Let’s check out the three price tiers for the Seattle area, as measured by Case-Shiller. Remember, Case-Shiller’s “Seattle” data is based on single-family home repeat sales in King, Pierce, and Snohomish counties.
Note that the tiers are determined by sale volume. In other words, 1/3 of all sales fall into each tier. For more details on the tier methodologies, hit the full methodology pdf. Here are the current tier breakpoints:
- Low Tier: < $264810
- Mid Tier: $264810 – $387274
- Hi Tier: > $387274
First up is the straight graph of the index from January 2000 through March 2009.
All three tiers dropped again in March, with the middle tier taking the smallest hit at -1.7% and the low tier taking the largest at -2.4%. The low tier has rewound to March 2005, the middle and the high tiers to May 2005.
Here’s a chart of the year-over-year change in the index from January 2003 through March 2009.
The high tier reversed its trend of improvement from February, hitting a new low in March at -15.8%. The low tier fell furthest over the year yet again. Here’s where the tiers sit YOY as of March – Low: -18.5%, Med: -15.8%, Hi: -15.8%.
Lastly, here’s a decline-from-peak graph like the one posted yesterday, but looking only at the Seattle tiers.
The declines in each tier seem to be tracking fairly close to each other the last couple of months.
(Home Price Indices, Standard & Poor’s, 05.26.2009)
With almost 10% state income tax in California for most homeowners, the state basically bankrupt and taxes probably increasing, I don’t really see how bailing to san diego is going to save much cash if any.
Just wondering:
If the low tier homes have fallen further and faster than middle and high tier homes, do y’all feel that it will hit bottom first?
Strikes me that some of the lowest of the low currently for sale could probably rent out for more than the monthly mortgage payment.
Not that being a slumlord has much appeal, but…
Since I am in seattle and that is about all I am interested in, the tier data is always pretty hard to interpret as the low tier basically does not exist in the CS ranges for the areas I would be interested in. I think the low tier may be a decent way to look at a lot of the sales in pierce, snohomish and outlying parts of king county, so I doubt it will rebound first.
Ira @ 2-
If Phoenix and Vegas are any indication, it seems that the low end will rebound first. That said, I think its too early to tell…many speculators down there could very easily get burned.
Ira, I think you’re right. There are a couple of bargain-basement properties for sale in my neighborhood that would pull in positive cash flow if they sold at the listed price and rented at market rates.
I have no problem whatsoever with being a slumlord. Alas, I have other fish to fry these days.
Wait,
So we’re continuing to drop home values even though it’s bright and sunny outside! Who could have predicted this!?
…..and the inventory tracker is back over 10000 units. Cheers! It should continue the trend for a couple of months or until school starts.
Median regional price will be again in the high $100s.
Just curious but is there a case-shiller equivalent for condos or are they considered in the cs index?
I’ve been monitoring downtown Bellevue condo prices and they seem to be stuck at bubble levels with no give.
RE: db @ 8 – Case-Shiller considers SFH only, and unfortunately I do not know of any equivalent index for condos.
$600K SEATTLE HOMES LOST ABOUT $100-140K IN VALUE PER TIM’S CHART
And if you bought one the last few years on a like 30 year fixed its slamdunk your lousy investment is a horrifying upside down investment. Commercial real estate hasn’t hit the news but I hear Snohomish County is planning more lay-offs of local government, because big land deals out there are bankrupting and owe the county money.
Wouldn’t surprise me at all if King County is in a worse mess than Snohomish.
Imagine when the effect of 2006’s ripoff home prices are removed from our local governments’ main tax base; property tax calculated on a three year average. This will occur in 2010. The solution, raise taxes on the employed/underemployed/laidoff? Believe me if they don’t lower the property taxes and deal with horrifying budget cuts; I see the foreclosure rate sky-rocketing with those that are barely making their payments today and their unemployment runs out. Its a conundrum, higher property taxes clearly sinks the ship even faster.
Is there a way to track the value from peak for land? I am curious if those of us who may want to build if property follow the same trends as the SFH values.
