Recent Spike in “Pending” Sales Due to Change in Definition?

At the risk of beating a dead horse, I feel we must revisit the “pending” issue once more. This time, we’ll take it from the top.

Prior to June of last year, a “pending” sale in the NWMLS system was defined as a sale in which an offer had been accepted, inspection and/or feasibility studies had been passed, and the parties were proceeding down the path to a near-certain closed sale. This is likely why on average, only around 5% of “pending” sales did not convert to “closed” status after 30 days from 2000 through 2007.

In late June of last year, the definition of “pending” changed. The biggest change was that homes that were previously considered “active” and “subject to inspection” were now part of a new category: “pending inspection.” Two other categories of “pending” status were added as well.

As recently as February of this year, I had received assurances that this change in pending statuses was not affecting the end-of-month statistics being reported by the NWMLS. We specifically asked their “statistician,” who assured us that the definition of “pending” used to calculate the end-of-month statistics had remained constant.

However, last week reader “One Eyed Man” reported receiving the following in an email from the NWMLS Director of Business Development and Member Relations (emphasis mine):

Our pending stats are based on the pending date received, so we count only the listings that went to pending during the month. In addition, all pending statuses count as pending. When a listing moves from pending inspection to pending, we do not count it again.

Since he stated that “all pending statuses count as pending,” it would seem that they are now counting “pending inspection” as “pending” in their end-of-month reports.

This is important for two reasons. First, we know for a fact that until at least July’s data, any year-over-year “pending sales” data is now useless. Second, if the change was made sometime between February and April, it could even be creating an illusory “spring bounce” (clearly visible in comparing the first two charts here), giving the pending sales data an extra bump that is not necessarily the result of additional buyer activity. That would also make the year-over-year stats useless until March or April.

Until we receive some straight answers from the NWMLS as to when exactly they changed how they report end-of-month pending sales, I don’t believe we can rely on any year-over-year comparisons of this metric. Please keep this in mind over the next year or so when we look at pending sales.

[Update]
According to a June 2008 message from the NWMLS quoted below by commenter JJL (a Realtor), the information I received in February via the NWMLS statistician was apparently completely false, and the new pending categories have been counted in the end-of-month reports since July last year. At least that answers one question. Unfortunately, we still have no way of knowing how many “pending inspection” listings tend to revert to “active,” or whether the percentage of the total pending sales that are “pending inspection” is increasing in recent months compared to the winter.

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

171 comments:

  1. 1
    JJL says:

    I want to clarify the statement of: “two other categories of “pending” status were added as well.”

    Even though this is what the NWMLS said, it really is misleading because we always had Subject to Feasibility and Pending BU requested. They were previously labled “Subject To”, hence the STI category. The “subject to” was dropped and changed to “Pending….”. So they were previously there, just called something else.

    Also here is the announcement from the NWMLS regarding the change: this may help you define how the MLS treats the pendings:

    “On June 24th 2008, NWMLS will change the available status choices to more accurately reflect the state of a listing. Active STI will become Pending Inspection and two new statuses will be created, Pending Feasibility and Pending BU Requested.

    All three statuses will appear in the pending section of the Hotsheet. Pending Inspection is used when the property has a signed Purchase and Sale Agreement and has an inspection scheduled. Pending Feasibility is used for listings where a purchase and sale agreement is signed pending a feasibility study. Pending BU Requested is used when the seller would like to receive back up offers.

    Once the inspection or feasibility study is completed the listing must be changed. The listing would be set to Active, if the inspection or feasibility study were not waived and the sale fails, or Pending, if waived.

    The pending date should not be altered when a listing is changed from one pending status choice to another. The pending date is the day the purchase and sale agreement first reaches mutual acceptance not when contingencies are waived or satisfied.

    All pending statuses are considered off-market and will be treated as follows:

    They will not accrue market time.
    They will be included in the Pending section of the NWMLS monthly published statistics.
    They will not be included in the NWMLS Standard IDX feed and cannot be displayed on a web site.”

    You are right regarding the difference in the new “Pending Subject to Inspection” skewing the numbers from prior year comparisons. Before this change, the “STI” was still considered an “Active” listing. Now it is considered a “Pending” listing.

    I can’t remember exactly when this took affect: July 1st perhaps?

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  2. 2
    The Tim says:

    RE: JJL @ 1 – Thanks!

    So, based on your quoted message above, which says “They will be included in the Pending section of the NWMLS monthly published statistics,” it would appear that the statements I had heard from the NWMLS “statistician” in February were simply flat-out false, and this change in the end-of-month reports has been in place since the July stats?

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  3. 3
    b says:

    Shouldn’t you see a jump in the data around July of last year for pendings? I would guess if its as large as 30% like these YoY stats seem to indicate, it should be pretty obvious.

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  4. 4
    The Tim says:

    RE: b @ 3 – I know, that’s what seems really fishy about all this. Just a few months ago the NWMLS folks were insisting to those that asked that they were still counting pendings the same way they always had, and we didn’t see any unusual spike in pendings in July of last year.

    Then suddenly with April’s data, we do get a huge spike in pendings, and subsequently find out that they are indeed counting the “pending inspection” listings as “pendings.” If they really have been counting them since July, why would we not see the big spike until now? Something doesn’t add up.

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  5. 5
    JJL says:

    Tim,

    I can’t understand that the NWMLS would say that this change would not affect the number of Pendings reported, because the prior “STI” (I believe) were still counted as active – STI. I could be wrong. I guess a good questions is “How were the STI’s counted in the numbers before?”

    Were the STI’s counted in the pending numbers prior to the change or were they counted in the Actives? I don’t have this answer.

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  6. 6
    JJL says:

    Tim,

    I think the jump in Pendings for this April is just your spring bounce. The status change took affect last year and should not have anything to do with this years numbers.

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  7. 7
    per_se says:

    Perhaps a way to create a YoY number for comparison is to look at the historical failure or discount rate between closed and pending for a past months or entire year. If that rate has been fairly consistent you could use the current closed sales and that rate to get the “adjusted” pending sales number.

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  8. 8
    The Tim says:

    RE: JJL @ 5 – Right, that is an important question. Everything I’ve seen seems to indicate that STI were previously “active” in the end-of-month reports. So if the note you quoted @1 above is accurate, then this change should have resulted in some sort of abnormal bump in the pending data beginning July last year.

    RE: JJL @ 6 – Here’s a simplified example of one thing that could be skewing the numbers with this change: It could be that last fall the end-of-month pendings were 90% “pending” and 10% “pending inspection.” Now spring has rolled around and more buyers are coming out, but they realize that the market is still soft and they’re in the driver’s seat, so they’re being more picky with their inspections, which cause the inspection phase to last longer. So maybe now the split is something like 70% “pending” and 30% “pending inspection.”

    If something like this is going on (and we have no real way of knowing), then there’s a little more to the March-to-April spike in pendings than just your usual yearly spring bounce.

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  9. 9
    JJL says:

    Tim,

    If I read your graph correctly, doesn’t this show a spike in Pendings for July last year?

    http://seattlebubble.com/blog/2009/02/10/one-in-four-pending-sales-failed-to-close-in-q4/

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  10. 10
    jon says:

    Compare the SFH pendings in February vs closed in April and you will see that in Seattle and the Eastside, there remains about a 90% rate of closing. It is only in the North and South that the closings fall to 70% of pending. That’s where the short sales are going to be concentrated.

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  11. 11
    JJL says:

    Although I can’t break this down into monthly numbers, FWIW here is today’s stats for King County residential:

    Active= 9,820
    Contingent= 76
    Pending Feasiblity=15
    Pending BU=475
    Pending Inspection=1,005

    As usual: Statistics not compiled or published by NWMLS.

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  12. 12
    Colin says:

    Thanks Tim and JJL for your work on this.

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  13. 13

    The vast majority of those in the pending category are pending inspection.
    I just did a quick and dirty check for the City of Seattle only, for those single family homes that have gone to a pending status in the last week. There were 186 total.
    14 were pending backup requested (Often required of seller’s lenders in short sale situations)
    50 were just plain pending
    122 were pending inspection
    0 were pending feasibility study

    If indeed the 122 pending inspections would have been called Active-STI a year ago and counted as active listings and not pending, as appears to be the case, then that would dramatically skew the numbers.
    If one could compare active STI from April 2008 to pending inspections from April 2009, that would be more of an apples to apples comparison, I think.

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  14. 14
    The Tim says:

    RE: Ira sacharoff @ 13 – Wow, thanks Ira and JJL @ 11. With such a large percentage of the reported “pendings” being “pending inspection,” it’s no wonder 1 in 3 aren’t closing in 30 days. At least we seem to have solved one mystery.

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  15. 15
    Magnolia44 says:

    Yep beating a dead horse.

    Why worry about small potatoes, the prices are declining is it that bad you can’t pounce on this data?

    Do you need material? We know its deflating, sales picked up its ok Tim.

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  16. 16
    melonrightcoast says:

    The Tim,

    This may have already been mentioned, as I didn’t read all the threads about the spike in pendings in Seattle, but this is what I was told by a mortgage broker when we were getting pre-approved (for the Boston area) this past January:

    In order for a buyer to get a mortgage for a $600K house, the IDEAL financing (for the best rates) would look like:

    $183,000 downpayment and a $417,000 mortgage

    Less ideal would be:

    $120,000 downpayment (20%), a $417,000 primary mortgage, and a $63,000 heloc (at variable rate currently around 6.5%)

    Least ideal would be:

    Any downpayment less than 20%. In this situation, there were only 5 or 6 lenders that were willing to underwrite second mortgages with down payment of less than 20%. These transactions were taking OVER SIX WEEKS to close. I’ll bet that would skew the pending numbers, if homes are taking a couple months to close.

    :)melonrightcoast

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  17. 17
    The Tim says:

    RE: Magnolia44 @ 15 – Nobody is contending that sales aren’t picking up, just that the stats definition change from the NWMLS is overstating the seasonal spring bump. I think that’s worth pointing out, since so many news outlets focus in on pending sales.

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  18. 18
    Magnolia44 says:

    Tim

    To me shi% is shi%, that’s what the numbers are. We are declining, economy is not improving but there will be some who get off the fence with huge savings and great rates over last year.

    I at times just wonder how many ways the obvious can be stated. I know you and other posters enoy the disecting of every data point but seems like material fodder to me, just my opinion.

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  19. 19
    deejayoh says:

    I seem to recall, perhaps incorrectly – that the agent had some latitude as to whether or not a STI listing remained active ? I thought I remembered this being a choice when I sold my first house. Basically I could leave it listed in case I thought it might fall through.

    That was 8 years ago though, so I could be mis-remembering (to channel the rocket).

