Let’s take a look at May market statistics from the NWMLS. I’ll update this post with a link to their press release when they post it. [Update] Here it is: Inventory shrinking, sales rising, prices stabilizing in some Northwest MLS areas
Here’s your King County SFH summary, with helpful arrows to show whether the direction of each indicator is positive or negative news for buyers and sellers:
| May 2009 | Number | MOM | YOY | Buyers | Sellers |
| Active Listings | 9,852 | +2.5% | - | - | - |
| Closed Sales | 1,312 | +30.7% | -14.4% |  |  |
| SAAS (?) | 2.33 | -18.7% | -7.3% | | |
| Pending Sales | 2,246 | +6.2% | - | - | - |
| Months of Supply | 4.39 | -3.5% | - | - | - |
| Median Price* | $375,000 | -1.3% | -14.8% | | |
Note that due to the change in definitions, year-over-year comparisons of pending sales, active listings, and months of supply will not be valid until July.
Closed sales posted a relatively strong month-to-month increase, but still came in negative year-over-year.
Back in January I predicted that sales would “eventually flatten out and maybe even show YOY gains” in 2009. Given that June has been the high point for sales in five of the last nine years (with only 3 years peaking later in the year), it looks like this month will have to be exceptionally strong for my prediction to have any chance of being correct.
Here is the updated Seattle Bubble Spreadsheet, and here’s a copy in Excel 2003 format. Click below for the graphs and the rest of the post.
Here’s the graph of inventory with each year overlaid on the same chart.
Note that unfortunately, the current data is not really comparable with pre-July 2008 data.
Here’s the supply/demand YOY graph. In place of the now-unreliable measure of pending sales, the “demand” in the following two charts is now represented by closed sales, which have had a consistent definition throughout the decade.
Here’s the chart of supply and demand raw numbers:
June will be the moment of truth for 2009. Will sales flatten out, or spike up to positive YOY territory?
Here’s the median home price YOY change graph:
Still hovering in the -15% YOY range.
And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994.
May 2009 King County median SFH price: $375,000.
June 2005 King County median SFH price: $375,000.
I’ll update this post with news blurbs from the Times and P-I when they become available. As usual, check back tomorrow for the full reporting roundup.
[Update]
Seattle P-I: Pending home sales up again, but will they close?
Seattle Times: King County median home prices in May continue to decline from year ago
If you all will recall, my 2nd and final prediction on the peak of monthly housing sales for the year was between 1000 and 5000, or something like that. You can see how everything is falling into place so far.
No charge, people, this time.
;-)
In a number of unit increase it looks pretty normal between May and June relative to the other years on the chart.
Percentage wise it’s a bit higher due to the exteemely low volume March 2009. But folks it’s still the lowest volume in 10 years by a margin, this is not a strong market by any means.
RE: patient @ 2 – Sorry that should be between April and May not May and June.
Sheep listening to the wrong people…these people will regret the decision in a couple years.
Wait until all these foreclosures get on the market.
By patient @ 2:
Indeed. 2009’s April to May jump was 308. 2007’s was 364. 2003’s was 380. 2002’s was 426.
Average pre-crash (2000-2007) April to May jump was 238.
“Given that June has been the high point for sales in five of the last nine years (with only 3 years peaking later in the year), it looks like this month will have to be exceptionally strong for my prediction to have any chance of being correct.”
Just eyeballing it, in 4 of the previous years the increase from May to June would put next month’s sales up over 2008. Given the strong pending numbers I would say the chances are better than 50%.
PREDICTION PIE IN THE FACE
Anyone can predict wide ambiguous ranges like 1000-5000, but tagging a YOY price decline for 2009 and being +/- 10% accurate by Jan 2010, would be a rabbit from the hat in my book.
I noticed the recent “rosy economy” is picking up speed with oil going through the roof [Goldman predicts 31% oil rise by end of 2009 and $85/barrel]. Most of the psychology for optimism is month to month changes [which I think are way over-rated], and in my humble opinion driven by short term higher energy gouging on wholesale bases with flat profit percentages getting bigger and bigger [until the consumer says, "Hades no, I can't afford it"]. And based on Tim’s chart, we have clear agreement here.
