Let’s take a look at June market statistics from the NWMLS. Here’s the NWMLS press release: “Aware and prepared buyers” help boost Western Washington home sales during June
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:
| June 2009 | Number | MOM | YOY | Buyers | Sellers |
| Active Listings | 9,655 | -2.0% | - | - | - |
| Closed Sales | 1,655 | +26.1% | +4.0% |  |
 |
| SAAS (?) | 2.06 | -11.3% | -15.5% | |
|
| Pending Sales | 2,447 | +8.9% | - | - | - |
| Months of Supply | 3.95 | -10.0% | - | - | - |
| Median Price* | $395,000 | +5.3% | -12.2% | |
|
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 data.
Closed sales posted another strong month-to-month increase, and actually turned positive year-over-year.
Looks like my prediction that sales would “eventually flatten out and maybe even show YOY gains” in 2009 turned out to be correct after all. Apparently absurdly low interest rates combined with the $8,000 tax credit were enough incentive to draw out a decent spring rush of knife-catchers.
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 the current data is still not 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.
That’s quite the sharp bump up there in June. Of course, sales closing in June are (mostly) all the result of deals that were agreed upon in the prime spring months of April and May. With interest rates back over 5% and the deadline for school district-related moves passed, will the sales spike be sustained, or merely a springtime flash in the pan?
Here’s the chart of supply and demand raw numbers:
Here’s the median home price YOY change graph:
I have no doubt that the $20k one-month bump in the median price will be the primary focus of most mainstream media reports about this data. Surprisingly, even with that large of a spike in the always-noisy median statistic, year-over-year price declines are still in double-digit territory. FYI, in order to get a better picture of what might be going on with the apparent price spike, I’ll be working on a couple of additional price measures in the coming week or two.
And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994.
That little bump put us back into 2006 territory. (Warning: Sarcasm Ahead) Oh no, anyone who didn’t buy in March has missed the bottom and will surely be price out forever!
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 Times: Home sales climb in June in King County; median price drops from year ago to $395,000
Seattle P-I: House sales up in King County
RE: Sniglet @ 100 –
Real Estate is a highly predictive, rational, market.
Housing unit prices have been tied to rentable income. Rents and mortgage payments have been neck and neck until this last infusion of investment dollars. Many investors who are unfamiliar with Real Estate bought properties, Notes, and securities backed by over priced assets.
Over priced means they exceed the value of the property. The NWMLS has become a sales organization. Again thousands of people who know nothing about Real Estate entered the business and began talking up the “investment” aspects. Of course you can make money in the Real Estate business. You need to know what you are doing. You need to know when to buy and sell, hold, or walk away.
We are in a time of walking away. The party is over for those who hold over priced assets. Your only recourse is to pay them off. The banks have shown they are the very people I’m talking about.
Real Estate will go back to a normal market, but banks will not recover.
Unlike the stock market with it’s thousands of products to offer Real Estate is a one note investment. You can buy, fix, build, borrow, or sell. That’s it. The only equity you can count on is the equity you create by buying well.
Real Estate takes work. It is an individual effort.
I will guess billions of dollars are stuck in Real Estate with no way out. If an investor holds even a discounted Note they will have to sell for face value, or less. Even the interest income is being whittled away by declining asset prices. If we look at commercial Real Estate it is another blood bath. Commercial Real estate is a cash market place. Cash is being lost along with the equity.
Here’s my prediction: The people losing all these billions of dollars will be looking at commodities to make up losses. We will all be asked to pay more for everything. I’m talking about real dollars rather than inflation. This will be the deflationary pain. You will have to make more in order to pay more.
The end result will be a stronger global economy and maybe some cooperation. We’ll see.
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jon who have to be a RE agent. that or you are smoking some serious weed, “Then you definitely won’t be laughing at the beginning of November when YOY goes positive. ” why wait until nov. why not pick sept?
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RE: voight-kampff @ 99 – I look at it this way, it is easy to predict something might be wrong if it defies logic. As with the dot com bust and the real estate bubble, if it sounds too good to be true, then it is, or was.
I did my homework, I read some books on buying a condo. Read how I needed to get their papers, read them, study them, investigate the association, etc. Got my money saved up. Went looking and found dirty condos, that needed painting and carpets. I was a bit shocked. So, like the naive guy I was, I asked about the association’s papers and was told that I had one day to make an offer and that within a week it would be gone. I said whoa. In a week it was gone.
I had to think about it, am I going to be priced out forever or is this nuts? I started investigating, and decided that this did not make sense. Mainly I saw that the median income earner could not afford the median income home.
To me this was an easy call. Doesn’t make me a master predictor, just a guy with common sense. So for me nothing to gloat about. Now I could buy today, but I think I am just a bit worried about this economy getting real bad. When I feel more secure, I am going to take the plunge.
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I think the increase in prices has to do with higher quality of homes being sold REO. Look at what the median price buys you today compared to what the median price got you last year. People might be paying slightly higher prices, but it’s for substantially better homes. SO, has the median price actually gone up??