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  20. 20

    A QUOTE FROM THE YAHOO MERRILL ROSENBERG’S TECH TICKER TODAY

    Says it all on the anomaly of phony pending sales requiring bank closings with loans:

    “…..Chances of a re-test of the March lows are non-trivial. To reiterate, it seems to us likely that the risk in the market is actually higher today than it was back at the same price points in early January, and we say that with all deference to the stress tests (which given the less-than-dire economic scenarios, along with the changes to mark-to-market accounting, were destined to reveal healthy results). While the consensus seems gripped with the burden of trying to decide if there is too much risk to be out of the market, we actually still believe that the chances of a re-test of the March lows are non-trivial, especially if the widely touted second-half economic rebound fails to materialize…

    The data flow is less relevant this cycle than in the past. This was not a manufacturing inventory cycle, which makes the data flow less relevant than in the past. Real estate values are still deflating and the unemployment rate is still climbing; these are critical variables in determining the willingness of lenders to extend credit. And as we just saw in the Fed’s Senior Loan Officer Survey, while there may be a ‘thaw’ in the financial markets, banks are still maintaining tight guidelines. In fact, the weekly Fed data are now flagging the most intense declines in bank lending to households and businesses ever recorded….”

    The low down, low credit qualified FHA loans backed by our blogger income tax dollars, may sound like a good subprime method to start the bubble again, but even FHA only represents a small portion the loans needed [like 20%].

    If you want a good laugh, check out The Business Insider website….it sounds like us:

    http://www.businessinsider.com/clusterstock

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  21. 21
    Kary L. Krismer says:

    I haven’t read all the comments here, but the recent jump is not due to the change, because the pendings have clearly gone up recently. YOY is another matter, but there sales are down.

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  22. 22
    TheHulk says:

    I would be instructive to go back and dissect how the pendings jumped so much in a single month.

    1. Could be people wanting to finalize school districts before the next school year.
    2. Could be a significant number of people buying houses that are priced “right”. By that I mean sellers dropped prices from unrealistic 400-450K for chocolate boxes to 300-325K, and these were snapped up by people who wanted to take “advantage” of the 8K tax credit thingy.
    3. Could also be the NWMLS suddenly deciding to really count all inspection / pre-sale / whatchamacallit “pendings” as pendings.

    Bottom Line: Pendings can jump all they want, its closings that really matter. A couple of months later we will be able to separate the meat from the bones pretty easily.

    As with most people here, I am not too concerned about timing the bottom. In reality we know we still have a ways to go before the market settles down (especially in the 400K + range, where getting financing is still tough especially if you dont have 20% down).

    For those who dont know this a bunch of ARM recasts are coming down the pipeline in the next couple of years. ARM Resets may/may not be affected depending on the prime rate at that time. Recasts though will be a different beast.

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  23. 23
    Kati says:

    What I think is interesting is that there are no MLS regulations in place for when an agent changes the listing from Active to Pending. I am sure many agents use plain old “Pending” when they should be using “Pending Inspection” so that their listing doesn’t look like it failed an inspection, in case it does. Since there are no ramifications for doing this, I am sure many agents know it and are taking advantage of this.
    Now, that can mess with the numbers right there.

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  24. 24
    dogwood says:

    So NWMLS silently changed the defintion last year, which accounts for the modest bump up in the YOY pending number for last July. This could be taken as evidence, despite all the cheerleading, that last year’s “spring bounce” was even worse than anticipated, so NWMLS just changed the rules. Nice.

    This does mean that there was a “spring bounce” this quarter in the pending number, but it’s completely useless (and misleading) because it’s not really a measure of true pending sales but rather an aggregate of true pending sales, pending inspection, and wishful thinking.

    I hardly think this is “beating a dead horse”. It’s about asking questions and getting to the heart of the matter. (Something that has been out of fashion for the last 8 years.) Nice work Tim.

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  25. 25
    Kary L. Krismer says:

    By Kati @ 23:

    What I think is interesting is that there are no MLS regulations in place for when an agent changes the listing from Active to Pending. I am sure many agents use plain old “Pending” when they should be using “Pending Inspection” so that their listing doesn’t look like it failed an inspection, in case it does. Since there are no ramifications for doing this, I am sure many agents know it and are taking advantage of this.
    Now, that can mess with the numbers right there.

    Where did you get that idea? The rule is a bit ambiguous on short sales, but other than that the rule is very clear. And as far as I know, no one would be using Pending when they should be using Pending Inspection.

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  26. 26
    Kary L. Krismer says:

    RE: dogwood @ 24 – A bit too much conspiracy theory for me.

    First, the change wasn’t silent, although maybe it was misunderstood.

    Second, last year people would have been looking at sales, not pendings. The only reason we’re looking so closing at pendings is because sales have been so dismal since the Fall.

    Third, again, the pendings are clearly rising in recent months, and the stats show that because you only have to go back a few months to see it, and there was no change in policy during that time.

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  27. 27
    Alan says:

    Changing some houses from “Active STI” to “Pending Inspection” will inflate pendings and deflate inventory. That would have a double impact on absorption numbers.

    Supply/Sales => (Supply – STI) / (Sales + STI)

    If STI is around 5% (I have no idea if that is the case), it would change 6 months of suppy to 4.3 months of supply.

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  28. 28
    The Tim says:

    RE: Alan @ 27 – Dang, good point Alan. So now we need giant asterisks next to the pending sales data, the inventory data, and the MOS data. Pre-July-2008 and Post-July-2008 are totally different beasts.

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  29. 29
    patient says:

    Thanks Tim for trying to get to the bottom of this. For us that look at the overall picture it doesn’t matter since we know that spring bounce or not prices will for sure continue to fall for a long time and much deeper. It’s the damage it can cause when market pumpers like Greg P. comes over and posts comments that could ignite fear in the less informed and/or neurotic ( Jess Pumpkin, bless her soul et. all ) and can cause them to make irrational decisions for the wrong reasons.

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  30. 30
    David Losh says:

    This is a joke or hoax or both. Last year I was very clear about this change to be told oh no.

    It has come up time and time again in the past year and every time it does it’s another oh no that’s not true.

    Today it’s surprise.

    It is a dead horse the same as Months of Supply is a dead horse.

    Real Estate is a specific set of data to a property an individual wishes to purchase or sell.

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  31. 31
    The Tim says:

    RE: David Losh @ 30 – As I said in the post above, I was told by an associate that directly queried the NWMLS “statistician” that they most definitely had not changed the way they were counting pendings. So it was the NWMLS representative’s word vs. yours. Obviously I should have ignored the NWMLS representative, since they apparently were giving out false information. Hindsight is 20/20.

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  32. 32
    One Eyed Man says:

    RE: patient @ 29

    Patient, I know you were just using him as a generic example, but in fairness to Greg P, he has been very specific that he was doing his own counts that included the categories of Pendings he listed and wasn’t using the MLS end of month counts. He was generally doing stat studies to follow week to week changes not YOY. I’m not saying that Greg’s methodology was perfect, but it isn’t as corrupted as the MLS data on Pendings YOY seems to be. And as Alan and Tim point out, the corruption flows thru all the other data that rely on MLS end of month counts involving Pendings and potentially active listing numbers.

    I’m not a MLS conspiracy theorist either and I don’t think the MLS was trying to rig the data. I don’t think they’re that ingenious. I sent them an email because when all the pieces don’t fit, common sense says to recheck the data and other assumptions for corruption.

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  33. 33
    MLS4owners says:

    I don’t know whether recent NWMLS reports compare apples to apples. However, I like the 2008 change in the way sales are reported (from the old Active-STI to the new Pending Inspection) and the improved rules about which properties can be displayed on public brokerage websites.

    Unless the buyer is bumpable, in my opinion it doesn’t really matter whether the contingency is due to inspection, financing, seller disclosure, title review or a general weasel clause. In each of these cases agents aren’t interested in showing the properties and buyers aren’t interested in seeing them. What agents and buyers really want to know is, “Is this property available for sale, or is it not?” If the listing is under contract and the buyer is not bumpable, it is not available.

    The change seems to have complicated the statistics, but it improves the data about currently-available properties.

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  34. 34
    singliac says:

    Tim,

    If you are looking for ideas, you could start plotting Magnolia44’s progress along the 5 stages of grief. We’ve passed “Denial”, and we’re well into the “Anger” stage. We’re about to enter “Bargaining”, which will probably involve demands for a principle reduction. We’ve got a long way until “Acceptance”.

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  35. 35
    deejayoh says:

    By JJL @ 9:

    Tim,

    If I read your graph correctly, doesn’t this show a spike in Pendings for July last year?

    http://seattlebubble.com/blog/2009/02/10/one-in-four-pending-sales-failed-to-close-in-q4/

    JJL – That was a quarterly graph – not monthly so I don’t think it shows that. Looking at the monthly data, there was no spike in pendings last July. It was completely normal

    2000 – 2008 averages
    Month/Pendings

    Jan 1,652
    Feb 2,146
    Mar 2,631
    Apr 2,523
    May 2,698
    Jun 2,652
    Jul 2,504 — July drops 5.6% from June on average
    Aug 2,509
    Sep 2,162
    Oct 2,169
    Nov 1,860
    Dec 1,486

    2008 only
    Month/Pendings

    Jan 1,225
    Feb 1,609
    Mar 1,710
    Apr 1,840
    May 1,766
    Jun 1,965
    Jul 1,855 — July dropped 5.6% from June in 2008 too!
    Aug 1,757
    Sep 1,767
    Oct 1,327
    Nov 1,163
    Dec 911

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  36. 36
    WaileaKid says:

    One Eyed Man@32 –

    I don’t know if Greg was aware that he is comparing to apples to oranges by comparing different stats from last year to this year but he clearly was writing his posts as if the worst is over and the market has bounced back significantly!

    TheTim@28 – I think it would help if you added another chart with corrected pending numbers. The corrected pending numbers can be calculated by applying the historic difference between pendings and closed sales

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  37. 37
    EconE says:

    RE: One Eyed Man @ 32

    I don’t see it as a generic example.

    Greg constantly spams Tims blog with his “come look at MY numbers” statements.

    We (bubble bloggers in general) laughed in the past when the industry pulled MOM stats out of their a$$ rather than using YOY.

    It’s even more pathetic when weekly stats are used.

    When can we expect the daily and hourly stats?

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  38. 38
    Kary L. Krismer says:

    RE: EconE @ 37 – I think you’re misunderstanding what Greg is doing with his stats. Also, sometimes you have to look at MOM to understand what’s going on. 2007 solds is a good example of that. YOY the price increases didn’t look too extreme, but MOM you could see an extreme increase in price starting.

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  39. 39
    Racket says:

    Say “bubble bloggers” 5 times really fast, its almost worse than toy boat.

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  40. 40
    Kary L. Krismer says:

    RE: Racket @ 39 – And you discovered this how? ;-)

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  41. 41
    EconE says:

    RE: Kary L. Krismer @ 38

    Or an extreme decrease….but I suspect you’ll be verry verry quiet about that now wontcha?

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  42. 42
    Kiton says:

    Why the big analysis about pending vs pending inspection? Either one of these indicates an offer was made and accepted on a property. There are clearly more offers right now because of the interest rate, the first time buyers tax credit and because we are having a mini spring rush. While there are clearly more homes pending right now, what is really significant is the number of days on the market is down. That indicates our market has picked up.

    There are rules about changing status in the NWMLS and if you try to fudge the system another agent usually turns you in. So it is not that easy to do. If you are pending inspection the agent representing the buyer will know if you change it to pending.

