitely seems that the bubble is less here and that the popping is slower here than elsewhere (no news to anyone given the 17-month offset you’ve always put on the Seattle relative price curves). My wife and I are renting now and won’t be buying for at least another 18 months, but I’m still curious to know what kind of ARM resets we’ll be looking at hereabouts. It seems that the subprime reset wave has mostly washed over Seattle without a huge amount of impact… what about option / alt-A ARMs? Anyone know?
2 Ubersalad, Ph.D // Jul 7, 2008 at 1:29 pm

I think the closet thing we have was that FED map, which lists out the % of subprime and alt-a loans. But like everything else relating to this mess, we don’t ever see the black and white number itself.
3 Scotsman // Jul 7, 2008 at 1:46 pm

Active Listings: up 25% YOY
Pending Sales: down 27% YOY
Median Closed Price*: $449,700 - down 4.3% YOY

How anyone sees the above stats as a “more balanced” market is beyond me. Realtors must have some special quality that the good Lord didn’t see fit to give me.

I’d ask if people really are that dumb, but sadly I already know the answer. And as Einstein said: “only two things are infinite, the universe and human stupidity, and I’m not that sure about the universe…” Gotta love them anyhow.
4 S-crow // Jul 7, 2008 at 1:51 pm

Calculated Risk is reporting that IndyMac is halting RETAIL and Wholesale with significant layoffs.

One less channel for borrowers to obtain loans for both purchases and refi’s.
5 Ubersalad, Ph.D // Jul 7, 2008 at 1:52 pm

Buhbye Indymac.
6 Scotsman // Jul 7, 2008 at 2:00 pm

http://www.michaelblomquist.com/complaint/OptionARM.htm

Not all you want to know, but a start on option arms.
7 Alex // Jul 7, 2008 at 2:00 pm

I really don’t like what I see…

Somehow, even after strong public evidence that the bubble burst, there’s way too many people willing to spend way too much money on housing.

For their sake, I hope the buyers that came out of the woodworks are using “real money”, rather than borrowing 4x their annual salary.
8 jon // Jul 7, 2008 at 2:02 pm

Scotsman, the move towards a balanced market that they are talking about is on a month to month basis, with MOS in King county down to 5.9 months. The figures you have listed are YOY.

I noticed that June King County SFH median price is up 2% from May. Must be gas prices.
9 patient // Jul 7, 2008 at 3:00 pm

In all fairness this is stronger numbers than I expected across the board. It’s still pretty weak numbers and I don’t think for a second that it’s a sign of any kind of bottom but still stronger than I expected.
10 softwarengineer // Jul 7, 2008 at 3:03 pm

STOCKS PLUMMETTED AGAIN TODAY

The stock market affects all of us, whether we invest in it or not. Its the longterm barometer of the economy. Its tanking in July, just like June.

The reason given: problems with Freddie lending, among other reasons. Is Freddie the guy with knives for finger nails and its victims are all of us?

This mess is worsening every day and a month of real estate investments are not a reason to take out the equity cash machine and start buying again.
11 unearthly // Jul 7, 2008 at 3:14 pm

According to the Map Of Misery, Seattle/Eastside has significant Option ARM exposure (~ 15%). How do you think all those post-1998 MS employees gobbled up million dollar Eastside homes.

And here’s the detonation cycle: Option ARM Reset Schedule Moves Up As Homeowners Feel Distress
12 Scotsman // Jul 7, 2008 at 3:15 pm

Jon- I know, but given the seasonality of the market YOY is all I find important. Simplistic, perhaps, but given the long cycle times involved (10-15 years) close enough.
13 softwarengineer // Jul 7, 2008 at 3:22 pm

THE FREDDIE AND FANNIE MONSTERS

Today’s Bloomberg Report:

Freddie Mac, Fannie Mae Plunge on Capital Concerns (Update4)

By Jody Shenn and Shannon D. Harrington

July 7 (Bloomberg) — Freddie Mac and Fannie Mae fell to the lowest in 13 years in New York Stock Exchange composite trading as concerns grew the two largest U.S. mortgage-finance companies may need to raise more capital to overcome writedowns and satisfy new accounting rules.

Freddie Mac fell 18 percent and Fannie Mae dropped 16 percent after Lehman Brothers Holdings Inc. analysts said in a report today that an accounting change may force them to raise a combined $75 billion. Speculation that the companies may take further writedowns also weighed on the stock, said John Tierney, a credit strategist at Deutsche Bank AG in New York.

“There’s a lot of apprehension about writedowns,” Tierney said. “If they have writedowns, they have to raise capital. How much do they raise and how easily can they do that? Those are the questions that everybody is asking.”

Fannie Mae and Freddie Mac have declined more than 60 percent this year, with declines accelerating in the past two weeks, on concern the companies’ capital raisings since December may not be enough to overcome writedowns. Washington-based Fannie Mae so far has raised $6 billion in capital to offset writedowns on mortgages it owns or guarantees. Freddie Mac, based in McLean, Virginia, raised $13.5 billion since December and said last week plans to add $5.5 billion probably won’t be fulfilled until late next month.