Garth #3 is correct, The tiers being noted as “Seattle” in the graph caption is misleading, as a full 1/3rd of SFH selling under $264,810 makes little sense, and only 1/3rd selling over $387,274 is equally false. I don’t know what time period those numbers are covering, but let’s look at King County solds for the last 6 months. Not restricting to “Seattle” purely, but most people wouldn’t call Orting or Fife,” Seattle”, whereas they likely would call Bellevue and Kent “Seattle”. I’m calculating the result as I type this…
5,144 Total SFH sold in King County in the last 6 months. Making an adjustment here as the # under $264,810 looked too high. Disclosure: I am excluding houseboats, manufactured single-double-and triple wides and townhomes. Townhomes show as both SFH and Condo depending on where they are built, so better to exclude the mixed sampling. (Included the townhome numbers at the end when doing Seattle only.) Now adjusting total sold in 6 months accordingly:
Total SFH sold in 6 months – 4,664
Under $264,810 – 866 – 18.5%
Over $387,274 – 2,320 – 49.7%
Let’s look at the last 3 months and see if the % has changed much, and in which direction.
Total SFH sold in last 3 months 2,625
Under $264,810 – 525 – 20%
Over $387,274 – 1,274 – 48.5%
Seattle ONLY total SFH sold in last 3 months (putting townhomes back in, as in Seattle they are more likely to be SFH vs. condo – see why in last paragraph)
Total sold – 1,075
Under $264,810 – 136 – 12.6%
Over $387,274 – 533 – 49.5%
Separating townhomes; still Seattle only:
Total townhomes sold last 3 months – 221
Townhomes under $264,810 – 14 – 6.3%
Townhomes over $387,274 – 76 – 34%
For the sake of those wanting to buy in Seattle, and not wanting a townhome:
Total – 854 (3 mos – SFH excluding townhomes)
Under $264,810 – 122 – 14.2%
Over $384,274 – 475 – 55.6%
(required disclosure – stats are not compiled, verified or posted by NWMLS) You have seen Greg Perry use a similar disclosure when posting data he compiles and posts in comments here, as it is required by all members of the NWMLS that we do so). The requirement further states it should be in bold lettering, as we do on our blog posts, but I don’t know how to do that in a comment.
As to townhomes being SFH or Condo, in Seattle they are more likely to subdivide the lots, making them legally SFH. On the Eastside and further north and south in King County, they are more likely to build several on one lot, without subdividing that lot, making them legally condo dwellings due to the shared lot issue. Whether or not there are condo fees is not the issue…it is the shared lot feature that is the determining factor, in most cases.
Unless I’m mistaken, since CSI data is limited to matched pairs, wouldn’t that always guarantee that it never compares exactly to overall sales?
Newbie Post – The CS data seems to be considered to be the best measure of price change, albeit 2 months in the past. To help in understanding the current market conditions it would be useful if this lag could be reduced. Is there a reasonable way to approximate what the CS results will be ahead of the 2 month lag? Possilby pull sample sales pairs, assume the existing CS history applies, then determine the neccesary adjustment from CS history to the sales price.
RE: Ardell DellaLoggia @ 12 – Sorry Ardell, but to me that whole comment just seemed like a really long way of saying “I am too busy to read the methodology.”
In that last grouping of 122 homes sold for under $264,810
- 96 had the directional “S” in the address
- 46 of those 96 were bank owned properties (post-foreclosure)
- 7 of those 96 were short sales (pre-foreclosure)
- 6 were Estate Sales
A few were lot based fixers, cash only, not habitable 2-5 of them
Of the 26 that were not “S” in the address:
- 10 were bank owned (post-forelosure)
- 3 were short sales (pre-foreclosure)
- 2 were Estate Sales and 2 or 3 were not habitable major fixers
Of the total 122 homes sold under $264,810
- 116 had 2 bedrooms or less; 64 of those 116 had 1 bedroom or less
- 38 had less than 1,000 sf of which 11 didn’t show the square footage
- of the 27 that did show the square footage, 4 had less than 600 sf, 5 had less than 700 sf, 13 had less than 800 sf and 19 had less than 900 sf. (each group includes the previous group)
Thought you might like to see the breakdown of that low tier as to where and what they were. Again – required disclosure – these stats are not compiled, verified or posted by NWMLS
The Tim – if there is any way you can put that discosure in bold lettering so I can be in full compliance, I would appreciate it.