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  43. 43
    Magnolia44 says:

    By singliac @ 34:

    Tim,

    If you are looking for ideas, you could start plotting Magnolia44’s progress along the 5 stages of grief. We’ve passed “Denial”, and we’re well into the “Anger” stage. We’re about to enter “Bargaining”, which will probably involve demands for a principle reduction. We’ve got a long way until “Acceptance”.

    Where have I ever said that I was disappointed in my purchase or that I am in a bad situation because of it? I am in a great home in a great neighborhood, mortgage is still lower than what my house is worth. Did I put some money into the home I would not get back if I sold today, sure but its not in the cards. This is a home first not an investment.
    Now at some point I might be begging for principal reduction? Lol please, remember someone out there always has more money than you or I. You don’t know my situation, so sit back and continue your wait for 50% off it. It Does not affect me either way, life is good my friend!

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  44. 44
    David Losh says:

    RE: The Tim @ 31

    This topic has come up a lot over the year. I personally believed you when you called and got a plausible answer. I asked my lender about it and we agreed it didn’t sound right. You are however a trusted resource so this comes as a shock to me.

    My original contention was that this was a deliberate attempt by the NWMLS to skew data. The reliance this year on the pending, pending, pending hype seems to confirm my suspicions.

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  45. 45
    Magnolia44 says:

    not sure what happend above edit does not work on a blackberry.

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  46. 46
    Greg Perry says:

    HA! I see some of you are talking about me behind my back! I’ve been too busy to come out to play.

    Ok, while YOY gives very important historical perspective. For me, YOY, isn’t as interesting as MOM. WOW (week over week) for me is the most interesting, as it shows the current trend, up or down..

    Call it what you want, spring bounce — stimulus — whatever. What I caught imediately was an overnight 25% increase pendings (last week of March) that has been building each week since. I find this market fascinating, especially when I break down the ranges where the inventory is selling and not selling. IMHO, the reason why everyone is so focussed on pendings, pendings, pendings is that they indeed turned on virtually over night, and that is newsworthy.

    The week long conversation in pendings have me interested in tracking the weekly closing to see if they’ll catch up like I believe they will.

    So, YOY gives perspective and MOM and WOW give current trends. To me both give a better understanding of the market. All are important.

    As for the change in pending status debate, It WILL screw up YOY for awhile. MOM and WOW numbers aren’t affected.

    Like it or hate it. The pendings have dramatically increased, MOM and WOW, even if you throw out YOY.

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  47. 47
    what goes up must come down says:

    Greg aren’t pendings suppose to increase in spring time isn’t that simply the historical norm? I guess I don’t get what is so amazing.

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  48. 48
    Greg Perry says:

    RE: what goes up must come down @ 47

    Yes, we’re having a very normal May As you look at the months between Sept 2008 and first half of March, pending numbers were abysmal. Normal May is huge market turn around, and quite amazing.

    I have been following WOW for over 3 years and don’t recall seeing a market turn (for the positive) like this one did. We saw it turn “OFF” in 3rd quarter 2007, but I’ve not seen one turn “ON”so abruptly.

    There are plenty of pot holes in the road for prolonged recovery, but for today, homes are selling better.

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  49. 49
    JJL says:

    I still believe that the status change method that went into effect last year has nothing to do with this year’s numbers of increased pendings. I also think this is too much attention to give to the pending numbers, as I think they are unreliable and prefer to base my statistics on sold and closed transactions. However watching them on a weekly basis (which I don’t do) can give you greater insight on the immediate up or down trend.

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  50. 50
    The Tim says:

    By Greg Perry @ 48:

    I have been following WOW for over 3 years and don’t recall seeing a market turn (for the positive) like this one did. We saw it turn “OFF” in 3rd quarter 2007, but I’ve not seen one turn “ON”so abruptly.

    What does World of Warcraft have to do with anything?

    Seriously though, you’re comparing apples to oranges when you look at the increase in WOW pendings this spring compared to past years, since “subject to inspection” never used to count in the pendings.

    There are plenty of pot holes in the road for prolonged recovery, but for today, homes are selling better.

    We can’t really make that determination until we see a spike in the actual closed sales data. Don’t get me wrong, I have been saying for months that sales are likely to pick up now that prices are approaching reasonable levels again, but I still think this pending status change thing is overstating the apparent recovery in sales.

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  51. 51
    Racket says:

    “What does World of Warcraft have to do with anything?”

    Everything, once the economy tanked, how little you could sell your accounts for.

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  52. 52
    Greg Perry says:

    Tim,
    Yes, I understand your point of view looking at it from YOY. There are apples and oranges in there currently.

    However, watching the market trend week to week, we’re seeing only apples. ONLY apples have been building (pendings) as measured week over week.

    I agree, we’ll need to watch closed sales. I’ll watch them weekly and keep you up to date so you don’t have to wait a week past month’s end to start to see resuts. I said last week that I think we’ll see 2000 June. Time will tell.

    Again, YOY gives perspective, MOM and WOW give trends.

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  53. 53
    TheHulk says:

    RE: Greg Perry @ 52

    Let me guess Greg, do you also watch CNBC every day/every hour? I find your focus on Weekly pendings as nauseating as CNBC’s fawning over the stock indices every stupid hour. These things are only relevant if you are a house flipper or a day trader. Most people on this blog I would think are neither and are mostly looking to buy a house for the next decade if not more.

    I wonder if you will be posting with such frequency and fawning over your pendings if they fail to translate into any moves for median prices, IF they actually move to closings? Despite your salivating over these pendings, I predict that as we have observed, 1 in 3 will fail to close. We might see a small bounce in spring, but it will be ever so tiny (1 to 2 %) that in perspective of the past 5 years, statistically it will be meaningless.

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  54. 54
    David Losh says:

    RE: Greg Perry @ 52

    Real Estate has cycles. You have market timing tied to specific incentives. School changes account for, now March, it used to be February, and June when school let’s out. We include May because there is activity.

    December and January are end of the year for tax and corporate transfer consideration. Holiday’s speak for themselves and everybody knows about August before settling in for the new school year.

    There are no trends or voo doo to Real Estate. There are no tops or bottoms. Real Estate is tied to specific economic cycles in 10 year increments the same as every other corporate world housing need.

    Buyers and sellers have specific time tables that determine pricing. Offering an tax incentive may be a pricing issue.

    I don’t know how real estate got so out of whack these past six or seven years, but it is a manipulation of the market place. Banks for sure have made a mess of everything for everybody.

    What I know is that the day traders of Real Estate need to go back to screwing up the stock market.

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  55. 55
    DrShort says:

    By Greg Perry @ 52:

    Time will tell.

    Again, YOY gives perspective, MOM and WOW give trends.

    What interesting to me is how this increase in sales activity here mirrors what was seen and written about in California a year ago. I don’t generally subscribe to the “we’re one year behind and will follow California” but it’s fairly similar.

    Example from May 2008 (prices have dropped 18% since this was published according to Zillow):

    http://www.chicohomesearch.net/2008/05/17/chico-ca-real-estate-market-report-for-spring-2008/

    “May 17th, 2008

    The Chico Real Estate Market is Changing!

    Although a steady decline of local home prices over the last several months has been reported there’s a change of direction in last months statistics. For the first time in months the median and average home price in the Chico area is in the black.

    The Chico area’s median price was up at $272,500 from March at $267,000. Median price refers to the exact middle point of all the homes sold in that month or given period. The average price in April was up at $340,881 from $311,232 in March. Average price is defined as combining the sales prices of all the sales for a given period and dividing by the number of unit sales for that period.

    In addition to this good news, the number of residential Chico area units sold was up significantly at 80 in April in contrast to March sales at 45. Of course many would say that this increase of number of sales is due to the traditional increase caused by seasonal changes, and they would be right. The overall increase in sales of residential units has little to do with the median and average home prices.

    So, are we on the road to recovery? A little early to tell, but many economists and analysts are indicating trends in that direction. “

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  56. 56
    what goes up must come down says:

    Dr. Short I think Greg would call that a little pot hole, others might say an 18% price drop is a huge freaking problem.

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  57. 57
    b says:

    RE: DrShort @ 55

    This is what I have been saying, as a Silicon Valley transplant this seems basically the same as last spring in the Valley. Sales increased, which realtors pounced on to say the market is on the rebound, but prices have continued to steadily decline.

    Here is an even broader sampling of news from last May in California

    Some choice headlines:

    Southern California home sales jump 22% in April (May 19, 2008)
    California Home-Price Cuts End Sales Losing Streak (May 27, 2008)
    Home sales offer hope to some (May 24, 2008)
    Ask A Realtor: Have we hit the bottom of declining home prices? (May 20, 2008)

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  58. 58
    what goes up must come down says:

    Jobs affecting real estate prices?

    http://seattletimes.nwsource.com/html/businesstechnology/2009208758_jobs12.html

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  59. 59
    The Tim says:

    RE: what goes up must come down @ 58 – There was little to no correlation between job growth and increasing prices on the way up, and I doubt that there will be all that much correlation on the way down, either. I think job growth (or shrinkage) and home prices are both symptoms of other larger economic factors.

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  60. 60
    Kary L. Krismer says:

    By EconE @ 41:

    RE: Kary L. Krismer @ 38

    Or an extreme decrease….but I suspect you’ll be verry verry quiet about that now wontcha?

    Like how I’ve been so quite for months about how the median level of pendings was much lower than the median level of sales, and how I was quite about pointing out that on pendings the price given is likely higher than what the actual sales price will be.

    I could through the same type of comment back. This entire board was pretty quiet about the significant price increase in the April NWMLS numbers—focusing on pendings and volume instead. In contrast, I’ve been ranting about volume is for months, even though that was a bad piece of news for agents.

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  61. 61
    Kary L. Krismer says:

    RE: DrShort @ 55 – Rather obviously, all things being equal a drop in prices will generate sales. But all things are never equal. One big difference now between California a year ago is we don’t have recovering consumer confidence, or what I would call the consumer forgetting how scared they were in September by Secretary Paulson.

    So IMHO there are at least two things that are resulting in the increased pendings: Prices and confidence. Three if you want to add in interest rates, which consumers follow very closely. The biggest drags right now are probably unemployment and fear of unemployment, and not in that order.

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  62. 62
    Kary L. Krismer says:

    On the topic of pending volume, one thing being ignored is that sales typically generate sales. Unless someone is moving to another state or unable or unwilling to buy again, they will likely buy another place when they sell their place. Relatively few people are buying a new place first these days.

    Anyway, as the market picks up, you’d expect it to pick up more–again all things being equal, which they won’t be at least over longer time frames.

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  63. 63

    “I’ve been ranting about volume is for months”

    We’ve got lots of people on Seattle Bubble who rant.
    You may be a lot of things, Kary, but a ranter you’re not.

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  64. 64
    what goes up must come down says:

    The Tim I guess what I was trying to get at is exactly what Kary mentions in 61: “The biggest drags right now are probably unemployment and fear of unemployment, and not in that order. ”

    When people see news like what is mentioned in the linked article talking about a fundamental shift in employment I have to think it would give people pause about going out and buying a house, especially, a house that they have to stretch to buy.

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  65. 65
    what goes up must come down says:

    The Tim no the correlation on the way up was easy or should I say beyond easy credit.

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  66. 66
    Racket says:

    RE: Kary L. Krismer @ 62

    On the topic of pending volume, one thing being ignored is that sales typically generate sales. Unless someone is moving to another state or unable or unwilling to buy again,.