Growing Delinquencies

Freddie Mac fell $2.59 to $11.91 after earlier dropping as low as $10.28. Fannie Mae declined $3.04 to $15.74 and earlier fell to $14.65.

The new FAS 140 rule that seeks to stop companies keeping assets in off-balance sheet entities may force Fannie Mae and Freddie Mac to bring mortgages back onto their books, requiring them to put up capital, Lehman analysts led by Bruce Harting wrote in a note to clients today.

Fannie Mae would need to add $46 billion of capital and Freddie Mac would need about $29 billion, the Lehman analysts wrote.

The companies will probably get an exemption from the rule because it would be “very difficult” for them to raise that amount of capital, the analysts said.

Fannie Mae and Freddie Mac, “have been battered every single trading session,” said Quincy Krosby, chief investment strategist for The Hartford, which manages $380 billion in Hartford, Connecticut. “At some point they’re going to stabilize.”

`Apprehension’

As mortgage delinquencies grow at a record pace, the companies likely will take further losses, Tierney said. Banks repossessed twice as many homes in May as they did a year ago and foreclosure filings rose 48 percent, according to RealtyTrac Inc., a real estate database in Irvine, California. Home prices in 20 U.S. metropolitan areas fell 15.3 percent in April by the most on record, S&P/Case-Shiller home-price index.

“There’s probably an accumulation of events today that has focused investor selling,” said Christopher Sullivan, who oversees $1.3 billion as chief investment officer at United Nations Federal Credit Union in New York.

Fannie Mae and Freddie Mac were both trading at more than $60 as recently as October as they distanced themselves from accounting frauds that caused more than $11 billion of restatements. Then defaults on subprime mortgages caused the credit markets to seize up and credit losses to rise. The companies, which own or guarantee almost half of the $12 trillion in U.S. residential mortgages, were so integral to boosting the housing market that Congress lifted restrictions on their buying power to help revive the economy.

Agency Spreads

“The provision discussed by Lehman could have an effect on our ability to serve the housing mission,” Freddie Mac spokeswoman Sharon McHale said. “We would hope FASB would take into account our mission” when it writes the final rule, McHale said.

Brian Faith, a Fannie Mae spokesman, declined to comment.

Yields on agency mortgage securities relative to U.S. Treasuries rose to the highest since March 13 on concern that banks may need to sell off the debt.

Bank of America Corp., the second-largest U.S. bank, may sell mortgage assets after buying Countrywide Financial Corp., Kenneth Hackel, the managing director of fixed-income strategy at RBS Greenwich Capital Markets in Greenwich, Connecticut, said in a note to clients.

“Balance sheets are constrained,” Hackel said, referring to agency mortgage bonds. Bank of America spokesman Scott Silvestri declined to comment.

The difference between yields on the Bloomberg index for Fannie Mae’s current-coupon, 30-year fixed-rate mortgage bonds and 10-year government notes widened 7 basis points, to 204 basis points. The spread has climbed 18 basis points since June 18.

Freddie Mac, the second-largest U.S. mortgage-finance company, said it’s “unlikely” to raise capital until after reporting second-quarter earnings next month.

Capital-Raising Delay

Executives told investors in May that the company would obtain $5.5 billion in additional reserves by “mid-year,” after registering its common stock with the Securities and Exchange Commission.

The cost to protect the subordinated debt of Fannie Mae and Freddie Mac rose to the highest since March 17, according to CMA Datavision in London. Credit-default swaps tied to debt of Freddie Mac and Fannie Mae rose 18 basis points to 195 basis points, indicating deteriorating perceptions about the companies’ credit quality, CMA data show.

`Catching Up’

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company’s ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline, the opposite.

A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.

Fannie Mae contracts closed at a record 260 basis points on March 13, according to CMA prices. Freddie Mac contracts reached 263 basis points on the same day.

“The stock market has just recently been catching up with the risk perceptions of the bond market,” James Caron, head of U.S. interest-rate strategy at Morgan Stanley in New York.

To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net; Shannon D. Harrington in New York at sharrington6@bloomberg.net

Last Updated: July 7, 2008 17:04 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=asb4r81Ls6kE&refer=home
14 Ubersalad, Ph.D // Jul 7, 2008 at 3:25 pm

I really don’t think it’s necessary to copy and paste headline stories…please STOP.
15 [troll] // Jul 7, 2008 at 3:27 pm

Kng Cnty pndng sls nd prcng sm t b mprvng. Tht lng trm SFH prc chrt bncd f th ptrnd ln nd s hdd bck p.
Lks lk ll y rntrs mssd th Kng Cnty bttm cpl mnths g, lk Jnry. Gss y wr t bsy pstng hr.