I’m wondering if the robust tick in month to month Seattle home prices are more a result of the deflated dollar raising energy wholesale bases than any strong consumer base: like unemployment not piling up worse and worse each month. Ohhhhh, that’s right, the unemployment rate is down or is it really unemployment ran out for a chunk and it looks like it went down…LOL
This economic mess predicting is like shooting at ducks; blind-folded.
By jon @ 6:
An increase of 280 (21.3%) from May to June this year would put us over June 2008 (which had 1,592 closed sales).
2000-2008
Average May to June increase: 144, 5.8%
Max May to June increase: 503, 17.7% (2004)
Not entirely out of the realm of possibility, but definitely above average. At this point the chances are looking very slim for Greg Perry’s 2,000+ prediction, however, which would be an increase of 688 (52%!) to hit it in June.
This is exactly what I predicted earlier this year, along with Steve T., prior to my second recant but well after the third statistically significant correction upward. Now however, given Dave’s erudite prediction, I may to to broaden my confidence interval or downgrade likely probabilities to make sure we hit this dead-on. Just like always. ;-)
I’m sticking with less than 1500. Thirty year rates are finally moving up and that will knock some pendings out. The general tone regarding future expectations continues to degrade. Even the truly clueless are experiencing, if not comprehension, at least a slight tingling that not all is well. That’s got to put a damper on things.
RE: Scotsman @ 9 –
HI SCOTSMAN
You’ve got me laughing and rolling on the floor :-)
You’re right, I saw 5.4% on a fixed 30 YR on Bankrate averages today…..we’re long out of the 4% woods now and rising. BECU’s 5.8%….whooooaaaaaa….weren’t they like 4.7 something just weeks ago?
None of this matters because all of us have missed the bottom according to Kathy Estey.
By The Tim @ 8:
Ah, but if you limit your sample years to 2004, 2005, and 2006, it is entirely possible… Not sure why anyone would suggest this, but hey – it’s fun with numbers!
As a side note, Aubrey’s article in the P-I mentions the pending-vs.-closed issue, and I just spoke on the phone with the Times’ Eric Pryne about it as well, so I think it’s safe to assume he’ll mention it too. I wonder if either the Times or P-I would have picked up on this angle had I not been hounding on it here for the last few months.
Edit: Just noticed this in the P-I article:
Seems like the kind of thing the NWMLS would have preferred not to mention, but found that they could no longer just keep silent on…
RE: deejayoh @ 12 – Two can play that game.
2000 peak in August,
2001 check
2002 nope
2003 peak in July
2004 check
2005 check
2006 check
2007 crash
2008 crash
Only the years 2002, 2007, and 2008 are precedents for not beating 2008.
RE: The Tim @ 13 –
TIM, I DO THINK YOU’RE INFLUENCING THE PI.COM ON THE AMBIGUITY OF PENDING SALES
See the proof:
http://www.seattlepi.com/local/406871_housing04.html?source=rss
“A Bank of America executive told reporters last month that, nationally, 60 percent of the short sales the bank approves ultimately fall through, often because buyers lose patience or can’t get financing.”
http://seattletimes.nwsource.com/html/businesstechnology/2009301166_webhomesales.html
It doesn’t matter how many pendings you have.
RE: David McManus @ 16 – Yeah, Eric mentioned that little gem to me on the phone today. That was surprising to me. Keep in mind that in addition to that, we also don’t know how many short sales fall through because the potential buyer just never hears back from the bank.
Like you said, pendings = basically useless.
By The Tim @ 8:
I think it will be a stretch for the 2000 mark in June. Yes, that what I predicted at one time, but it just shows I’m just good a predicting. But maybe not always hitting the right answer :)
Historically, June has the highest closed volume each year: http://www.workingforyou.typepad.com//.a/6a00d83451cc6269e20115708af219970b-popup
I think this year the highest closed volume will be in July because of the late start we got. (January and February pending sales combined, weren’t as high as April)
We’ll be hitting 2000+ sales, but …………don’t think it will be in June. Could be, but I’m thinking it’s more realistic to think it will happen this year in July. I am still committed to 2000+.
Here’s the latest weekly for SFH:
King County had it’s best week of pending sales for the year at 657. This is against 9,755 Active listings for 3.4 Months of Supply at the current rate of sale.
(Compare 657 with the average weekly pending count 230 in February)
The sold count for the 7 day period ending 6/03 was 344.