    Sure but how many of those sales are short, or foreclosure which will not generate sales for a long time.

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  67. 67
    Greg Perry says:

    RE: Kary L. Krismer @ 61 – And I would add that it looks like the consumer confidence regarding housing is stimulated by the $8,000 tax credit stimulus.

    RE: what goes up must come down @ 56

    18%? I must be wrong. I had it at 25%.
    http://www.workingforyou.typepad.com//realestate/2009/05/king-county-highs-and-lows-real-estate-statistics-residential-houses.html

    A large part of my look into weekly ratios is to look at WHERE the homes are selling. We have to go back to 2001/2002 to see a market that was so weighted on the low end.

    I still contend that if the current trend remains, the lower tier will stabilize in price and start to appreciate. Yet, the second tier and high end are seeing little activity and will continue to fall in price.

    RE: TheHulk @ 53

    Never watch CNBC. I wonder if the only thing you watch the History Channel. It seems your opinion is that weekly looks for trends are irrelevant. Fine. If that’s your opinion, you get to keep it.

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  68. 68
    Kary L. Krismer says:

    RE: Racket @ 66 – We don’t know that yet. MTD it seems to be about 10%, but that’s a very early return.

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  69. 69
    Greg Perry says:

    By deejayoh @ 35:

    By JJL @ 9:
    Tim,

    If I read your graph correctly, doesn’t this show a spike in Pendings for July last year?

    http://seattlebubble.com/blog/2009/02/10/one-in-four-pending-sales-failed-to-close-in-q4/

    JJL – That was a quarterly graph – not monthly so I don’t think it shows that. Looking at the monthly data, there was no spike in pendings last July. It was completely normal

    2000 – 2008 averages
    Month/Pendings

    Jan 1,652
    Feb 2,146
    Mar 2,631
    Apr 2,523
    May 2,698
    Jun 2,652
    Jul 2,504 — July drops 5.6% from June on average
    Aug 2,509
    Sep 2,162
    Oct 2,169
    Nov 1,860
    Dec 1,486

    2008 only
    Month/Pendings

    Jan 1,225
    Feb 1,609
    Mar 1,710
    Apr 1,840
    May 1,766
    Jun 1,965
    Jul 1,855 — July dropped 5.6% from June in 2008 too!
    Aug 1,757
    Sep 1,767
    Oct 1,327
    Nov 1,163
    Dec 911

    Now, if everyone would take a big, deep breath and focus a little on these numbers that deejayoh posted.

    Now this from trendgraphix (taken from NWMLS numbers and corrected — which makes trendgraphix slightly more conservative)

    Pendings January 2009 — 874
    February 2009 — 990
    March 2009 1372
    April 2009 — 2009

    Now these are pendings that INCLUDE Pending STI.

    Take a deep breath and compare these numbers with the historical average and the 2008 numbers. As I said, this market went from about zero to sixty virtually over night.

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  70. 70
    patient says:

    I’ve said it for quite a while, pay little attention to pendings they are unreliable and now also determined to be inconsistent. Use closings for analysis and trends. A months lag to spot a trend or change in market direction does not matter, home buying is not a day trading activity. Better to use reliable data even if it’s a month behind. The same goes for prices, use Case Shiller and not median, median have the same problem as pendings, it’s unreliable to spot trends and directions of home prices.

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  71. 71
    The Tim says:

    By patient @ 70:

    Use closings for analysis and trends. A months lag to spot a trend or change in market direction does not matter, home buying is not a day trading activity. Better to use reliable data even if it’s a month behind.

    Exactly.

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  72. 72
    One Eyed Man says:

    RE: DrShort @ 55

    DrShort, ever hang out in Chico or go tubing on the Feather River? I haven’t been there in over 30 years, but I was probably as happy living out of the back of my van and spending a few days in Chico as I am in 4000 sq ft in Maple Valley. If my wife would let me, I think I’d go back to the van. Some body tell me again why I care about Pendings? Oh yeah, that’s right, it’s the money. chocolate, what happened to my life? How the hell did I end up representing real estate developers? Ironically, people with better credentials than me got the jobs working for The Nature Conservancy and Trust for Public Lands. I wonder if those guys ever hung out in Chico? Was the penalty for my mis-spent youth that I ended up as a pawn working for real estate developers?

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  73. 73
    David Losh says:

    RE: Greg Perry @ 69

    Now this from trendgraphix (taken from NWMLS numbers and corrected — which makes trendgraphix slightly more conservative)

    Trendgraphix is a sale tool that goes along with Real Estate being a commissioned sale position. Agents use the graphs to make a presentation, but it means nothing.

    People need to make informed decisions about the property based on current market conditions.

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  74. 74
    Kati says:

    By Kary L. Krismer @ 25:

    By Kati @ 23:
    What I think is interesting is that there are no MLS regulations in place for when an agent changes the listing from Active to Pending. I am sure many agents use plain old “Pending” when they should be using “Pending Inspection” so that their listing doesn’t look like it failed an inspection, in case it does. Since there are no ramifications for doing this, I am sure many agents know it and are taking advantage of this.
    Now, that can mess with the numbers right there.

    Where did you get that idea? The rule is a bit ambiguous on short sales, but other than that the rule is very clear. And as far as I know, no one would be using Pending when they should be using Pending Inspection.

    Just look under new Pendings–on any given day–and you will see some that went straight from Active to Pending under Propert History—skipping the Pending Inspection. (New construction is notorious for doing this.)
    So, I did a search in my home (2) areas for homes that went Pending (not Pending Inspection) in the last week.

    Of the 19 that went Pending:
    12 went from Pending Inspection to Pending.
    There were 3 new construction listings that went straight from Active to Pending.
    There were 4 resales that went straight from Active to Pending.

    I doubt all 7 of those buyers are forgoing inspections.

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  75. 75
    One Eyed Man says:

    RE: patient @ 70RE: The Tim @ 71

    I can’t condemn Greg or Kary for wanting to look over the horizon, but I’ve always been a closed sales guy for the reasons you’ve stated. As long as Greg and Kary accurately portray the data, I think it’s a service to their clients. It also takes a lot of work to pull the data and organize it and I applaud their industriousness. And at least it’s based in some quantitative analysis and not just NAR rhetoric.

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  76. 76
    what goes up must come down says:

    Greg I would ask myself why the significant change? I did note that April 2009 is still below the historical average — what does that mean? Since the historical averages don’t included the Pending STI the 2009 data looks even worse.

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  77. 77
    Kary L. Krismer says:

    RE: Kati @ 74 – Some places do go straight to pending, especially new construction (which is a mistake, but whatever). Also some investor types will pre-inspect. So I don’t find going straight to pending suspect.

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  78. 78
    Kary L. Krismer says:

    RE: One Eyed Man @ 75 – Thanks, and I’d point out that to the extent I do look over the horizon, it’s only to pendings. So that means predicting sales one or two months out at most. I don’t pretend to know where we’ll be in six months, a year or whether we’re at a bottom, etc.

    I’m also more of a closed sale type of guy. For doing absorption rates, I used closed, not pending.

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  79. 79
    Greg Perry says:

    By what goes up must come down @ 76:

    Greg I would ask myself why the significant change? I did note that April 2009 is still below the historical average — what does that mean? Since the historical averages don’t included the Pending STI the 2009 data looks even worse.

    What changed? Consumer confidence. What changed consumer confidence? IMO, the tax credit, low prices and low interest rates.

    Yes, April was down from historical averages, but over double what February was. (NO OTHER YEAR PERFORMED LIKE THIS) March had very slight week to week increases until the last week.

    This doubling in pending counts happened very quickly.

    Now, will May be close to historical averages? Yes. IF the pendings continue to come in at the same rate as the last 2 weeks. No matter what the numbers, I’ll post them, so we can all watch it.

    Now, here’s the dirty little secret. Using my analogy above, the market went from 0-60 virtually overnight. Under $500,000 SFH hit 80. $500k to $1 mil is creeping along at 25. Above 1 million is still sitting in a traffic jam.

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  80. 80
    The Tim says:

    By Greg Perry @ 79:

    What changed? Consumer confidence. What changed consumer confidence? IMO, the tax credit, low prices and low interest rates.

    I’ve got a lot of friends close to my age (late 20s, early 30s), which I would think is the prime first-time buyer age, and I have to say, I haven’t heard a single one of them mention the tax credit as an incentive that is pushing them toward buying a home sooner than they otherwise were planning to.

    I realize of course that the plural of anecdote is not data, but I have not seen any data on this subject either, so I don’t think we can really say for certain whether the tax credit is “pushing buyers off the fence.”

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  81. 81
    patient says:

    RE: Greg Perry @ 79

    ” IMO, the tax credit, low prices and low interest rates.”

    Imo, none of that makes any sense.
    – The tax credit is insignificant to the decision of ponying up several 100k or not.
    – Prices are not low, just less outrageous.
    – The interest rate did not go down overnight at the infliction point Greg mentions.

    If there is a bump ( closed sales will tell ) it’s more likely due to that people think they get deals on short sales and REOs. I’m highly skeptical to the bump being anything else than normal seasonality and even more skpetical to people getting deals when all is said and done.

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  82. 82
    joe says:

    RE: Greg Perry @ 79

    Could it be that no other year “performed” like this, because so many sales are short and REO? If it’s taking twice as long to close a sale, shouldn’t the pending numbers go way up?

    Is there some way of knowing the average length of time that a given property is “pending”? If that average is going up as fast as the number of pending sales, I suspect the increase isn’t because so many more houses are getting sold, it’s just taking longer to sell, and you’re just filling the pipeline, even though the water coming out the end isn’t flowing any faster.

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  83. 83
    waitingforseattletocool says:

    RE: The Tim @ 50

    The Tim,

    For what it is worth, I kept track of the Active – STI listings on the Winderemere website for quite some time while the data was available.

    Generally speaking, the number of pending sales reported by NWMLS at the end of each month was about 3x the number of Active – STI listings.

    I have the raw data if you are interested.

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  84. 84

    THE TRUTH ON PENDING IS PENDING

    Sometimes the real answer is “Lord Only Knows” to some dilemmas; albeit my WAG on pending is still liberally conservative on the realistic side. The RE folks like to say the price plummetting isn’t as bad as it was, the bottom is coming this year. Welllllll…….there’s another “Lord Only Knows” to that allegation too:

    Just because the gas is spilling out of the economy’s gas tank [like jobs] at a slower rate now doesn’t make it better at all. Its clearly just the opposite. Without job growth replacing the 6 million unemployed and the other 6 million underemployed [add in another 6 million give ups?]; its all a house of cards and doomed to fail.

    Jobs, jobs, jobs…..and like Bruce Springsteen said, “and those jobs ain’t comin’ back”. But the RE folks will point at the delicious stimulus money bringing back some government jobs that were about to be lost…..again, where’s the job creation or the “+” in the equation. I know, you come up nada like I do. California and Washington both have similar horrifying deficits and without good skilled jobs adding into the tax base, raising the taxes on the what’s left working population will drive companies with jobs out of the states faster than rats will scare a buyer out of a home deal.