Thr s stll hp, nvntry s frly gd lthgh dppng blw 6 mnths.

Wth ny lck w my hv strng smmr rsltng n sllrs mrkt gn cm th fll :-)

Nt mch f Bbbl, myb rnm ths st “Th Sttl Dp” s n By th dps.

prsnl nt t sftwrngnr: Thnks fr th hstry lssn n th stck mrkt. Y mght jst b th prfct cntrrn ndctr. s th bttm n nw?
D tll.
16 Ubersalad, Ph.D // Jul 7, 2008 at 3:30 pm

RAL, so how many properties are you in line to purchase right now?
17 [troll] // Jul 7, 2008 at 3:38 pm

n, s sn s sll.
18 [troll] // Jul 7, 2008 at 3:39 pm

BTW my cmmnts r bsd n lkng t th xcl sprdshts (Tm prvdd lnks t th tp)
19 Ubersalad, Ph.D // Jul 7, 2008 at 3:41 pm

so you’re selling your house at bottom and in line to buy another at bottom? sounds like a great investment tip, any other tip?
20 [troll] // Jul 7, 2008 at 3:48 pm

Pls tll m yr nt rlly Ph.D
21 Lake Hills Renter // Jul 7, 2008 at 3:49 pm

June 2008
Active Listings: up 25% YOY
Pending Sales: down 27% YOY
Median Closed Price*: $449,700 - down 4.3% YOY

That’s improving?
22 Ubersalad, Ph.D // Jul 7, 2008 at 3:51 pm

Improving: not as bad as before.
23 Ubersalad, Ph.D // Jul 7, 2008 at 3:51 pm

Of course I am Ph.D, just not from any school you heard of.
24 b // Jul 7, 2008 at 3:52 pm

This is still the Wile E. Coyote season for Seattle. If you look at CSI for all other bubble areas before us, the first season after peak only shows small declines. It is not until the second season after peak, where all hope by people refusing to budge on price or waiting to sell is lost, do things cliff dive. The sales pace shows that prices are still out of wack, right now its knife catchers and people moving up because they sold to knife catchers. I know several people myself (note: anecdotes != data) who either tried to sell and pulled off the market, or were going to sell but are now waiting until next year “when things are better”. When it turns out next March that nothing is better, and things are most likely much worse due to continued economic deterioration and interest rates rising, we are going to see the serious declines hit here.
25 James // Jul 7, 2008 at 3:53 pm

Don’t buy yet. We have NOT seen the bottom of this market. Our office has closed only three homes in the last 2 weeks, and we have no current offers pending. What does that tell you?
We do, however, have about 160 frustrated sellers.
26 Tsuru // Jul 7, 2008 at 3:53 pm

So, RAL, are you officially calling the bottom?
27 Lake Hills Renter // Jul 7, 2008 at 3:54 pm

RAL can’t call bottom, since he said he was leaving the site weeks ago.
28 NotaBull // Jul 7, 2008 at 3:54 pm

“One, as soon as I sell.”

Man, still haven’t sold that place?

"golly" dirty renters!!!
29 mike2 // Jul 7, 2008 at 3:55 pm

Rob, the Credit Suisse report from March 2007 put the % of IO and Negative Amortization loans in Seattle at 33% of originations in 2006.

This is about 10% higher than the US average. People in Seattle were stretchig 2 years ago.

http://www.billcara.com/CS%20Mar%2012%202007%20Mortgage%20and%20Housing.pdf
30 Tsuru // Jul 7, 2008 at 3:59 pm

"golly" dirty renters!!!

I don’t know about the rest of you all, but I certainly have my nose pressed up against the window of ownership. It’s okay though, because when I look through the window the only people inside are RAL and Tom Vu.
31 [troll] // Jul 7, 2008 at 4:03 pm

Lk Hlls Rntr // Jl 7, 2008 t 3:49 pm

Jn 2008
ctv Lstngs: p 25% YY
Pndng Sls: dwn 27% YY
Mdn Clsd Prc*: $449,700 - dwn 4.3% YY
……………..

Jly 2007 shwd th HGHST v prc pd vr fr Kng Cnty Sngl Fmly hm t $481,000

SFH’s hv clmbd bck p t $450,00 v n Jn, ftr fllng t $430 rlr ths yr.

Bbbl r Dp?