Metro Seattle areas had 246 pendings and the Eastside areas had 182 pendings, both high water marks on the year. 72 percent of the Metro seattle area pendings were under $500,000. 44% of Eastside Pendings were under $500,000.
Metro Seattle=NWMLS 140,380,385,390,700,705,710,715,720
Eastside = NWMLS 500,510,520,530,540,550,560,600
STATISTICS FROM NWMLS, BUT NOT PUBLISHED OR VERIFIED BY NWMLS
By jon @ 14:
Based on June (which was my comment) on a percentage basis there are ZERO precedents. And on a raw numbers basis only 2001, 2004 and 2006 are precedents
Incr Req’d 21.34% 280
June-00 -1.34% (29)
June-01 17.03% 340
June-02 -11.11% (266)
June-03 -1.43% (38)
June-04 17.70% 503
June-05 8.25% 239
June-06 15.12% 394
June-07 3.74% 95
June-08 3.85% 59
fun game, I think I win :^)
Are the Chinese going to continue to move big parts of their “safe” investments from US treasuries to oil, that’s the question. If they are forget 5% or even 6% interest rates. And if Bernanke tries to counter by buying more treasuries the Chinese will sell even more due to the resulting plunge in the USD. As Scotsman mentioned this would probably kill just as many pendings as the banks lazy short sale processing.
By David McManus @ 16:
LOL. Back when I was single 60% of women turned me down for dates, because they didn’t like me or they actually had something else to do. Saying it like that makes me feel a lot better.
I’m sure there are a ton of people making offers on low end houses that are over 10% under market that cannot get financing.
By patient @ 2:
Based on the charts Tim did in another thread, I thought the prior high increase was in the range of 15%, and this was well above that. But it is true these are pathetic numbers.
I’m surprised by the $375,000. It had been holding steady at $380,000 for a long time.
“Clean up on isle 3, clean up on isle 3 please…”
I don’t see any county breakouts on the NWMLS press release like they usually have. Anyone see those?
What’s interesting is the median pendings are now above the median again, even including all the short sale junk. In April they were 15,000 below the median sold and this month the pendings are 10,000 above.
RE: The Tim @ 13 – No kidding. The MLS releases are purely data and stats and such a change completely destroys YOY stats which you would think would be a big deal. It only took them almost a year to reveal it after misleading you in an email reply (if I understand correctly) several months ago. MLS stats have enough problems without all the dishonesty.
By Joel @ 26:
http://en.wikipedia.org/wiki/Hanlon%27s_razor
I’d never really followed the monthly pendings, so I didn’t realize it wasn’t a count of all the current pendings, as opposed to just the new ones. I really think knowing the current pendings though is probably more important–cutting them off at a certain date if necessary.
I know part of this is probably the new system, but there were about 300 more pendings YTD, but about 2100 fewer closings YTD.
The pendings that are from 5/1 or before have a median about 30k below the ones 5/1/ or after.
By Kary L. Krismer @ 28:
MIght be a result of the conforming jumbo loans being available up to 567K now. I think those just started to be available a few weeks ago.
I’m keeping in mind an $8K tax rebate, record low mortgage rates, a huge decrease in home prices, increased consumer confidence, and wonderful little green shoots in the economy. Let’s face it, given the massive price cuts and incentives, this is the most pathetic Spring ever. Despite all the artificial propping up of homes, they still lost value last month. Imagine how big the price drops will be when Spring ends. (Vegas here we come!)
As for the$8K tax rebate, this Fall it will be 3-fold negative.
Meanwhile, I’ll stay on the sidelines and watch my downpayment continue to grow.
1) $100K saved = $200K financed and instant equity when you buy after prices have stabilized.
2) Saving up a larger downpayment gets you out of paying PMI and results in even more instant equity.
3) The cheaper price and the larger downpayment could result in a 15-year mortgage instead of 30.
30 years @ 5% borrowing $400K = $2147/mo (It will take 13 years of payments to make up the extra $100K you borrowed. IOW, after 13 years of payments, you owe as much as if you’d waited and bought at $300K.)
30 years @ 6% borrowing $300K = $1799/mo (If you pay $2147/mo you will owe about $150K after paying for 13 years. And remember, the $150K you saved so far is in the form of equity. Refinance this low amount at a cheap rate and save even more.)