The Tim #15 :) No, I just like real and relevant numbers. It takes me longer to calculate those than to click in your data link, so it’s not about time and effort expended. I promise not to show real numbers often…as it is a lot of work to count the bank-owned properties and short sales one by one. I often see people asking what % of the mix are bank owned and short sales, and how many non-distressed properties might be dragging into the same price range as a result.
To pa.pow, my stats go to present day, but do not show in “pairs”. It is raw sales data from the mls.
My primary concern is that people will think they can buy a house “in Seattle” for less than $264,810 after reading a full 1/3 sell in that range by reading this post. A breakdown of what you get for that in Seattle, I felt was appropriate, particularly for people planning to relocate here from other areas who may be scanning blogs without clicking on the underlying data charts. They are more likely to read the comments than to dig into the underlying data, so I post it here FWIW.
Since it seems to bother you, feel free to delete my comments. I try not to comment here very often.
By Ardell DellaLoggia @ 16:
Like this: <b>bold</b>
Result: bold
By Ardell DellaLoggia @ 17:
I’m not bothered by your comments. I was just giving you a hard time. Should have added the winkey face. ;^)
Maybe belongs in the Forums but since we’re on the subject here is a good article from the Wall St Journal online…
Is Your Home A Good Investment?
As assets, homes provide only modest annual returns in the long run.
There’s the usual talk about what the latest Case-Shiller house price data mean for the next short term move in the real estate market. Has housing bottomed? If not, has the rate of decline slowed? And when will we see an upturn?
Human nature likes the short term. Which is why so little attention is paid to something that is probably more important, if less urgent: What the latest data show about the long-term of the real estate market. And it’s startling.
We have just been through the biggest boom in real estate in American history. The subsequent bust surely hasn’t finished. Dropping home prices are only one of the factors that keep the annual returns on homes low.
Yet look at the numbers. Since 1987, when the Case-Shiller index of 10 major cities begins, it’s risen from an index value of 63 to 151. Annual return: Just 4.1% a year. During that period, according to the Bureau of Labor Statistics, consumer prices rose by 3% a year. Net result: Home prices produced a real return of just 1.15% a year over inflation over that time.
Critics may point out that the analysis is unfair — after all, it starts counting near the peak of the 1980s housing boom. Fair enough. Look at the performance since, say, early 1994, when home prices were near a historic trough. Surely someone who bought then has made a bundle.
Not necessarily. Since then the ten-city index has risen from a value of 76 to 151. Annual return: 4.7%. Inflation over that period: 2.5%. That’s still only a real return of 2.2% a year above inflation. You can often do better on long-term inflation protected government bonds. And real estate often costs 2% or more a year in property taxes, condo fees, maintenance, insurance and the like. Conventional wisdom long held that home ownership was a route to wealth, and the imputed rent — in other words, the right to live in your home — was just part of the value you got from it. Under that widespread view, the recent housing bust was simply a temporary, though deep, pothole.
Yet for very many people, even over the past 15 or 20 years, the imputed rent may have been all, or nearly all, the real value they actually got from their home. Yes, it’s only recent data. And it’s only ten cities. But there’s some reason to suspect these numbers may, if anything, flatter real estate performance. After all, it’s hard to look at the data and figure the bust is now over. And if they fall further, those long-term return figures will fall too.
Prices weren’t just down 19% over the past year. They fell 2% just between February and March. And it’s not the worst-hit markets that worry me the most — Phoenix is down 53% from its peak, Miami 47%. That smells of capitulation. It’s the other markets. New York and Boston are only down 20%. Denver’s only down 14%.