Dd y ll mss th bttm :-(
32 NotaBull // Jul 7, 2008 at 4:04 pm

“Did you all miss the bottom :-(”

No, I own a house already.
33 [troll] // Jul 7, 2008 at 4:07 pm

Ntbll
r y Ph.D ls frm sm schl n n vr hrd f?
34 b // Jul 7, 2008 at 4:08 pm

RAL -

I suggest you go check out raincityguide.com for other numbers. They break it down by price/square foot, condos, etc. The numbers show this quarter was basically back to Q4 2006 levels and that pending data shows prices are continuing to drop. People might spend $450k for a house still, but it is a larger and better house. The marginal stuff is not selling at all and won’t until the prices of it drop. Just wait until next year, I am sure when you put your home back on the market in March after failing to sell it this season you will be disappointed to find things are even lower by then. Every interest rate rise cuts your price, since buying at top dollar for the lowest interest rate is a great way to get "lick"ed over when rates rise and you want to sell. Your buyer can now afford to pay your much less, so now is the time to adjust your attitude towards business instead of emotion.
35 Scotsman // Jul 7, 2008 at 4:10 pm

I thought Tom Vu was on his boat with the bikini crew?

Lots of listings pulled in my area, unsold, waiting for the competition to decrease or prices to head back up. Those who need to sell keep dropping prices, but still no offers. One is down from $549K to $380K. Ouch. Another has dropped from $899K to $799K. Given what they paid 2 years ago that will be a big loss after transaction costs. There isn’t a bottom in sight, but there is a lot of pain and frustration is on the horizon.
36 Ubersalad, Ph.D // Jul 7, 2008 at 4:10 pm

RAL is obviously smarter than all of us, that’s why he’s selling and buying at the same time.
37 Lake Hills Renter // Jul 7, 2008 at 4:10 pm

Missing the bottom implies I am looking for the bottom, which is yet another of your incorrect assumptions.
38 Tsuru // Jul 7, 2008 at 4:11 pm

Did you all miss the bottom :-(

So can we assume this to mean you’ve taken your house off the market? Why would you sell at the bottom?
39 EconE // Jul 7, 2008 at 4:11 pm

You’d better raise your price RAL…now that the appreciation train is back.
40 [troll] // Jul 7, 2008 at 4:14 pm

tht’s why h’s sllng nd byng t th sm tm.
…………………

t’s ll rltv sn’t t?
Sll lw, by lw?
41 TC // Jul 7, 2008 at 4:14 pm

I have to admit that I have been following this site for quite sometime. The conversations have been interesting to follow and it appears that the same things keep jumping out at me.

First, trying to predict what the market may or may not do is difficult. So many of you think that the market may continue to fall. It may fall further, that may well be the case. This is your opinion. You can try to read the charts and make your decision.

What I have seen is an upward trend in home sales since Jan. maybe this is down from last year.

It looks like Seattle has had some downfall JUST like many other parts of the country.

Second, which has been said over and over again on this site NOW is not the time to buy. If you are planning on staying in your home over an extended period of time the market will come back. Again that is your opinion. People have to sell for different reasons.

I think you buy when the time is right for you.

For those of you waiting for the market to come down and then buy good luck I hope that you find the house of your dreams. I am not sure when you can figure out that the market has hit the bottom. If you can figure out please let everyone else know.

Also compared to other parts of the country Seattle may be considered expensive. I moved from California and found the prices up here to be less expensive then California. So I don’t agree with those of you who sasy that it is too expensive. I guess it depends.

I have rents in this area to be very affordable.

For those of you renting I hope that you figure out this magic break in the market and find the right time to buy.

For those of you who have a place of your own good luck on selling.
42 NotaBull // Jul 7, 2008 at 4:15 pm

“Notabull
Are you a Ph.D also from some school no one ever heard of?”

No, because I don’t have those little letters after my name. I think you’re confusing me with someone else.

Why did you come back? Internet contact from people that dislike you is better than your actual life? That must suck…
43 b // Jul 7, 2008 at 4:16 pm

isn’t it much smarter to buy now, then sell your current home next year for even more money? if this is bottom you can get a steal on your new house and then ride the gravy train on the old one. I am sure appreciation will more than cover your carrying costs for a year.
44 [troll] // Jul 7, 2008 at 4:17 pm

Y’d bttr rs yr prc RL…nw tht th pprctn trn s bck.
…………

Wldn’t tht b smthng, f sllrs strtd rsng thr prcs!
45 [troll] // Jul 7, 2008 at 4:18 pm

sn’t t mch smrtr t by nw, thn sll yr crrnt hm nxt yr fr vn mr mny? f ths s bttm y cn gt stl n yr nw hs nd thn rd th grvy trn n th ld n. m sr pprctn wll mr thn cvr yr crryng csts fr yr.
…………..

Wy t mny mvs, t mch hssl!
Frgtbtt!
46 Ubersalad, Ph.D // Jul 7, 2008 at 4:18 pm

Someone as intelligent as you should be selling at the peak, and buying 2 or 3 at the bottom…I am disappointed that you can’t sell your house and only buying one…
47 [troll] // Jul 7, 2008 at 4:21 pm

brsld,
m nt n th rl stt flppng bsnss, nvr hv bn, bt thnks fr yr cncrn.
48 b // Jul 7, 2008 at 4:22 pm

ral - how are there any more moves to that any selling and buying immediately? there is nothing different there, except you are leaving a bunch of money on the table by waiting to buy later and not getting top dollar for your current place. seems pretty stupid for a savvy investor like yourself.
49 Ubersalad, Ph.D // Jul 7, 2008 at 4:23 pm

So what inspired the move? Why are you selling and buying new home?
50 Civil Servant // Jul 7, 2008 at 4:31 pm

James @ 25: How does your office’s current activity level compare to happier times, for instance the same period in 2006 and 2007? Thanks — and I appreciate your uneqivocal don’t-buy-yet.
51 [troll] // Jul 7, 2008 at 4:43 pm

S wht nsprd th mv? Why r y sllng nd byng nw hm?
…………….