    A good jobs article to focus on as the pending question is pending:

    http://finance.yahoo.com/news/Job-openings-scarce-even-as-apf-15216028.html?sec=topStories&pos=2&asset=&ccode=

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  85. 85
    Plymster says:

    RE: Kary L. Krismer @ 78

    I’m also more of a closed sale type of guy. For doing absorption rates, I used closed, not pending.

    So you’re using “inventory / closed sales”. But if inventory is skewed by this pending sales change (per Alan and Tim’s brief exchange at 27 and 28 of this thread), then you’re using a skewed metric as part of the absorption rate.

    How skewed? According to JJL@11:

    Active= 9,820
    Contingent= 76
    Pending Feasiblity=15
    Pending BU=475
    Pending Inspection=1,005

    So you’re reducing the inventory by 10% before you even start.

    Much thanks to Tim for being one of the only journalists out in the world doing any sort of real reporting. Keep up the good work!

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  86. 86
    patient says:

    Say that for “normal” transactions the average number of homes that endup in pending sales per buyer is 1. Now, say that for short sales and REOs due to the more complex and uncertain outcome the number is 3. You now have a 200% bump in pendings without any added buyers or buyer interest/activity. Unreliable is the word. This is not an issue with closed transactions. Every closed transaction counts as real demand.

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  87. 87
    Greg Perry says:

    RE: joe @ 82RE: patient @ 81RE: The Tim @ 80

    While there are more short sales and REO’s than years past there are fewer of these IN CITY and EASTSIDE markets than one would think.

    So here’s a question for you guys:

    In December, January, and February where the pending count, INCLUDING PENDING STI did not even reach 1000. (We had short sales and REO’s in those months, as well.) April came in double February. May so far is strong. Why do you think April pendings doubled February?

    (Before you answer, study the averages in comment 69 against this years numbers).

    What I’m looking on the “averages” is a 17 percent bump between February and April. 2008 showed a 14 percent bump between February and April. 2009 shows a 100.3 percent bump between February and April. So “historically” it looks like a normal spring bump is around 15 percent between February and April.

    Again, WHY do you think April pendings doubled Feb. pendings in 2009?

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  88. 88
    patient says:

    RE: Greg Perry @ 87

    Who knows exactly between the flaky accounting of pendings, the possibility of a raise in multiple pendings per buyer, buyer delusions of “deals” etc. Many possible causes but in the end not particulary interresting. Come back when we see the same abnormality in closings and we can discuss further.

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  89. 89
    Greg Perry says:

    By patient @ 86:

    Say that for “normal” transactions the average number of homes that endup in pending sales per buyer is 1. Now, say that for short sales and REOs due to the more complex and uncertain outcome the number is 3. You now have a 200% bump in pendings without any added buyers or buyer interest/activity. Unreliable is the word. This is not an issue with closed transactions. Every closed transaction counts as real demand.

    I have to tell you I got a huge chuckle out of your item number 3. How are these numbers going up without increased buyer interest and activity? Priceless…….

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  90. 90
    Greg Perry says:

    By patient @ 88:

    RE: Greg Perry @ 87

    Who knows exactly between the flaky accounting of pendings, the possibility of a raise in multiple pendings per buyer, buyer delusions of “deals” etc. Many possible causes but in the end not particulary interresting. Come back when we see the same abnormality in closings and we can discuss further.

    That’s it. It’s an evil plot by the MLS to assign 3 pendings to each buyer only in the month of April. Bwa ha ha ha

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  91. 91
    patient says:

    RE: Greg Perry @ 89
    Now, that is easy. If you one month have hundred buyers making 100 offers and the next month you have 100 buyers making 300 offers with the same intent of closing 100 each month you have zero increase in buyer interest and activity where it counts. Chuckle on but be careful not to choke, I accept no liability for that ;-)

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  92. 92
    The Tim says:

    By Greg Perry @ 90:

    That’s it. It’s an evil plot by the MLS to assign 3 pendings to each buyer only in the month of April. Bwa ha ha ha

    http://en.wikipedia.org/wiki/Hanlon%27s_razor

    Never attribute to malice that which can be adequately explained by stupidity.

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  93. 93
    Greg Perry says:

    By patient @ 91:

    RE: Greg Perry @ 89
    Now, that is easy. If you one month have hundred buyers making 100 offers and the next month you have 100 buyers making 300 offers with the same intent of closing 100 each month you have zero increase in buyer interest and activity where it counts. Chuckle on but be careful not to choke, I accept no liability for that ;-)

    Party on.

    Just a couple of tiny flaws in your plan: 1) A deal doesn’t go to pending until it has been mutually accepted by both parties. 2) The normal reason for failure is inspection issues. I got it! It’s a conspiracy, not by real estate agents, but real estate inspectors! 3) Have those 100 buyers making 300 offers to close 100 unionized?

    Tim re: 92 Awesome. I’ll remember that one.

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  94. 94
    patient says:

    RE: Greg Perry @ 90 – Now, now you are not being sarcatic are you Greg? Anyway i didn;’t say that nwmlsis assigning buyers more pendings than what they have. i said that a buyer of short sales and REOs are more likely to make bring more transactions to pending and this can potentially have a huge impact on how many pendings have the intention to close and also it can make the amount of buyers out there that are making offers an illusion.

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  95. 95
    b says:

    Want to know why there are so many more pendings? Because people love to be knife catchers. Please keep in mind the same type of morons who took 105% option-arm loans on homes 10x their income are still out there, they didn’t all die off last winter. With the bear-market rally in stocks to pump up the financials for the stress test capital raising, the easily led among us has jumped off the fence to buy some green shoots. As shown last year in Cali, if there is enough of a drop and talk about ‘steals and deals’ from short sales and REO people will come out to catch as many knives as they can. It should not effect continued price declines, which are going to be a product of market compression, shadow inventory and consumer wage deflation. Add into the mix that the 10 year is going up and we will soon see this reflected in mortgage rate increases as well, further contracting fragile pricing. Sales being better than “incredibly terrible” and instead being just “terrible” won’t be pushing up prices anytime soon, so don’t get your panties in a wad.

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  96. 96
    patient says:

    RE: Greg Perry @ 93
    More sarcasm, I thought sales men were supposed to be polite. I guess it doesn’t apply when you want to discredit comments that threatens your own. Good to know.

    ” A deal doesn’t go to pending until it has been mutually accepted by both parties”

    So, it doesn’t mean that a buyer can’t back out or the owner in case of a short sale. As long as that is the case the acceptance means close to nothing.

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  97. 97
    Greg Perry says:

    By patient @ 94:

    RE: Greg Perry @ 90 – Now, now you are not being sarcatic are you Greg? Anyway i didn;’t say that nwmlsis assigning buyers more pendings than what they have. i said that a buyer of short sales and REOs are more likely to make bring more transactions to pending and this can potentially have a huge impact on how many pendings have the intention to close and also it can make the amount of buyers out there that are making offers an illusion.

    Of course I was being sarcastic!

    Seriously, from the aspect of short sales and reo’s, there were no significant changes in the market between Jan and February and April. In my opinion, reos and shorts are neutral to the equation. Some other factors attributed to the rise.

    1.Again I don’t think it was normal seasonal bump. The numbers show me the opposite.
    2. I don’t think or have seen any evidence that short sales and reos affected the pendings any more in April than in Jan/Feb.
    3. My conclusion is an increase in consumer confidence. Anecdotally, we’re seeing big numbers of buyers visiting week end open houses.

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  98. 98
    Racket says:

    “Anecdotally, we’re seeing big numbers of buyers visiting week end open houses. ”

    Talking to my peers, It’s seem like people are trying to hit the house jackpot, thinking that the current pricing is only temporary.

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  99. 99
    JJL says:

    I can’t believe when I posted these numbers I left out the regular “pendings”. So I’ve added them for you.

    By JJL @ 11:

    Although I can’t break this down into monthly numbers, FWIW here is today’s stats for King County residential:

    Active= 9,820
    Contingent= 76
    Pending Feasiblity=15
    Pending BU=475
    Pending Inspection=1,005

    As usual: Statistics not compiled or published by NWMLS.

    Active= 9,820
    Contingent= 76
    Pending Feasiblity=15
    Pending BU=475
    Pending Inspection=1,005
    Pending: 1,798

    Not that this changes anything – just wanted you to have ALL the info.

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  100. 100
    patient says:

    RE: Greg Perry @ 97

    You have to excuse me if I take info like open house traffic with a grain of salt. From now on I will do the same with pendings.

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  101. 101
    dancingeek says:

    I’m not sure how much effect it has on pendings, but remember that the moratorium on foreclosures was lifted in April. That may have drastically upped the number of properties available for short sale (pent up supply), and short sale properties have a historically lower closing rate.

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  102. 102
    Greg Perry says:

    By patient @ 100:

    RE: Greg Perry @ 97

    You have to excuse me if I take info like open house traffic with a grain of salt. From now on I will do the same with pendings.

    Anytime someone tags a comment with “anecdotal” you SHOULD take it with a grain of salt. However, while there is some debate on how to understand pending numbers because of market conditions AND the change the NWMLS reporting, anyone who really wants to understand the real estate market should be very intentional about understanding the pendings. Pendings are one of the most important numbers of all to understand as they tell us the current trend.

    This is why Tim has created 4-5 posts in the last 2 weeks around the issue of pending sales. Market conditions are different. Rules have changed on pendings. He wants to understand the market, so he wants to understand the pending dynamic as much as he can. You see, I really like this as he is seeking first to understand.

    I may put more emphasis on pending sales than Tim, but that is my work style. I need to be on top of current trends for both buyers and sellers. Otherwise, for me working with clients, it would be like driving through the rear view mirror. I also have a great sense of appreciation for YOY and historical data for perspective.

    If you really want to understand the market, you’ll try to understand and follow pendngs along with the REST of the numbers. If your only interest is to argue the numbers aren’t the numbers, then as my Grandpappy used to say, “You can’t argue with the ignorant”.

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  103. 103
    Kary L. Krismer says:

    RE: Plymster @ 85 – I never would do pending off the NWMLS month end data, because it’s irrelevant to what I do. I do my own searches for a more specific area and property type. Thus I would only be dealing with true actives and true solds (subject only to agents not moving their listings within 3 days as they should).

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  104. 104
    Greg Perry says:

    RE: JJL @ 99

    So by my count from this post it looks like all pending catagories have 3,293. It will be interesting indeed to track weekly closings now through the end of June.

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  105. 105
    patient says:

    RE: Racket @ 98

    This I believe is one likely cause. There are always people willing to buy the “hurry this will not last” message as soon a something is reduced in price independent how over priced the item might be.

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  106. 106
    Greg Perry says:

    RE: Kary L. Krismer @ 103

    Kary is correct. The rubber meets the road in the area, neighborhood, price range and house style.

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  107. 107
    deejayoh says:

    By patient @ 81:

    RE: Greg Perry @ 79

    ” IMO, the tax credit, low prices and low interest rates.”

    Imo, none of that makes any sense.
    – The tax credit is insignificant to the decision of ponying up several 100k or not.
    – Prices are not low, just less outrageous.
    – The interest rate did not go down overnight at the infliction point Greg mentions.