Overall the ten- and 20-city Case-Shiller indices are merely back to mid-2003 levels. After the biggest boom and bust on record, history suggests things don’t stop getting worse until they’ve gotten a lot worse than that.
http://online.wsj.com/article/SB124336746233955539.html
I live in Ballard there is nothing in my area even close to the low tier. Even the high tier is misleading, there is very little listed below 400K in this area. I guess Ballard still has pink ponies around.
RE: Urban Artist @ 21 –
Check back next year. We’ll have that fixed for ya! ;-)
RE: pa.pow @ 14 –
” Is there a reasonable way to approximate what the CS results will be ahead of the 2 month lag?”
Yup. Take a look at the second chart again. It shows that year over year percentage declines are increasing.. or accelerating. Even if the line suddenly went horizontal, we’d still be looking at 15% annual declines. If it turned up a bit, we might only be looking at 10% annual declines. But that downward slope looks pretty steady to me, so I’d say that the next two months will easily be as bad, if not worse, than the last two.
Now Ardell said we hit bottom a couple months ago, so if you borrow her glasses with the special lenses you’ll see the mirror image of what reality portrays. A few pink ponies may be spotted around the periphery. Sweet!
Dear Thee,
You should mention that CSI’s “Seattle” really means Seattle-Tacoma-Bellevue. This would actually provide readers of your blog with accurate information and save some pants from overflow of excitement.
Thanks Tim,
To Scotsman – bottom is 20% under peak value of a “non-distressed” property and 37% under peak for a distressed (pre/post foreclosure) property.
A 2% movement is not relevant due to concession issues which are hidden in most closed sold prices.
Unfortunately there is no way to determine if the buyer received 3% or so concessions in terms of seller paid closing costs or credit back of RE commissions. FHA allows up to 6% for concessions not to exceed actual costs. So a 3% this way or that is hidden in all transactions and not reflective of a price movement of any consequence.
Home X sells for $700,000 with 6% concessions (mention that as I did one of those in March – new construction) vs. $675,000 with no concessions.. The $700,000 sale is lower, yet higher at face value.Appraisers will call us to get those concessions when doing an appraisal of a nearby property. Otherwise they are not generally available to agents and homebuyers and sellers, except via an appraisal. Another reason why appraised value sometimes come in at a surprising amount.
Scotsman,
I don’t like to post links on other people’s blogs, but this is the PI story written by Aubrey Cohen for reference to my “bottom call”.
http://www.seattlepi.com/local/399422_housesales10.html
By 2kt @ 24:
Actually, “Case-Shiller’s “Seattle” data is based on single-family home repeat sales in King, Pierce, and Snohomish counties.”
That’s the second sentence of the post.
@ 26 Ardell DellaLoggia:
Went to the SoundOff comments section here: http://www.seattlepi.com/soundoff/comment.asp?articleID=399422
Someone did some due diligence on you in #681603 and found evidence that your house was in short sale back then. Care to comment on the validity of this claim?
RE: Ardell DellaLoggia @ 25 –
Well, we’re already more than 20% down for non-distressed properties, and falling at an annual rate of 15+% with no end in site per CS. Time to retract that call? Maybe you could review Steve Tytler’s posts for some tips on successful predicting. ;-) Or just take Kary’s approach and declare the whole thing an impossible task. Both work.
But I will boldly tell you- no qualifiers- this is not the bottom. And you won’t see it next year either.
#29 Scotsman said “Well, we’re already more than 20% down for non-distressed properties….”
????? Where are you seeing that? My numbers come out 16% down for areas with few distressed sales and 25% to 28% for those with more distressed sales. The low tier here in seattle is showing well over half being distressed sales.
#28 – still is…as you can see from the stats above, for some reason many if not most banks are preferring the lower sale price of a post-foreclosure to a higher price as a pre-foreclosure. No one can figure out why that is…
Scotsman, I respect your opinion as I do Sniglets. But where do you see more than 20% down without factoring in short sales and bank owned property for stats in King County? I could probably find a few people who did that, but as a stat for an area? Seriously asking…I’d like to know.