Also, the govt. is going to attempt to bring rates down in the future. People who bought last year claiming rates would go up, wiping out the amount those who waited saved, are looking like total idiots right now. React to the easy to predict dropping house prices–not the difficult to predict short-term future of mortgage rates.
I’ve been a bubble head since 2002, but prices for some homes in my neck of the woods are starting to make some sense (Pullman). Not for all homes or all tiers, but some.
Example: A new 3/2 townhome sold for $122k back in 1997, now listed for $184k in pristine condition with a completely remodeled kitchen. Let’s assume I buy with cash (3% cost of capital), 1.3% property taxes, 0.5% insurance and 1% annual maintenance… that comes to $900/mo total ownership cost. This place would easily rent for $1200/mo. And I didn’t even take the $8k kickback into consideration. If I could negotiate down an extra $10k (it’s been on the market for months), then it really starts to pay off.
Downsides? If interest rates go back up my cost of capital increases and with an illiquid investment I’m stuck. If I have to move in the next couple years, it could be really hard to sell this unit and I don’t want to play landlord.
This is just one example, but in some market segments we are seeing prices come back in line with rents. The market segment that is completely out of whack is the mid-to-high end, with houses listed at $350k that MIGHT rent for $1500/mo.
RE: Jonness @ 30 –
Very good points Jonness.
I can’t see how rising interest rates wont accelerate the decline in house prices across the country.
What is amazing to me is that some of the hardest hit areas (LA, SF, Las Vegas, Miami etc) are still declining and they are over a year ahead of us in the decline….
Doesn’t bode well for Seattle RE prices…
RE: Jonness @ 30 – I’d agree with most your first paragraph about propping up the market, but don’t put too much faith in the median having fallen 5k. As I mentioned, it was even most of the last week, and also the pendings are up. I view it more as being basically flat–too little of a variation to be statistically significant.
By Hugh Dominic @ 32:
They’re being affected by the same things we are–specifically the very weak economy. And they’re apparently affected more (have a weaker or less diversified economy than us), or else perhaps they’ve reached the point where they’ve fallen so far it’s hurting the market more than it should based only on the economy.
Look at all the talk up here about how hard it is to sell a short sale, and how little they sell for. Imagine if over 50% of the inventory was a short sale. People talk about foreclosures, but short sales are probably the bigger risk because they can consume a larger portion of the market and are actually more difficult to market than a bank owned property. The only advantage is some CA sellers might have legal advantages over us, but I suspect they still have a lot of the same problems where buyers avoid short sales.
RE: The Tim @ 27 – Hey you just said yourself:
RE: Groundhogday @ 31 –
The main downside is that you have to live in a townhome in Pullman. Thats like buying a condo in the Issaquah Highlands, whats the point?
By Kary L. Krismer @ 33:
It’s interesting to see flat prices during a time of 4.75% interest rates, massive govt. stimulus, a big tax rebate, and Spring selling season in full bloom. It begs the question of how June will fare if interest rates remain around 5.5%?
30 year 4.75% loan for $400,000 = $2086/mo
30 year 5.5% loan for $400,000 = $2271/mo
Difference = $185/mo
That said, month to month data is typically too noisy for me to make good sense of. Quarterly data and greater is easier for me to interpret, so post June Q2 data should be interesting, as it represents the strongest selling season of the year in conjunction with massive govt. gasoline added to the fire. If the overall outcome is a statistically significant drop in home prices, Q3 and Q4 will most likely turn horrific. If home prices rise significantly, it could help pad to the vulnerable later quarters.
By b @ 36:
Except that we are currently living in a 2-flat in Pullman. Is a townhome worse? Decent houses to rent are few and far between… student junk or accidental landlords trying to get twice what the market will support.
Tim,
With mortgage rates going up so fast (almost 1/2 percentage points in 1 week), I wonder if we will see a drop in closed sales pretty soon.
Most Washington homes are still way overpriced and a few percentage points can make a big difference here. Next week the government will have to auction off billions in 10 year treasuries. Time will tell….
RE: Jonness @ 30 – Good points Jonness. Tim request you to chartify such stuff i.e. interest rate movements vs house prices and the impact on monthly payments. How much rate hike should not increase monthly payments at current rate of decline in house prices and increased down payment later. Complicated but should be worth it.