Lfstyl chng, mvng t th sn (rtrmnt)
52 matthew // Jul 7, 2008 at 4:46 pm

RAL couldn’t even survive a full month without SB!
53 biliruben // Jul 7, 2008 at 4:46 pm

You’re greed will be moving you from Filet territory through your golden years down to ground-round, if you wait too long and chase the market down, RAL.

I’m worried about your nutrition, man. Cut your price and sell!
54 Lake Hills Renter // Jul 7, 2008 at 5:08 pm

Ground round? There’s no way RAL would ever stoop so low as to eat like a loser renter.
55 EconE // Jul 7, 2008 at 5:20 pm

Face it RAL. You’re priced in forever. If moving to a sunny climate was really all that important, you would have already sold your gold encrusted rat-trap and would be blogging from the beach, toes in the sand with a drink in hand.

Enjoy the rain!
56 Alex // Jul 7, 2008 at 5:28 pm

On b’s comment:
>> People might spend $450k for a house still, but it is a larger and better house

This right here is the root of all our problems. 450k for a house in a place where median income is less than 80k is just WRONG. Why don’t people see that?

Even if you CAN afford such a house: If you buy an average house, and you intend to one day sell it, shouldn’t you expect to be able to sell it to people of average income??
57 [troll] // Jul 7, 2008 at 5:45 pm

lx,

Yr rgmnt fts ncly wth th cmmnst prty ln. Ths s mrc.
f y cn’t ffrd Sttl myb try Knt r Tcm.
58 June MLS Report: Inventory Down, Pending Sales Up | Redfin Seattle Sweet Digs // Jul 7, 2008 at 6:13 pm

[...] Seattle Bubble’s spreadsheet has more number crunching if you want to dig deeper. [...]
59 deejayoh // Jul 7, 2008 at 6:26 pm

You all missed the bottom, just like RAL missed the top.

Nobody getting all snarky on him for that one.
60 Captain Kirkland // Jul 7, 2008 at 6:26 pm

RAL- Congrats on having zero analytically ability…and absolutely no comprehension of general business concepts.

The only important number of the June numbers is that listings are up 25%. Higher Supply and lower demand = lower prices coming to a neighborhood near you.

Luckily, those of us that are educated can pray on chumps like you when you are begging to sell your house in a couple years at 40% less than it is now.
61 softwarengineer // Jul 7, 2008 at 6:32 pm

BAIL OUT THE SEATTLE BANKS?

I imagine it gets a bit disgruntled to talk about an anomalous data spread in June’s house prices in Seattle with a simultaneous need to demand taxpayers bailout bad contracts in Seattle to prevent more foreclosures.

Speaking of education credentials, what percentage of rich educated folks in Seattle are paying full asking prices for Seattle homes? Maybe the blue collar workers have more common sense than that? Just wondered [and I'm highly educated too].
62 Angie // Jul 7, 2008 at 6:47 pm

It’s so cute when you boys all antler-dance.

Hope everyone is having a good summer!

For my part, I think b back at #24 is on the right track. Sellers are hoping that they’ll be the one that reels in a (near) full-price offer. With as many properties as are on the market, in the next year or 6 months the prices will really start to fall as people realize that supply needs to balance with demand.

I also strongly suspect there is a *lot* of pent-up demand in the area, so that prices won’t fall as far as you all think or hope.

Luckily, those of us that are educated can pray on chumps like you when you are begging to sell your house in a couple years at 40% less than it is now.

“Lord, deliver us from the chumps, right after we rook them out of their houses!” Or did your highly educated self mean “prey”?
63 [troll] // Jul 7, 2008 at 6:57 pm

Cptn Krklnd,

f y wr ndd dctd lk yr ‘brs hr y ll wld b sttng n &qt;chclt&qt;ld f qty lk m. Bt yr nt.

Hw r y njyng yr cckrch nfstd rt trp wth n vr ncrsng rntl rt?