RE: Costco Mike @ 11 –
How many you sold?
RE: NoMoreWork @ 20 –
I think your analysis leaves out two potential investment benefits. First, the cash flow analysis of rent vs own has to take into account the deductability of interest and taxes. Second, assuming the cash flow analysis is a wash with regard to rent vs. own (which it was for the house I bought in the 1990’s during most of my ownership) you have to adjust the percentage appreciation to a return on your cash investment. rather than a return on the homes purchase price. If the rent vs own is a wash, then assuming you’re down payment was 20%, your cash on cash return is 5 times greater than the appreciation calculated based upon the purchase price. That would be 5.75% over inflation or 11% over inflation depending upon whether you start at 1990 or 1994, which is a pretty good return.
Don’t get me wrong, I’m not saying that real estate is always a good investment. You must first factor in the risks and your percentage losses will also be increased if you are leveraged and suffer a loss. Based on the CS index, if you bought in 1990 and sold within 5 years in King Co you probably lost money after paying closing costs, and in SoCal it would have been about 10 years. That’s a long holding period for an investment to yield no positive return. And the analysis assumes that the rent vs own analysis is a wash on an after tax cash flow basis, which commonly hasn’t been true for a number of years even in the less expensive areas. My old house was in Kent and although my rent vs own after tax cost analysis was negative for the first few years, it was break even or positive due to decreasing interest rates after the 3rd yr I owned the house. I doubt that anyone financed at 5 or 6% will be able to benefit from decreasing rates in the future the way I did.
RE: ARDELL @ 30 –
The 20% comes from the third chart at the top of this post. I know, I know, we’re talking about CS numbers here and you’re cherry-picking the MLS areas you focus on. Fine, but just wait until the end of the year and then the 20% off will work for both of us. Time is not on your side unless Microsoft is about to unveil a super browser even my 90 year old mother can install and troubleshoot. Then I’ll admit home prices may stabilize within 5 miles of the MS campus. But other areas will still continue down.
Ardell, you know I love your spirit and independence, and it has to be hard to feel legitimate in real estate right now, so you have my sympathy. But really, there isn’t a bottom in sight.
RE: ARDELL @ 30 –
Ardell, I think you and Scottsman are probably talking apples and oranges. I believe Scottsman is probably referring to Case-Shiller which has dropped more than 20% in all three tiers of the Seattle index whereas you are using MLS stats modified by removing what you define as distress sales. Case-Shiller’s methodology provides for certain adjustments which I believe eliminate trustees sales and give weightings for sales that are out of the norm (like below normal price trend sales which I think includes most short sales). But my recollection is Case-Shiller doesn’t entirely exclude short sales and REO’s from the Index calculation. It would be easy enough to check the Case Shiller methodology as they set forth the methodology on their site as a pdf. I think it might take 15 minutes or so to find it and I’m not that motivated to check.
I think The Tim’s reference to methodology was directed at the fact that the Case-Shiller methodology divides the sales into tiers based upon the tier the past sale of the pair was in when it was made and not based upon the tier the current sale is in. The result is that the tiers aren’t each comprised of 1/3 of the current sales and the dollar price divisions for each of the tiers doesn’t necessarily define thirds of the current sales volume either.
I don’t necessarily agree with everything you post, but I appreciate the data and your input. I tend to believe a little controversy is a good thing and without it things would be a little dull. As you know, any time you post here, your profession will cause you to draw some heat based on skepticism as to your objectivity. My guess is that much like the others in the brokerage business, you’re strong enough to take the heat.
One eyed man, none of my stats include anything about Trustee Sales either. No Trustee Sales appear in stats derived from the mls. I only pulled out the bank-owned sales in that one tier, because they were numerous, and to answer a curiosity I have seen raised here on other threads.
I don’t think it’s apples and aranges as a combination of up to 20% down sales mixed with some up to 37% down sales will of course be higher than 20%. So what we see in the Case Shiller data is not contrary to what I have said in the past. In fact I find Case Shiller data to be spot on and only object to the mixxing of 3 Counties, which seems to be a common complaint. It makes the data less relevant to most people who are looking for real answers.
