Posted by: 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 responses to “Recent Spike in “Pending” Sales Due to Change in Definition?”

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  1. dancingeek

    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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  2. Greg Perry

    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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  3. Kary L. Krismer

    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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  4. Greg Perry

    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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  5. patient

    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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  6. Greg Perry

    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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  7. deejayoh

    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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  8. Kary L. Krismer

    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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  9. Kary L. Krismer

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

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  10. Greg Perry

    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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  11. TheHulk

    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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  12. Greg Perry

    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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  13. waitingforseattletocool

    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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  14. Kary L. Krismer

    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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  15. patient

    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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  16. Kary L. Krismer

    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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  17. Kary L. Krismer

    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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  18. biliruben

    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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  19. patient

    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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  20. patient

    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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  21. Kary L. Krismer

    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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  22. biliruben

    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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  23. Kary L. Krismer

    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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  24. Kary L. Krismer

    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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  25. One Eyed Man

    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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  26. Kary L. Krismer

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

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  27. deejayoh

    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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  28. patient

    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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  29. One Eyed Man

    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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  30. S-Crow

    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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  31. softwarengineer

    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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  32. mukoh

    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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  33. Kary L. Krismer

    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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  34. softwarengineer

    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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  35. softwarengineer

    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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  36. Kary L. Krismer

    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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  37. mukoh

    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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  38. Greg Perry

    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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  39. Eastside Westside Its All Good

    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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  40. Greg Perry

    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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  41. Greg Perry

    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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  42. Eastside Westside Its All Good

    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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  43. JJL

    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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  44. David Losh

    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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  45. Greg Perry

    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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  46. Greg Perry

    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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  47. Eastside Westside Its All Good

    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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  48. David Losh

    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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  49. Ira Sacharoff

    “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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  50. Greg Perry

    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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  51. Greg Perry

    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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  52. Magnolia44

    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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  53. mukoh

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

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  54. Kary L. Krismer

    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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  55. David Losh

    RE: mukoh @ 153

    Got it, but please put some cohesive thoughts together.

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  56. David Losh

    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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  57. Ira Sacharoff

    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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  58. Joel

    Popular opinions are always right.

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  59. what goes up must come down

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

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  60. what goes up must come down

    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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  61. David Losh

    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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  62. Kary L. Krismer

    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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  63. Greg Perry

    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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  64. Civil Servant

    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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  65. TheHulk

    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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  66. David Losh

    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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  67. Puget Sound Counties Interactive April Update | Seattle Bubble — News & discussion about real estate & the housing bubble in the Seattle area.

    [...] 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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  68. Puget Sound Counties Interactive May Update | Seattle Bubble — News & discussion about real estate & the housing bubble in the Seattle area.

    [...] 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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  69. May Seasonally-Adjusted Active Supply by Neighborhood | Seattle Bubble — News & discussion about real estate & the housing bubble in the Seattle area.

    [...] 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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  70. Seattle Bubble • NWMLS: Median Price Still Down Double Digits from 2010

    [...] 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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