    If there is a bump ( closed sales will tell ) it’s more likely due to that people think they get deals on short sales and REOs. I’m highly skeptical to the bump being anything else than normal seasonality and even more skpetical to people getting deals when all is said and done.

    I am more inclined to believe the tax credit has driven volume – especially at the low end where pendings are picking up

    For a $400k house you are talking about an $80k down payment – so the tax credit just increased the ability to swing that deal for a lot of first time buyers. It’s a 10% increase in cash available in the next 12 months.

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  108. 108
    Kary L. Krismer says:

    People, let’s put this in perspective. Even if June is 2000 sales, that would still be below normal for June. So it’s not like everyone is running out and buying property.

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  109. 109
    Kary L. Krismer says:

    RE: deejayoh @ 107 – A $400,000 house would require a $14,000 down payment.

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  110. 110
    Greg Perry says:

    RE: deejayoh @ 107

    Actually deejayoh, most buyers will only need at $14,000 down payment (3.5% FHA). VA and rural farm loan programs are still available at zero down.

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  111. 111
    TheHulk says:

    Ok Greg, we all understand your need to track pendings (it seems to be the only positive statistic left to look at).

    Let me ask you this. What about reliability? There is a reason people track closings, medians, sales volume and Case Schiller numbers so closely. For one thing they are actual deals that have been finished. It means money has actually changed hands and something concrete has happened.

    Pendings are like the put/options market. As far as accuracy goes, they have as much reliability as a hurricane path.

    If I was in the real estate business, I would be doing a disservice to my clients by telling them about pendings since that is incomplete and inaccurate information (especially based on how many pending statuses there are and an indeterministic number of them fail to close).

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  112. 112
    Greg Perry says:

    RE: TheHulk @ 111

    “Reliability” when looking YOY between previous months to July 2008 will always be questioned.

    I repeat, in recent history WE HAVE NOT SEEN markets where a number like pendings double like they did between Feb/April COMBINED with the higher fallout percentage and slower closing dynamic of short sales. This market is different and pendings are reacting different. As for accuracy, real estate numbers are never totally accurate. They are at most relative.

    I also watch medians, C/S, price per sq. foot and other “historical” measurements.
    See: http://www.workingforyou.typepad.com//realestate/2009/05/king-county-highs-and-lows-real-estate-statistics-residential-houses.html

    You are correct in that talking only about pendings does not give a complete picture. Pendings are the subject of this post. To understand market strength, sales ratios — the ratio between active and pendings tell us the relative strength of the market at the time.

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  113. 113
    waitingforseattletocool says:

    RE: TheHulk @ 111

    So what other data point do you propose to use to show the trend in the market place going forward?

    Of all the data The Tim uses in month end statistics, pending sales and inventory are the only two that are forward looking.

    Closed sales and YOY pricing are backward looking.

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  114. 114
    Kary L. Krismer says:

    RE: TheHulk @ 111 – They’re a leading indicator, but sometimes inaccurate. For example, looking at pendings in March would have lead you to the wrong conclusion as to where the price was headed. That’s what leading indicators are–indicators.

    You’re not going to get an increase in sales without an increase in pendings. But you could get an increase in pendings without getting an increase in sales.

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  115. 115
    patient says:

    By Kary L. Krismer @ 108:

    People, let’s put this in perspective. Even if June is 2000 sales, that would still be below normal for June. So it’s not like everyone is running out and buying property.

    That makes sense because if they were I would assume neither you, Greg, Ira or Ray would have the time or incentive to post here. As long as we see your comments here we assume the market is depressed, I would rate that as a more reliable metric than pendings ;-)

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  116. 116
    Kary L. Krismer says:

    By waitingforseattletocool @ 113:

    RE: TheHulk @ 111 – Closed sales and YOY pricing are backward looking.

    And Case-Shiller is backward looking using a telescope.

    Even on the NWMLS data, when it’s released say on the 6th, about half of those sales were written about 60 days earlier. Agents, buyers and sellers really don’t care that much about what was happening 60 days ago. They care about today.

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  117. 117
    Kary L. Krismer says:

    RE: patient @ 115 – That would be an incorrect assumption. I wasn’t posting here back at the beginning of 2007 when I was perhaps the busiest I’ve ever been, but I was still posting at the places I posted at the time.

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  118. 118
    biliruben says:

    By Kary L. Krismer @ 62:

    On the topic of pending volume, one thing being ignored is that sales typically generate sales. Unless someone is moving to another state or unable or unwilling to buy again, they will likely buy another place when they sell their place. Relatively few people are buying a new place first these days.

    Anyway, as the market picks up, you’d expect it to pick up more–again all things being equal, which they won’t be at least over longer time frames.

    -KK

    NAR says many current sales are one and done:

    There is no “chain reaction” in the housing market – over half the sales are to first time buyers, and frequently the sellers are banks.

    I hear this from real estate agents all the time: the agents (low end) are plenty busy with REOs and short sales, but the deals are mostly “one and done”.

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  119. 119
    patient says:

    RE: Kary L. Krismer @ 117 – Incentive Kary, incentive. This is Seattle Bubble and you probably saw no reason to blog here while business was blooming. You don’t think at least your comment frequency here would drop if it were 2005 all over again? I thought an agent needed to be on the road some of the time? Anyway it was mostly an attempt to a lame joke.

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  120. 120
    patient says:

    By biliruben @ 118:

    By Kary L. Krismer @ 62:
    On the topic of pending volume, one thing being ignored is that sales typically generate sales. Unless someone is moving to another state or unable or unwilling to buy again, they will likely buy another place when they sell their place. Relatively few people are buying a new place first these days.

    Anyway, as the market picks up, you’d expect it to pick up more–again all things being equal, which they won’t be at least over longer time frames.

    -KK

    NAR says many current sales are one and done:

    There is no “chain reaction” in the housing market – over half the sales are to first time buyers, and frequently the sellers are banks.

    I hear this from real estate agents all the time: the agents (low end) are plenty busy with REOs and short sales, but the deals are mostly “one and done”.

    Thanks biliruben, makes sense. As and add-on to that the joy over potentially increasing sales now is probably somewhat misguided. Prices will likely continue to decline making today’s first time home buyers another round of owners unable to do the “move up” in the average 5-7 years due to lack of equity prolonging the low volume for a long, long time. A sharp reset to sustainable prices would be good for most but interrestingly enough best for real estate agents who rely on volumes for their income.

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  121. 121
    Kary L. Krismer says:

    RE: biliruben @ 118 – It would depend on the area of the country. As I mentioned, seemingly only 10% of sales are REO or SS. We’ll have a better idea how that holds up towards the end of the month, and an even better idea in 3-4 months. Agents should be indicating REO or SS when they take a listing to sold, but they’ll be most likely to do that under the new system when they enter a new listing.

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  122. 122
    biliruben says:

    How are you calculating the 10% number?

    The reason we are seeing so many REOs and short sales in Cali and other bubbly places is that prices dropped there earlier than here in Seattle. Now, as more sellers are underwater due to declining prices, don’t you think that will lead to a much larger portion of REO and SS going forward?

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  123. 123
    Kary L. Krismer says:

    RE: biliruben @ 118 – Also, I really doubt the NAR has a way of tracking their claim that half the buyers were first time buyers, but regardless, again that’s a national stat where they say the median is $169,000. It’s a lot easier for half of the buyers nationally to be first time buyers where the median is $169k, than for half the buyers here to be first time buyers where the median is $380,000. And even if it were true, that wouldn’t mean it wouldn’t result in a second sale.

    What you’d really need to do is track total sales, back out short sales, REOs, bankruptcies and also any sale where the seller didn’t net maybe $12,000-15,000 for a down payment on a new house, and even that would assume they didn’t have another source for down payment.

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  124. 124
    Kary L. Krismer says:

    RE: biliruben @ 122 – I’m looking at the sales that have closed so far this month, and less than 10% of those sales indicate SS or REO based on the check box. But as mentioned, newer listings will be more likely to be accurate in that regard.

    Yes if prices decline further and the economy gets worse we’ll see more SS and REO.

    BTW, even my statement above isn’t quite accurate, because I had a bankruptcy sale this month where the buyers didn’t buy until their other place sold, and they specifically placed their property on the market to buy my bankruptcy listing. So the bankruptcy sale was the second sale. It won’t generate a third sale, however. That’s the end of the chain.

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  125. 125
    One Eyed Man says:

    RE: patient @ 115

    Patient, don’t forget that although this site is a source of information and intellectual exercise for many, it also may have some collateral promotional benefit for some. Even in good markets most agents spend a fair part of their time promoting their own business. And even in a good market, many of the same names would show up in the comments. I’m not being critical, here. I’m just stating a fact. I don’t think it’s a coincidence that some people use their real names and faces on this site. Take Greg for example. I don’t know if that’s his name, but I’m pretty sure that’s his face. Of course, One Eye is only a nick name, but my wife will tell you I am kind of a dog. And although I’ve never been a sheperd, I do have a little german blood in me.;-)

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  126. 126
    Kary L. Krismer says:

    RE: One Eyed Man @ 125 – Actually, this site is a better source of information than business.

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  127. 127
    deejayoh says:

    By Greg Perry @ 110:

    RE: deejayoh @ 107

    Actually deejayoh, most buyers will only need at $14,000 down payment (3.5% FHA). VA and rural farm loan programs are still available at zero down.

    By Kary L. Krismer @ 109:

    RE: deejayoh @ 107 – A $400,000 house would require a $14,000 down payment.

    So $8k is an even bigger incentive, if it gives you back half your down payment. that just reinforces my belief that this is driving sales

    However – Interesting report from the “Washington Office of Budget and Policy” I heard about on the radio this morning

    Nationwide, 77 percent of subprime loans with adjustable rates have already seen the first reset of the interest rate.13 In Washington State, only 67 percent have already been reset. In other words, 33 percent of subprime adjustable-rate mortgages in Washington State are still at the original interest rate (Figure 4). This is a higher rate than all but two states (Utah and Oregon).
    This is problematic because the subprime mortgages most likely to go into delinquency or foreclosure are those with adjustable interest rates. Homeowners with these loans see significant increases in their mortgage bill from one month to the next and the additional cost can lead to late payments and eventually, foreclosure. Many Washington homeowners are still awaiting that increased cost. In the next 12 months, it is expected that interest rates will reset on 23 percent of subprime adjustable rate mortgages in the state, a higher share during that period than nearly every other state (Figure 4).
    Problems for strapped homeowners can be exacerbated by prepayment penalties and large loan balances. Thirty-two percent of subprime mortgages in Washington State have prepayment penalties currently in force, a higher percentage than nearly every other state. And only 10 states have larger average subprime loan balances.
    These statistics do not necessarily suggest that the Washington State situation will become as severe as Florida where 1 of every 10 mortgages are seriously delinquent or in foreclosure, but they do suggest that the worst for Washington State may still be ahead.

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  128. 128
    patient says:

    RE: One Eyed Man @ 125 – Point taken, but you probably won’t see agents engaging in endless discussions over pendings when closings are in the 3000s…Whatever, I’m find myself dragged into to many subjects I’m not really interrested in today. I.e pendings and why agents blog.

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  129. 129
    One Eyed Man says:

    RE: Kary L. Krismer @ 126
    If I didn’t agree with that Kary, I’d be using my real name and picture.