As to Case Shiller including Short Sales and REO properties, I don’t have to look. I can tell by the result that they do, as do most everyone’s stats, mine included. Would make no sense to exclude them. The big question is how much do they infulence the values of non-distressed property. Sometimes a lot…sometimes not at all.
Scotsman,
Frankly I see home prices close to Microsoft being hit harder than they should be based on local economic factors, primarily because the buying public in that area is more cautious, well informed, and striking some very hard bargains.
I have never been in the business of convincing people that they should buy a house. In fact I have a high record of telling people who came to me to buy, to rent instead, especially in the last two years. I also had clients who called me to sell their home who rented before or after their home sold, and I never said a word about their choice to rent.
I take no offense unless people are just being mean spirited, and I do not see that very often…rarely.
RE: db @ 8 –
why would you want a condo in bellevue
Did anyone catch that 30 year rates hit 6.5%, up from about 5.0% this morning? It sounds like they’ve recovered some, but they took quite a hit on the bond market excitement. Remember, a 1 point increase in the 30 year rate means a reduction of 10% in the amount you can borrow for a given payment.
Would it be fair to say everybody’s home value dropped 10+% today? Naw, just kidding…. But when rates go to 7-8% and stay there, that’s gonna hurt.
Can someone explain the logic of removing “distressed sales” from the stats? I mean, they’re out there, part of the market. Waving a wand around and saying they don’t really exist ignores that buyers aren’t going to do the same. If you have a street of “$300K houses,” nine of which are priced at $200K as “distressed” sales and one which is priced at the “true market” of $300K, yeah, Mr. True Market hasn’t dropped his price but he also isn’t going to sell his house.
Is there anyone lurking who works in the belly of the mortgage beast? What’s going on with your in-process portfolio right now given the yield curve moves today? Is this going to blow up a lot of loans that all parties thought were done deals? What about paper that you hold & have not yet passed on to Uncle Fred & Aunt Fannie? Do you hedge in-house?
My curiosity consumes me. I don’t see any of that side of the business, but I am intrigued. Hedging against extension kicked off a nasty feedback loop today; I’m looking for insight on what tomorrow will bring.
This is an odd time for rates to become unstable.
We’ll see in the morning what that’s all about.
RE: Roger @ 39 –
We are in strange times. Banks, lenders, are propping up prices by wanting more and more money out of a sale. What you are hearing about is the olden days when distressed properties sold for say 50% less so they were never counted as a fair market value sale. In the past a lender, investor could take his or her cash and reinvest to make more money. Today the distressed sales are much closer to fair market value than Mister True Market is.
By David Losh @ 41:
Really? it seems a completely reasonable time for rates to spike to me … the U.S. sold a boatload of bonds today and foreign buys pretty much walked away … where else could rate go except up?
RE: David Losh @ 41 –
Lmao he was joking.
One of the best things about C-S is that they adjust for major remodels and factor those out of the stats (as best they can). I’ll bet that during the period 2004-2007, $hundreds of millions$ of money went into new granite countertops and other remodels. Just about every one of my friends remodeled his house. So that massive influx of capital skews the MLS data towards what appears to be natural price increases, when it’s really just the remodel investment bubbling up.
In other words, your old crappy home did not go up in value as much as you think. It’s just that the neighbors put in a new Viking range.
I have tracked just about every expense and benefit related to my home. I have a spreadsheet where I log all my home-related expenses, maintenance, remodels, landscaping, mortgage payments, and so on — anything that I would not pay as a renter. I also log every benefit such as the rent I’m not paying, the tax deduction. (I do my taxes twice each year – once without the home deduction, to figure it out)
I also estimate the selling price of my home, less 10% for selling expenses.
If my estimate is correct, my ROI since 1997 has been about 5.8%, as of today.
when you calculate the rent do you calculate a comparable house in comparable quality?