By th wy dntfy yrslf s Cptn Krklnd whn y mk n ffr nd wll b sr t tll y t stck yr ffr whr th sn dn’t shn.
64 b // Jul 7, 2008 at 7:08 pm

ral - if you have so much equity, then I am guessing your payments are either small or you make a lot of money compared to them. If that is the case, then why are you deciding to not buy right now, during the bottom, and carry your current house until you can get top dollar when everything rebounds at the end of this year? your prior explanation of “too many moves” is nonsensical, can you explain it further? My calculations show that you will move once either way, so what are you waiting for? Why not put your money where your mouth is?
65 jon // Jul 7, 2008 at 7:10 pm

“With as many properties as are on the market, in the next year or 6 months the prices will really start to fall as people realize that supply needs to balance with demand.”

MOS in King County is already balanced at 5.9. As people become confident in the local market, probably when the YoY figures are on a base last year that is after the credit meltdown, then sales will go up. That increase in sales will probably offset any increase in sellers that are currently holding off the market waiting for a better time to sell.

As for the post on activerain.com about $/sq ft dropping while price is increasing, that is a sign of people scooping up the bargains.
66 [troll] // Jul 7, 2008 at 7:10 pm

T mch dstnc btwn th 2 hms.
67 [troll] // Jul 7, 2008 at 7:13 pm

Bbblhds r n mssv dnl tht th Sttl SFH Mrkt s hldng t’s wn. Bst prfrmnc n th cntry! vn Tm “skwng” th tmng n hs grphs dsn’t hlp!

Hrd hr hr!!!
68 Captain Kirkland // Jul 7, 2008 at 7:27 pm

RAL- Its fairly obvious that you’re not that intelligent. That said, unless you’re a trust fund kid, I’m sure I would no interest in ever living in your neighborhood, so you can take your 1500 sq ft home in crapsville (that you think is worth 400k) and enjoy the nosedive of your equity.

I lived in San Diego for several years and heard a ton of people just like yourself talk about how San Diego is immune from this down turn. Unfortunately, their ignorance, as yours soon will, got the best of them.

King Co. inventory rapidly on the rise…exactly what happened in CA, FL and AZ before prices dropped 20%. As a renter with cash, I can’t wait.
69 wreckingbull // Jul 7, 2008 at 7:37 pm

I also strongly suspect there is a *lot* of pent-up demand in the area, so that prices won’t fall as far as you all think or hope.

What does ‘pent-up demand’ mean? ‘Pent-up’ for prices to return to a level supported by fundamentals such as household income and lending practices? If so, then I have to agree with Angie for once. Speaking of lending practices, I sure hope you were not counting on Indy Mac to un-pent your demand. OOPS!
70 jon // Jul 7, 2008 at 7:39 pm

Speaking of inventory, the first of Tim’s charts shows King SFH inventory at just under 12,000. The closest of the 3 inventory feeds is now the third one, which is 750 below the first one.

Did inventory really drop or is this just a reporting glitch?
71 david losh // Jul 7, 2008 at 8:31 pm

One of my contemporaries made an intersting point about high end buyers returning to the market place. It would prop up the medium sales price and lower the price per square foot. Larger properties have a lower price per square foot than smaller properties, it has to do with the price of the lot.
His reasoning is that for many months these high end buyers were sidelined because of falling prices. In June they were looking at making a better deal while inventory was still full. Some are waiting until July and August for the fire sale, but most want to be settled before the election.
72 beth // Jul 7, 2008 at 8:35 pm

“If you were indeed educated like your ‘bros here you all would be sitting on a "chocolate"load of equity like me. But your not.”

No, I’m not. I’m sitting on cash (sold in ‘06). It’s not what you make, it’s what you keep.
73 Alan // Jul 7, 2008 at 8:43 pm

“Pent-up demand” implies a belief that there are a lot of people who would buy at today’s prices if they thought prices were not going to fall. It assumes a non-linear price/demand curve where demand is a function of price, change in price, weather, and a bunch of other stuff. I think there is truth in that the real demand function is complex and depends on a lot of features, but I think the “pent-up demand” folk put too much weight on news.

If you model supply/demand with a standard demand curve, it is obvious that there is lots of demand at prices below today’s prices. As prices fall, more of that demand becomes active. But it is unlikely that a small change is price is going to bring the amount of demand needed to push price back to the peak.

Instead prices will asymptotically approach the equilibrium price that the price/demand curve defines.
74 NoMoreWork // Jul 7, 2008 at 8:49 pm

RAL,
What you’ve just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.
~I thought you were done with this site? what gives? sell, retire and leave already

Did anyone ever notice SoftwareEngineer never posts on topic but yet thinks his posts are important enough to have their own headlines? Awesome, just awesome.