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  130. 130
    S-Crow says:

    deejayoh- re 127: the article to you cite regarding subprime and prepayment penalties.

    I can’t attest first hand that PPP’s are really putting those refinancing into a pickle with declining housing values. They are making it exceptionally difficult to refi because a number of people roll costs (including PPP’s if they don’t have the time to let it expire) into the new loan amount (higher). LO’s who sold these loans are having difficult discussions with their clients (if those refinancing are even using the same loan officer again).

    .

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  131. 131

    I’M STILL LAUGHING MY HEAD OFF OVER ANY BUYER BUYING A $400K HOME FOR $14K (3.5%) DOWN TODAY

    What happens when the house potentially/likely crashes another 13.5% or even 23.5% down the road very soon? Ya hand the keys back to the bank for tax payer assistance? Ya refinance to the magic new 0.5% FHA interest rate with your wonderful 600 credit rating….LOL

    Sounds like Gary and Kary don’t want the subprime mess to ever end?

    How many investment homes did they buy in error the last few years?

    Thank God I’m debt free….LOL

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  132. 132
    mukoh says:

    Buyers now are qualifying on 35% Debt/Income ratio’s that is what is vastly different from 2006/7/8 years. I haven’t seen a single LO have who has 20 applications get more then 50% through. This is vastly different from years gone by. I think when a person is buying at that ratio it is reasonable to assume they are not going to stop paying, unless there is a drastic change in their employement situation.

    Speaking of employement news one contractor for MS reduced all of their employees salaries by 10%. Khmmm.

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  133. 133
    Kary L. Krismer says:

    RE: softwarengineer @ 131 – Wow, hard to imagine what’s wrong with that post.

    First, sub-prime ended back in 2008.

    Second, no investment properties here.

    Third, do you really think someone is better off who put 20% down if afterward the market goes down 13.5 or 23.5%? I suggest you Google the term leverage, and then maybe you’ll understand what happens if values go up or down on a leveraged investment.

    Anything else you’d care to speculate about or guess wrong on? ;-)

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  134. 134

    YOU’RE RIGHT MUKOH

    I hear Snohomish government workers recently took 5% cuts in hours and I’m hearing other local government across the board pay slashes too….none of underemployed gets tracked in unemployment rates though.

    Maybe the Stimulus Money to local governments will stretch longer now…LOL

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  135. 135

    HI KARY

    We’re just two opinions on the opposite sides of the river, but I do appreciate youir candor.

    What is leverage when price plummets? Deleveraged?

    I’d rather put my down payment (even 3.5%) in a cash can; at least it doesn’t disappear and I can maybe buy in:

    a. when I’m good and ready
    b. or never, what’s wrong with renting on the cheap?

    As a rentor though I’d do thorough credit checks on my landlords; I just went on a coffee date with a gal that’s renting and her landlord is about to foreclose and she gets evicted. She’s horrified.

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  136. 136
    Kary L. Krismer says:

    RE: softwarengineer @ 135 – Interesting you use the cash can example. One of the BS scripts that mortgage people used previously was a story of two people who bought a house, and one put the money in a cash can buried in the back yard, rather than into a down payment. The idea was to convince the buyer to get as large a loan as possible in order to get the mortgage person as large a fee as possible on the purchase. It was similar to the script used to promote option arms.

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  137. 137
    mukoh says:

    I think leveraging personal property is fairly convoluted idea, at least from my opinion. Personal should be paid off.

    Leverage is good in investment ROI leveraging to provide a better return, and less risk.

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  138. 138
    Greg Perry says:

    Another very interesting observation:

    339 of the 2009 SFH pendings in April 09 on Trendgraphix are NEW CONSTRUCTION pendings. (King County)

    King County NC for April 2009 = 1878 active, 339 pending 5.5 MOS based on pendings

    Monthly NC active/ pending/sold counts since September 2008:

    Month Active Pending MOS Closed MOS (closed)
    9/08 2231 190 11.7 227 9.8
    10/08 2274 126 18.0 214 10.6
    11/08 2251 142 15.9 107 21.0
    12/08 2154 118 18.3 173 12.5
    01/09 1954 135 14.5 85 23.0
    2/09 2113 183 11.5 122 17.3
    3/09 2019 231 8.7 172 11.7
    4/09 1878 339 5.5 163 11.5

    (statistics from trendgraphix from NWMLS, but not verified or published by NWMLS)

    I didn’t realize until now that there are a huge number of new construction homes included in the monthly pending numbers.

    I don’t have any opinions yet on what this means.

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  139. 139
    Eastside Westside Its All Good says:

    Weren’t there a number of real estate auctions in the Mar/Apr time frame? I may be making up a memory, but I recall that several developments were put up in bulk auctions.

    That would explain a jump in pendings.

    Anyone buying into or selling “consumer confidence” (ie Greg) either has an agenda or has no understand of the reality out there. U3 unemployment may be 8.9%, but U6 in Washington State is 16%+

    Look at today’s MSNBC story in travel on how everyone is cutting WAY back on vacations – except for higher income households who are bargain hunting.

    When you consider – tighter credit for indviduals and small businesses, U6, no household equity to trade up from and people on eggshells from fear of more Boeing/Microsoft layoffs – who exactly are these confident people driving this spring jump in demand???

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  140. 140
    Greg Perry says:

    By Eastside Westside Its All Good @ 139:

    Weren’t there a number of real estate auctions in the Mar/Apr time frame? I may be making up a memory, but I recall that several developments were put up in bulk auctions.

    That would explain a jump in pendings.

    Anyone buying into or selling “consumer confidence” (ie Greg) either has an agenda or has no understand of the reality out there. U3 unemployment may be 8.9%, but U6 in Washington State is 16%+

    Look at today’s MSNBC story in travel on how everyone is cutting WAY back on vacations – except for higher income households who are bargain hunting.

    When you consider – tighter credit for indviduals and small businesses, U6, no household equity to trade up from and people on eggshells from fear of more Boeing/Microsoft layoffs – who exactly are these confident people driving this spring jump in demand???

    Would not explain pendings. Auctions are not listed properties, therefore would not appear pending.

    Like it or not, buyers are on the streets making these purchases.

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  141. 141
    Greg Perry says:

    I will admit that this is one of the craziest real estate graphs I’ve ever seen, however. It hits to the core of the discussion.

    http://www.workingforyou.typepad.com//.a/6a00d83451cc6269e201156f8c9bd0970c-popup

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  142. 142
    Eastside Westside Its All Good says:

    It’s not a question of like it or not for me Greg, I’m just trying to understand who these people are. I can count on one hand the number of people I know who are in the market (myself included). We are all upper income and renting with downpayments in treasuries or CDs. Buying has been a function of how long we are OK with renting. All of us are turning into ‘first time buyers’ based upon our time as renters. As a 20+ year homeowner now renting (sold at peak in ’07 in another market before moving here), I am not a traditional first time buyer. All THOSE folks (25-32) are in tough straits since many of them counted on their parents wealth for their downpayments.

    “Like it or not, buyers are on the streets making these purchases.”

    So here is the problem for me – the beginnings of a real estate recovery will require some normalcy in home buying behavior – such things as move up buying or selling a home at a profit). How can a recovery take hold if no one is making a profit?

    What we are seeing is the handful of people who are the sidelines taking their shots at what inventory is out there. (Has anyone seen existing homeowners selling and buying?) That population is not sufficiently large to sustain anything.

    The other big barrier to recovery here – California. The people who drove up prices here – all those Cali escapees – they’ve stopped coming. In fact, we have already begun to lose population to SD, LA and SF since we are no longer less expensive and we no longer have more jobs than any of those areas.

    Greg, if you are going to convince people on this site of the questionable demand (to some of us), you will need to explain how it is happening. Who are these people? Why will Seattle prices stabilize above San Diego? Who is hiring? What company is relocating people to Seattle and bringing homebuyers?

    Absent any rationale, your statements are implausible.

    Taking it further, ignoring any claims of a RE recovery by interested parties (realtors and all the Lawrence Yun progeny) is simpy common sense. Your opinion can’t be trusted Greg, with all due respect, because you have the most to gain by convincing others of your point of view.

    I saw some houses this past weekend, one that I liked (though not at current price), and the realtor couldn’t help but toss me some lines about how the houses are getting snatched up. The automatic attempt to create urgency and a sense of scarcity will have me look with another realtor next time.

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  143. 143
    JJL says:

    RE: Greg Perry @ 138

    Greg… Here are the actual numbers from the NWMLS:

    King County
    Pending Sales Reported for April
    2114 Residential Resales
    351 Residential New Contruction
    532 Condo Resales
    82 Condo New Construction
    TOTAL PENDING=3,079

    I’m not sure who puts the numbers in for Trendgraphics but they don’t match up with the numbers put out by the NWMLS.

    As usual: Statistics not complied nor published by NWMLS

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  144. 144
    David Losh says:

    WOW what a day.

    Let me turn this around because pending sales mean nothing in today’s market place. Some people want or need to buy and this is the window to do that. Of course I would have waited until August, but if you have kids it’s hard to get settled during the start of a school year. Mom, dad, and the kids are the most motivated buyer pool.

    In addition there is a huge increase in new construction sales with 2.87% to 4% special builder financing. Which brings us to the banks.

    Yes it was the end of the foreclosure moratorium, along with Wells Fargo leaking the profit report, and the leaking of the stress test results. The economy looked good there for about a month. Banks are talking about giving back money or they don’t need money. BECU claimed a 20% increase in deposits.

    Then Warren Buffet hit the talk show circuit talking about the end of the recession. As an aside Warren is looking more and more like P.T. Barnum to me. He has the guys dressed as Fruit of the Loon, cavemen, and a talking lizard.

    To give banks a further boost President Obama gets up and tells 9 million Americans they can save money if the just refinance their homes.

    I find the housing activity unremarkable given the amount of good news thrown around. It’s hard to remember now but we had a full recession way back in January.

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  145. 145
    Greg Perry says:

    RE: Eastside Westside Its All Good @ 142

    Well, the way I see it there are 3 separate issues.
    1. Buyers are making purchases (homes going pending)
    2. Why are the buyers buying homes?
    3. What is causing the widening gap between pending and closed?

    I asked the second question in 79 above. Tim as asked question #3 several times in the last 2 weeks.

    I don’t see any way to debate #1. I’m not here to convince these sales are happening. They are happening.

    #2 and #3 have been hashed about pretty good.

    Now as for recovery, I have offered no opinions for prolonged long term recovery. I challenge you to find one. We’re discussing the spike in April pendings, and I have shared additional information on the price range here the majority of these pendings are happening.

    Next as for credibility, I don’t worry too much about your opinions. BTW, exactly what do you do for a living that makes you such a real estate market expert?

    Lastly, I have made it clear here that I have deep concerns for overall and lasting recovery. There are plenty of local and national issues that will create huge pot holes to healthy recovery. I agree with your statement about real recovery starting with normalizing buyer behavior. I also agree that the move up buyer is lacking in this market. I have said this many times in many ways — and as far as I know — introduced the concept of market compression to this blog, which I’m sure we’ll be cussin’ and discussin’ in the future.