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By what goes up must come down @ 102:
Looking at the recent pending numbers for King County SFH, it seems that the mix of closed sales will be shifting to higher priced markets over the next couple of months. Since there are not as many short sales in those markets, the pending sales are presumably more solid there.On the other hand, people are saying the number of NODs is increasing now, so maybe that will bring the mix back down.So I’m just calling it a wash, but yeah, I wouldn’t be too surprised by positive YOY in September numbers either.
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By jon @ 104:
2009 prices GT 2008 prices by November basically puts us back where the market was in 2005. So that is 1 year of flat performance, or 4 years of flat performance – depending on how you look at it.
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RE: jon @ 104 –
Looking at the recent pending numbers for King County SFH, it seems that the mix of closed sales will be shifting to higher priced markets over the next couple of months. Since there are not as many short sales in those markets, the pending sales are presumably more solid there..
There are tons of short sales in higher priced markets, and many more regular listings converted to short sales.
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By Sniggy @ 106:
There are a lot, just not as many on a percentage basis as in lower priced areas. The closed sales on the Eastside track more closely to the pendings from 2 months previous than they do in south KC.
Flat is not the first word that comes to my mind to describe the last 4 years. The recent upturn in sales indicates that already some people have stopped viewing the market as deflationary. When YOY goes positive, I think even more people will do so and therefore sales will start to move back to the normal range. That isn’t going to affect the excess inventory of house very much, but it will help soften the impact of the alt-A wave here next year, which in any case is not going to be nearly as bad here as it will be in California.
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I love how the bulls have jumped on this information.
The fact remains that you can rent a nice place for about 1/3 of what it would cost to buy it, without the property taxes, upkeep, and the (very real) risk of property depreciation wiping out my down payment.
And someone asked where the ‘shadow inventory’ is: its on the books of your local bank, and more is coming.
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By what goes up must come down @ 102:
The median was still well above 400k in September. That’s the month Paulson made his famous announcement, so prices were still unaffected at that time. The better question would be why not pick October, when it was 392,000, 3,000 below November.
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RE: voight-kampff @ 99 -I don’t agree, you loose credibility when you are wrong not when you stand by your belief if that belief turns out to be correct. If you always predict raising home prices and that is what happens you are credible until prices turns negative. The same goes for people who predict a negative economic and hosuing outlook, until they are wrong they are credible. This blog has been around for to short time to know if there are any constant “doom-sayers” here. Especially since things has gone worse than just about anyone predicted so far. I don’t hink even Eleua with his eerily accurate predictions included the full extent of the collapse we’ve seen. We seen many commenters come a go that tried to put the “even a broken clock is right once a day” stamp on Seattlebubble and it’s commenters. When perceptual pessimism turns out to be realism it’s not doom and gloom is it? And again, to much risk management is not what caused the problem we have, so a little bit of overweight in the cautious side in evaluating the health of the economy and housing market this time is probably preferable in comparison to the obsessive cheerleeding.
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RE: Joel @ 95 –
“Take a guess and make it good because if you’re wrong, everybody will hate you. ”
That would depend. If you are in the position to guide people into making a decision based and your guess and it turns out to be spectaculary wrong. ( Someone guiding a buyer to buy property in 2007 as a good investment for example ) I can see that you could be the target for some hard feelings. If you make a guess on the number of closed sales on a blog in June and you are wrong you loose some credibility but it’s not hate. I don’t give my 4 year old much credibility in predicting the direction of the housing market but I love her infinitely, I just wouldn’t take her advice on that subject.
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Very strange site. Credible is somehow synonymous with lucky here. And not even that lucky. This isn’t like roulette, there are only three choices, up, down or flat.
And as to predictions regarding sales volume, I was giving updates periodically through the month, and indicated that the sales were back loaded. At one point I indicated also that what you’re predicting is how slow agents are entering their data. I just don’t see how being right on that poll makes you somehow credible. Realistically there were only three choices to that poll that made any sense at all.
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RE: Kary L. Krismer @ 113 – If you make good predictions your future predictions will be more credible. And the real estate industry is full of predictions so it’s good to get an idea of whose predictions you should consider as being of value. Is that so strange?
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Is John L. Scott credible hmmm…….
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By patient @ 114:
Credibility should be based on sound reasoning, lack of bias, and an ability to effectively integrate a wide variety of information sources. Having the right “guess” says nothing about credibility.
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Kary you said you wanted to read about Shiller and his predictions: http://money.cnn.com/2009/07/06/real_estate/robert_shiller_housing_market.fortune/index.htm?postversion=2009070710
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I just received an email from someone asking if I didn’t find the site credible. That’s not what I’m saying at all. I responded that this was one of the best sites out there.
I’m just saying being right on a guess doesn’t result in credibility.
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One more thing–you don’t have to be right to be credible. What Eleua was saying in 2007 turned out to be pretty close to correct as to the problems, but he grossly overstated the consequences–to date anyway–he might be right based on what happens in the future.