IMHO, we are no where near bottom, but……. foot traffic at open houses is increasing, the weather is getting nice, interest rates are on the rise, gas prices are holding up the close in areas and the negative media is starting to die down…. yes, it’s a great time to buy buy buy!!! Just ask WaMu and their shareholders: Whoo Hoo!!
75 magnolia44 // Jul 7, 2008 at 8:57 pm

lol Sky Fall yet?

in other news i bet the savings portfolio is holding up even better..let me guess the 80 - 100k you have saved is in cash right guys?

lol
76 Captain Kirkland // Jul 7, 2008 at 9:31 pm

Magnolia- another presumptive post from an ignorate home owner. Personally, I’ve owned several places in the past 10 years. ..made great money on all of them, but also knew when to cash in my chips. Now, I’m going to sit back and watch all the homeowners pound their chest on how stupid it is to rent, then watch the value of their home fall 20- 40%. Get your popcorn ready…its going to be an exciting show.
77 MacAttack // Jul 7, 2008 at 9:34 pm

in other news i bet the savings portfolio is holding up even better..let me guess the 80 - 100k you have saved is in cash right guys?

No, it’s almost all in equities.
78 kruser // Jul 7, 2008 at 9:39 pm

RAL is baiting.

This is a dead cat bounce.
79 mikal // Jul 7, 2008 at 9:48 pm

It looks like either we are at the bottom or a temporary rise. The next six months will speak volumes against any of the wasted time I just spent reading all these posts.
80 magnolia44 // Jul 7, 2008 at 10:22 pm

mac that’s my point equities that are dropping monthly last I checked more than Seattle home prices from peak.
81 mukoh // Jul 7, 2008 at 10:27 pm

I think there is a lot of pent up demand for people who want to buy as traffic on new home construction plats is high.
The factor that keeps people back is all the news of bubbles bursting and bloggers being smarter then bankers. Even if prices fell to $100 per sq ft, if there is enough bad news out there it will keep buyers on the fence even if they can afford it easily.

And if you are making $80k a year and living in metropolitan seattle and renting maybe its a good idea to look for a job that actually pays you a decent salary.
82 EconE // Jul 7, 2008 at 11:49 pm

“And if you are making $80k a year and living in metropolitan seattle and renting maybe its a good idea to look for a job that actually pays you a decent salary.”

Ahhhh…thanks for our daily dose of smug PNW passive-aggressiveness.
83 Michael // Jul 8, 2008 at 2:01 am

EconE.

Don’t you love how people that have time to hang out all day posting on blogs are all millionaires, dating supermodels, and extremely generous in their advice.

BTW. I hate to gloat but we had a discussion about six months ago about ways to short the real estate/mortgage market and a lot of people suggested SRS and SKF. Anyone looked at the price lately! Thank you god, thank you god, thank you god.

PSSS. Please repost the old discussion so I can reference our collective genius.
84 Buceri // Jul 8, 2008 at 4:25 am

June 2008
Active Listings: up 25% YOY
Pending Sales: down 27% YOY
Median Closed Price*: $449,700 - down 4.3% YOY

Any way to know the area (sq. ft.) of that $449,700 home???
85 AMS // Jul 8, 2008 at 6:54 am

The headline should read something like, “Every individual month in 2008 is lower than every other corresponding month from 2000 to 2007.”
86 shawn // Jul 8, 2008 at 7:58 am

Article on where “not” to buy: http://tinyurl.com/buyNlose

Projected equity in 2012
Seattle: -108,427
Tacoma: -111,496
Bellevue: -114,151
87 shawn // Jul 8, 2008 at 8:08 am

So, seems RAL is correct, now is the right time to buy, that is if you want to lose about 100k in the next four years :)
88 Buceri // Jul 8, 2008 at 8:09 am

Note on Shawn’s linked article, that a low cost house is considered 75% of the median price.

For Seattle, today that would be about $336K.

They claim that by 2012 that house will be priced at about $ 228K.
89 Gary // Jul 8, 2008 at 8:09 am

All this aside, even IF your house IS worth $450,000 now, what is that going to matter when it costs $500 a week to fill your fridge ? Our money is clearly losing value.
I believe inflation is much higher than is being reported ( at least it is for me! ) things are costing a lot more and it has a cumulative effect on my accounts.
Likely the fed will raise interest rates which will increase the cost of borrowing money.
Buyers can only pay $XXXX per month period.
There is only one way this scenario can play out and it isn’t going to be that prices will increase.
90 Geordie Romer // Jul 8, 2008 at 8:38 am

Second Quarter stats are now available for Leavenworth at http://www.myleavenworth.com We have seen a slowdown YOY that we weren’t seeing in the First Quarter. Appreciation has flattened, but sales volume is really down. The Leavenworth market hasn’t been tied to affordability or to local wages in a long, long time. Since it is a vacation market, this is about consumer confidence, which we all know is in the gutter.
91 EconE // Jul 8, 2008 at 8:46 am

Geordie…

I’ll bet that many vacation markets were tied to people cashing out equity on their primary residence for that 2nd home.

Who’s gonna buy now?

I’m expecting resort property to really plummet in price with very few exceptions…such as Aspen and Vail.