    So, in short I don’t and won’t try to convince anyone that demand is up. If you’re so myopic that you can’t see numbers in front of you, we’ll as I said above, “You can’t argue with the ignorant”.

    Argue about what it all means, OK. But look at the result and deny it?

    The weekly rise in pending numbers may end this week, or it may go on awhile. I’ll make you a deal, if they go up — or they go down, I’ll let you know what happens.

    BTW, you should know I had 14 offers on a recent listing.

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  146. 146
    Greg Perry says:

    RE: JJL @ 143

    Trendgraphix does a manual correction process of NWMLS data. Their numbers are always conservative to what the NWMLS publishes. I actually have more faith in their corrected numbers than the released data, and since their numbers always come out more conservative, I don’t see any harm in using them. The crowd here should like it because they lop off some of the NWMLS published demand.

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  147. 147
    Eastside Westside Its All Good says:

    re: 145

    I used to forecast market conditions for one of the largest homebuilders in the country, including the interelation between metros nationally. I also worked in finance modeling exchange rates and stock indexes.

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  148. 148
    David Losh says:

    RE: Greg Perry @ 146RE: Greg Perry @ 145

    Here’s the deal though. Sales increase every year. I did look at pendings and there were many that went from pending inspection back to active. There has been some heavy negotiating this year.

    Let me also say this about sales strategy. If you price a property low enough it will get multiple offers. I know we are in a market where that makes sense to do. What makes me reluctant is that it is many times a poor strategy for the seller. It’s a sales technique.

    Trendgraphix is a a sales tool. It’s sold as a sales tool. Windermere has their agents pay for it. Some agents use it in a CMA presentation to show market “trends.”

    The CMA is specific to a house in a neighborhood. Showing what King County did means every little, sorry. Actually in Seattle showing a 1 mile radius can be very deceiving. 1 mile is acceptable in appraising as long as the comparable is indeed comparable, but it needs to conform to other like kind properties.

    Am I rambling too much? Stop me if you’ve heard this before.

    All of the area pendings or solds are interesting to look at, but detailed analysis on a broad scale is worth nothing. A Real Estate transaction is between two individuals. They are to have a meeting of the minds about the exchange of consideration, most times cash, for a specific property.

    When you hire a Real Estate agent your agent should be able to research beyond any doubt the value of the property. They then negotiate the best terms, in your best interest.

    That’s it. I can know what the Real Estate market will do in the next three years and keep that in mind while helping a person, but Real Estate is a snap shot in time. It’s fluid. Nuances change hour to hour. Paul Volcker can get up in a meeting before Congress and say he doesn’t care about inflation. Obama can make a speech in the morning that will spike interest rates to 13%.

    I’m just saying.

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  149. 149

    “BTW, you should know I had 14 offers on a recent listing. ”

    Greg,
    I think that’s more an indication that you’re a good agent rather than an indication that buyers are everywhere.
    Some sellers aren’t lucky enough to have an agent like yourself who will browbeat them into listing their home at a price to sell, and their homes linger on the market, seemingly forever.

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  150. 150
    Greg Perry says:

    RE: Eastside Westside Its All Good @ 147

    Good to know. You do have market analysis experience. As I noted, I agreed with several of your conclusions.

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  151. 151
    Greg Perry says:

    By Eastside Westside Its All Good @ 147:

    re: 145

    I used to forecast market conditions for one of the largest homebuilders in the country, including the interelation between metros nationally. I also worked in finance modeling exchange rates and stock indexes.

    Do you have any sense for what to expect in the way of upcoming new construction markets? I’ve heard several theorize that once current inventory is sold through (absorbed), there could be an 18-24 month lag before substantially more ready to sell inventory is on line.

    Many (most) builders have credit problems and aren’t buying up land?

    Let us know if you have any insights.

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  152. 152
    Magnolia44 says:

    This thread has convinced me, the 50% off crowd here are some cooks.

    Yes the 3000+ people who bought homes this month are whacks, and the 40 if that loyalists here have it all right.
    40 is generous

    Good night folks.

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  153. 153
    mukoh says:

    #148. Ummmm, Hmmmmm. Yeah. Nice and organized way of saying nothing.

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  154. 154
    Kary L. Krismer says:

    RE: Magnolia44 @ 152 – Okay, I’ll follow that up by pointing out that 1,000 people buying a month is a horrible market, 2,000 a bad market and 3,000 a great market. Now compare those numbers to the number of households in the Seattle area and you’ll see that a very tiny percentage of the population drives the market at any given time.

    That’s why foreclosures are potentially so devastating. They can happen in numbers that would overwhelm what would otherwise be the normal activity.

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  155. 155
    David Losh says:

    RE: mukoh @ 153

    Got it, but please put some cohesive thoughts together.

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  156. 156
    David Losh says:

    RE: Ira Sacharoff @ 149

    an agent like yourself who will browbeat them into listing their home at a price to sell

    It depends on what’s in the seller’s best interest.

    A Real Estate agent is not a commissioned sales person. An agent should advocate for the clients wishes and in thier best interests. Some times that means the best price. Some times it means to get rid of it.

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  157. 157

    RE: David Losh @ 156
    Totally agree with you, David. But I was specifically referring to the times right now where there are a lot of properties just lingering because the prices are too high and there aren’t as many sales as in the past.
    Sure, if you feel that someone will ultimately pay a high price for the house and the client understands that it may take time to sell that house at that price and might not be able to at all, sure. But in general, if prices are continuing to decline, and your client is not Bill Gates, it’s probably a good idea to price it on the low end.

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  158. 158
    Joel says:

    Popular opinions are always right.

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  159. 159
    what goes up must come down says:

    Mag44 your posts get angrier by the day. You must be at periscope depth now.

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  160. 160
    what goes up must come down says:

    Greg I just read that retails sales unexpectedly dropped this month maybe that consumer is not as confident as you think.

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  161. 161
    David Losh says:

    RE: Ira Sacharoff @ 157

    I do tell every one that prices are declining and to get rid of the property. Then you have a Catch 22 of what the numbers say. Several properties are 10% below what the CMA says and they are still lingering. When an agent starts going 20% below market CMA there is activity in any market.

    There have been deals where a property, listed below market, got the fourteen offers only to come back onto the market and languish. Some agents have used the term that a property will get “bid up” to market price and I have yet to see that happen.

    In my opinion the structured price reduction is the best.

    What’s really best is if buyer’s agents would make offers on properties a client is interested in. My main rant is that buyer’s agents look at list price as a retail sticker when it’s all negotiable.

    Saying it’s the listing agents job to price the property below market so the buyer’s agent has an easy target is doing both agents job. Buyers waiting for property prices to come down is going to take a long time.

    If an agent has a buyer it should be their job to find a property that works for the buyer. I don’t think we are all here to make a buyer’s agent job as easy as we can.

    Here’s how the sales aspect of the buyer’s agent works. The buyer’s agent is sitting on the computer checking prices every morning. One morning a special super low priced bargain comes on as a new listing and the agent breathlessly gets on the phone to the buyer. They will say and I quote, “There is a steal of a deal on the market today. You’ve got to jump on it or it will be gone this afternoon, skip work and let’s go look at it.”

    This is exactly why people get the idea all they have to do is to check the computer.

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  162. 162
    Kary L. Krismer says:

    What I don’t like about structured price reductions is they seem to be based on the idea that properties sell at a given price within 30 days. That’s not even true during good times. Thus I view a structured price reduction system as being more something for people who are very desperate to sell. Note, however, I’m not talking about reviewing prices every X days, only something where it’s agreed in advance that the price will be reduced $XX,XXX.xx every Y days.

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  163. 163
    Greg Perry says:

    By what goes up must come down @ 160:

    Greg I just read that retails sales unexpectedly dropped this month maybe that consumer is not as confident as you think.

    Hmmm, perhaps they’re not buying crap from the stores to save up for a down payment?

    Ok! That’s my story and I’m sticking to it!

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  164. 164
    The Tim says:

    Heh, in case anyone is curious, with the addition of this comment, this thread is now tied for the 10th-most-commented post on the site.

    1. May Reporting Roundup (2008) – 330 comments
    2. House Valuation Workshop – 232 comments
    3. Official Word on Microsoft Layoffs – 218 comments
    4. June Reporting Roundup (2008) – 206 comments
    5. Predictions: 2007 Revisited, 2008 Prognosticated – 186 comments
    6. Breaking: House Votes Down $700B Bailout – 179 comments
    7. More Unfounded Starry-Eyed Nonsense from Lawrence Yun – 173 comments
    8. Who gives a RA about the banks, anyway? – 168 comments
    9. Sell at a loss, or refinance and wait it out? – 167 comments
    10. (tie) What’s Your Housing Bust Strategy? – 164 comments
      Recent Spike in “Pending” Sales Due to Change in Definition? – 164 comments

    Not much further and we can break into the top 5! :^)

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  165. 165
    Civil Servant says:

    Greg, did you mean to be insulting @ 146?

    “The crowd here should like it because they lop off some of the NWMLS published demand”: are you implying that “the crowd here” would rather have their alleged biases reinforced by low demand numbers than work with accurate, vetted statistics — instead of, perhaps, the assurance that open house traffic is up or your claim a few days ago that the market has suddenly “gone from 0 to 60″?

    Generally speaking, Greg, we dig solid data. We don’t want anything lopped off. And we are avidly aware that you are trying to sell us something.

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  166. 166
    TheHulk says:

    RE: Civil Servant @ 165

    Spot on Civil.

    Also Greg, you can toot your horn all you like about pendings.

    Basic market psychology has changed from “OMG you didnt buy a house?? and you are renting?? you are just throwing away money” to “golly, I wish I had rented for the past 5 years and saved up for a downpayment, whatever money I put in my house is going to disappear after transaction costs”.

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  167. 167
    David Losh says:

    RE: Kary L. Krismer @ 162

    My number one tool is price per square foot, then it’s by comparison to like kind sold properties.

    Sellers now have the pictures and stats on surrounding properties from ridfen and zillow. Most interview a group of agents. After price it’s presentation. Buying a listing is never a good idea.

    What i like is to list at market value with the agreement to lower the price if it doesn’t sell in two weeks. My goal is that if it gets showings but no offers it’s 5% over priced, and no showings 10% over priced, I will do 5% increment reductions.

    My Queen Ann listing is something near and dear to my heart. It is a property of exceptional value. It has the price reductions, but it will take a special buyer at any price.

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  168. 168

    […] 07/08 will appear lower, pending sales higher, and months of supply lower than prior to 07/08. See this post for more details.) King – Price: -15.3% | Listings: -15.9% | Sales: +14.9% | MOS: 4.5 Snohomish – Price: -14.3% | […]

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  169. 169

    […] 07/08 will appear lower, pending sales higher, and months of supply lower than prior to 07/08. See this post for more details.) King – Price: -14.8% | Listings: -20.0% | Sales: +27.2% | MOS: 4.4 Snohomish – Price: -11.4% | […]

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  170. 170

    […] to the definition change by the NWMLS in both the numerator and the denominator in the “months of supply” calculations, I am […]

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  171. 171

    […] definition of what counts as a “pending sale” in July 2008 to inflate the numbers (details here), I fail to see how this is a headline-worthy […]

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