RE: David Losh @ 42 – Distressed sales are occuring before they get to MLS. Anything that hits MLS is garbage and left overs to pick.
RE: Racket @ 47 – Yes, I estimate what I could rent my house at by looking at comparable rental listings and I use that figure.
“as you can see from the stats above, for some reason many if not most banks are preferring the lower sale price of a post-foreclosure to a higher price as a pre-foreclosure. No one can figure out why that is”
Are people really struggling with this concept? At the time the bid is made on the pre-foreclosure the market is way higher than it is at the point of post-foreclosure. Since most professionals have believed. since the beginning of the mess, that every new moment in time represents the DEFINITE BOTTOM, why should the bank take such little money on the pre-foreclosure when, by the time the house goes into foreclosure, the economy will will have V-d straight up, and the bank will recoup it’s loss.
I get tired of this phony rosy picture being portrayed of the local housing market, when not a single predictor considers macro-economic fundamental factors in his/her analysis. For instance, Q13 Fox News just reported that the $8K tax rebate has driven up demand and resulted in multiple offers. By their account, the median home price in Seattle rose 14% in the month of April (a complete blooper). Everytime I open a newspaper, a highly repsected RE expert has made a new definitive bottom call. It’s completely absurd. Why can’t people understand that the only loans available right now are FHA and only require 3.5% down (and are often 0% down loans in disguise for people with lousy credit)? Every single FHA-funded house being sold right now is in danger of becoming a new foreclosure in the future. Add in an $8K kicker, and you can get everybody in the county living a trailer to move into a stick built right away. Hey, if they get behind on the mortgage, they can always trade food stamps for cash. :)
Yet, all the experts are calling a market bottom because of all the new Subprime activity. That’s laughable. Let’s talk about the non-FHA market for a change. What do the non-FHA-funded pendings and closed sales look like? Yet, by expert accounts, we’ve definitely reached bottom. I’m tired of the debate, let’s put our money where our mouths are and pony up some well-publicized bets. I’m looking to increase my downpayment for when the market reaches a real bottom.
RE: One Eyed Man @ 34 – I’m not sure if others have followed up on C-S and distressed properties, but I’m not sure they even know they are distressed. I think they would only get excluded if the price is outside what they would consider a normal change in price.
As I mentioned somewhere, often when you look at the data on sales there are transactions that you just cannot figure out why they sold for a certain price–either high or low. I think C-S is in a position to recognize that, but I doubt they’re in a position to determine why.
By Roger @ 39:
Look at it from the other side–completely remodeled houses. Those are excluded too. Those went up in value for another reason, besides the market. C-S is trying to judge the market, not judge whether the seller was incompetent disposing of their repossessed properties.
There are other situations where the sales get excluded, including sales to family members, insider entities, etc. Again I don’t think C-S has the ability to determine why a price is outside an expected range, so I think they just exclude it as being suspect.
As to your example, I sold a listing where there were three other houses for sale for less, at least one of which was a short sale. The buyers knew about the other homes too. Short sales and REOs are not for everyone.
RE: Jonness @ 50 – What makes you think the only loans available right now are FHA?
RE: Kary L. Krismer @ 53 –
I don’t know why people even respond to his fact lacking, angry rants anymore.
It’s almost impossible if not impossible to buy a REO on FHA, and a short sale could have the same problem.
So if everyone is only doing FHA who’s buying all the REO inventory?
RE: mukoh @ 48 –
You’d be funny if not for your extremely threatening manner.
REOs are only one part of distressed properties.
In my opinion the way foreclosures are going the junk is selling in that process more readily than in an REO.
Racket of course your opinion counts sooo much more.
RE: fwiw @ 43 –
Mortgages are the center of the investor debacle. If volitility continues in martgage rates the delicate balance of all financials will suffer.
RE: what goes up must come down @ 56 – Actually, what’s being discussed isn’t a matter of opinion, it’s a matter of fact. In 53 I asked someone for backup on a factual claim and Racket responded with the post you’re responding to.