Leavenworth? Not even in the same league.
92 EconE // Jul 8, 2008 at 8:51 am

BTW…interesting article in the NYT today. Bernanke says no more exotic mortgages…well…pretty much.

http://www.nytimes.com/2008/07/09/business/09housing.html?hp
93 deejayoh // Jul 8, 2008 at 8:51 am

I have a problem with the basic premise of the article that Shawn linked in #86. All of the conclusions of the author are based on this assumption:

Using a rule of thumb that truly affordable homes cost no more than 15 times their annual market rent

Where an affordable home is defined as 75% of median home price.

Quick check of history for Seattle - back to 1985 - indicates that the median home price has never even approached a 15x multiple. The long run average (before the recent run up) for Seattle is closer to 25x. And 75% of 25x =19x - which means they are overstating the potential decline by a full 25%. And I would guess for most of the cities on the list the same is true.

The idea that there is some “rule of thumb” that you’ll revert to a 15x multiple is not supported by any data I have seen.
94 mukoh // Jul 8, 2008 at 9:01 am

EconE,
No problem on the remarks, hope they helped you out :).
95 Sarge // Jul 8, 2008 at 9:01 am

I agree Gary.

With inflation out of control the fed will have to raise interest rates, forcing housing prices even lower. I will not be surprised to see 15% interest rates again (the loan on my first home was 18%). If you can afford a 400K home with today’s 5.75% interest rate you will only be able to afford a 100K house with a 15% interest rate. It would be interesting to see how interest rates have affected housing prices (although it might be a difficult correlation due to the many factors that affect housing prices).
96 Geordie Romer // Jul 8, 2008 at 9:05 am

EconE-

Certainly some buyers were bringing home equity to the closing table and even more so in retirement communities where buyers were actually moving into the recently purchased homes.

A large number of buyers were also cashing in stock market gains for downpayment (or full payment) on their vacation home.

Unfortunately, I don’t have any data showing us where the money came from.

Anecdotally, the number of folks looking to purchase homes seems like it is holding steady. The number of qualified buyers remains high and I haven’t heard of many difficulties with financing getting approved.

What I see on a daily basis is buyers waiting longer to become comfortable with the idea of the buying a vacation home in a time of economic uncertainty.
97 laxtosnoco // Jul 8, 2008 at 9:07 am

“If you can afford a 400K home with today’s 5.75% interest rate you will only be able to afford a 100K house with a 15% interest rate.”

That’s laughable. If I have a reasonable downpayment saved for a $400k house (20% or $80k), I could almost buy that $100k house for cash. Heck, why not put it on my credit cards and earn some points?
98 Gary // Jul 8, 2008 at 9:10 am

Sarge,

15% would be devastating! I hope that doesn’t happen.
Tim, is there a way we could look at how rates affect housing prices ?
Maybe that would put in perspective how deep an affect a point increase can have…
99 AM/PM // Jul 8, 2008 at 10:25 am

I agree with some of the comments here. Whether it’s good time to buy or not, it just depends.
We bought a house that was on the market a year ago for 1.1M (ok, 1,980,000 or 1,890,000 I dont remember), we bought it for 850K. I mean, it’s a good deal to us. We like the house, we love the location (DT Kirkland), and we see ourselves live in this house for the next 20-30 years.
So again, it really depends, for us, it made sense. Im not going to lose sleep if the market goes down/up, coz we want to be there for a long time, and the house (final price) is within our budget.
100 Sarge // Jul 8, 2008 at 10:59 am

I’m talking about first time buyers laxtosnoco. They are the people who drive the higher end market in a traditional housing environment. Even if a first time buyer saves 80K they can still only afford a house around 200K, not even close to your 400K house. Do the math if someone on a $2,300/moth payment.

Im just giving examples of what will happen if interest rates go up to 15%.
Try a conversation instead of insults.
101 NotaBull // Jul 8, 2008 at 11:26 am

“15% would be devastating! I hope that doesn’t happen.”

If inflation hits 15% or some other silly high number, then we’d probably be in a wage-price inflationary spiral. So wages would be going up which would somewhat offset the lack of affordability brought in by the higher interest rates.

During the period 1970 to 1980, retail prices went up 97%. However, wages also went up 98%. This was a period of fairly high inflation in US history and wages and prices were both heading up at an average of 7.5% each year. The 18% mortgage rates were the absolute and temporary peak and hit at about 1982. So while mortgage rates went from 8% in 1970 to 15% in 1980, wages also doubled. The same factors driving wages and prices higher were also driving rates higher. When inflation and expectations moderated, so did rates.

Expecting interest rates to go up to those levels again pretty much implies you expect the economy to go back to that state, which is highly unlikely IMO.
102 Sarge // Jul 8, 2008 at 12:41 pm

I doubt it too, lets hope thinks don’t get that bad again! The stag-flation and spiral inflation during the ’70s was no fun. I was just pointing out the worst case scenario and I admit my example was exaggerated but it is not impossible. We are already seeing faily high inflation so Interest rates will have to go up to get it under control (hopefully they will have the guts to raise interest rate before inflation hits 7+%).