By David Losh @ 55:
Threatening? All I was referring to was that when MLS used to be a book that showed up once a week, there were deals there for investors. Now everyone finds them before they are on the MLS. Now how was that threatening?
By what goes up must come down @ 56:
Who was stating their opinion?
“Why can’t people understand that the only loans available right now are FHA and only require 3.5% down (and are often 0% down loans in disguise for people with lousy credit)?”
While there’s been an increase in FHA loans, there are still a lot of conventional loans out there. There might be tighter credit out there, but there’s still plenty of conventional lending going on out there..
Why can’t people understand that Martians have taken control of the universe? Why can’t people understand that cigarettes are the elixir of life?
RE: Kary L. Krismer @ 51 –
I agree Kary. C-S doesn’t know or care if it’s a short sale or an REO. If a sale price is outside their price trend range, they do a weighting adjustment but the sale is still nornally used in computing the index. I wasn’t trying to tell Ardell that the current C-S contradicted her prediction. I was only trying to say that because C-S includes both “distressed” and “non-distressed” sales it’s not the best metric by which to judge her prediction which separates “distressed” and “non-distressed” sales.
RE: Ira Sacharoff @ 61 –
I don’t know, but I’m pretty sure a martian came out of my family room can light and pissed in my cherrios yesterday.
RE: One Eyed Man @ 63 – It was even worse for me! I have a gap in recollection between 9:30 and 11:20 a.m., and I’m pretty sure I was probed during that period!
(Either that, or I had a colonscopy and was sedated. ;-) At least being out I didn’t hear the doctor repeatedly say: This is what we do to real estate agents.)
RE: Kary L. Krismer @ 64 –
Been There, Done That. I think that’s where the sayin “Don’t drink the cool-aid” actually comes from.
Herman @ 46, could I persuade you to share that spreadsheet file with me, minus your data of course? It’s a fantastic idea and I suspect would have some budget-ballparking/dose-of-realism utility for those of us who have yet to buy.
RE: mukoh @ 59 –
Again your comment makes no sense.
What’s the book have to do with distressed properties? Nothing.
As a matter of fact the book had that week of lead time. It was the cards maybe you are referring to and that agents used to wait for the cards to be delivered. They would find the first place the cards were delivered in the morning and go there.
“While there’s been an increase in FHA loans, there are still a lot of conventional loans out there. There might be tighter credit out there, but there’s still plenty of conventional lending going on out there..”
It has nothing to do with the fact that people with documented steady income and high credit scores can get loans. Why can’t most people understand that there is a huge discrepency in the number of loans available during the bubble compared to the number of loans available now. The market is NOT going to V back up. The easy to get loans during the bubble years caused artificial demand and drove prices up beyond historic levels of affordability. Now that those loans are no longer available, prices are heading back to historical levels. This is evident. All’s anyone has to do is look at one of the many charts on Tim’s site.
When I say no loans are available, I’m referring to phony loans. FHA is the new subprime and is the only thing that can support prices beyond historic levels of affordability. Yet, FHA is not enough to offset the mess we’re in. Look, I’m willing to put my money where my mouth is. It’s easy to criticize my analysis, but does anybody who does so have the guts to bet against me?
Pony up, because I’m looking to massively increase my downpayment prior to the real bottom.
RE: Racket @ 54 –
“I don’t know why people even respond to his fact lacking, angry rants anymore.”
The reason I’m responding to your fact lacking angry rant is to encourage you to look past the literal interpretation of the world and observe the big picture.
You can always put your money where your mouth is prior to thinking this through. I could use a bigger downpayment prior to the real bottom.
RE: Jonness @ 68 – I don’t know that I’d call the acceptable credit rating for FHA “sub-prime,” but part of that is I don’t like credit scores being used for mortgages.
But when FHA requires 3.5% down, but allows over that amount in seller concessions, 0% really hasn’t gone away (except that the 3.5% cannot be seller concessions). So seemingly the only difference is the credit score, and the fact that I don’t think FHA has things like teaser rates and option ARMs, etc.