The point is, Eleua is much more credible than say someone who in 2007 predicted the June 2009 median would be $395,000 because they thought prices would fall 15%.
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RE: shawn @ 117 – Thanks–I’ll have to look at that later.
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kary you are spot on being right has nothing to do with being credible.
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RE: DrShort @ 116 – Consistently having good predictions is a result of the factors you mention. There is no contradiction. Most predictions here are not wild guesses but a result of things as knowledge, experience , intelligence and information gathering. But it doesn’t matter how many years of college and experience etc you have if your predictions are wrong your predictions have little credibility. The proof is in the pudding not in the receipe.
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From wikipedia regarding credibility:
“Traditionally, credibility has two key components: trustworthiness and expertise, which both have objective and subjective components. Trustworthiness is a based more on subjective factors, but can include objective measurements such as established reliability.”
You see that “established reliability”. Consider it for a while and see if you change your mind of that being right is not a component of credibility.
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Oh my, does anyone beside me find this side tangent on credibility hilarious?
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RE: Greg Perry @ 124 – No, but I can understand with the record of crediblity that your industry have that you wan’t to redicule it, especially since you seem to be caught with not understanding the concept yourself. From the constant destruction and the apparent willingness to destroy it I can also see that it’s not regarded as a particulary important virtue by your industry. Here’s a newsflash, it’s a critical component to any business.
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RE: patient @ 125 – Credibility also goes to core of the existent and popularity of this site, if there were other credible sources for consumers when this site started it would not have been so relevant and become so popular. After nearly 5 years since it’s it’s inception it is still the most credible source in this area.
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By Greg Perry @ 124:
I find it hilarious that you point it out. ( in an ironic kind of way, not in a “your an evil agent kind of way”)
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RE: patient @ 125 –
Well, sport, you’re certainly on your high horse.
In The Tim’s “Guess the closings” post deejayoh summed up the logic quite well, (I agree with this logic).
“Macroeconomic factors really have very little to do with it at this point. It’s straight math. As Greg points out, we are seeing over 2,000 pendings a month. And my bet is that the close:pending ratio is more likely to get better at this point than it is to get worse. Money is easing up – especially at the low end of the market where all the action is. So worst case is 65% of pendings close (2,500 * 65% =1,625) and more likely we see 70 – 75% of pendings close”
Here is what I said at the time (nobody at that time had guessed +2000),
I’ll be the lone brave one and declare 2000. We’ll have 2500 pending sales in May. 4500+ pending sales in 2 months will have to create closings despite the fallout rate. The spring lag between pending and sold is normal, although the the much discussed gap is wider this year. Good post. this will be fun to watch as the year unfolds.
Since you’re so adamant that this was my “official” guess. Which month did I say?
ROTFLMAO!
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Being “right” is certainly not all that it’s cracked up to be. It is far better to get along rather than be right if you wind up alienating others, or to appear to be disruptive. I can attest to this phenomena personally. There have been numerous occasions in my career where I articulated (very reasoned) concerns about the viability of given strategies or product directions which later turned out to be eerily prescient. In the process, however, managers would grow to view me as a wrench in the gears. What companies want are “team players” who follow directions.
I have seen numerous glad-handers zip by me on their career tracks, never challenging the directions from above, and diligently working on (or implementing) policies or directives that would ultimately fail. The fact that my early insights may have proven to be right on the money is irrelevant.
Even in my sideline of economic/financial forecasting (and how it relates to business), I have engendered a fair bit of hostility in my company. Some people view me as just an apocalyptic doomsayer who reeks of negativity. One colleague has said she can’t stand to even be in the same room as me because she knows what I think about how the economic trends will impact our business. Sure, I have fans (over 200 people have joined my economics discussion club at work), but those who are rankled by bearish views have become increasingly hostile. It’s as if this recession is driving people into different camps, and raising the temperature levels of any discussions.
Just look at the people who lost their jobs during the boom years because they were unwilling to play along. The Wall Street Journal had a series of stories about compliance or risk managers, and even executives, who voiced serious concerns with what their firms were doing and lost their jobs as a result. These same people would have been much better off to just have turned a blind eye, collecting those hefty bonuses, while the good days lasted. Analysts who give sell recommendations will find themselves out of a job in short order. I believe I described my experience as a tech journalist, where the analysts who had the most positive stories had smoother careers.
Taking a contrarian stand is a lose-lose proposition. You are ridiculed for an unorthodox view, and resented if proven to be correct. If you are following the crowd, it doesn’t really matter if you are wrong, since you can just say that “everyone” made the same mistake.
In short, being “right” is almost never useful to your career, finances, friendships, or even mental health.
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RE: Greg Perry @ 128 – Greg, I think your prediction could have been part of the reason to the poll, long before the poll you were explicitly asked by me if we would see 2000 closings in May and June. You replied yes, we will see 2000+ closings in June. This was in relation to when the big difference between pendings and closings was discussed and your interpretation was that it’s normal with just a bit added delay due to underwriters being busy with things like refi’s. Others suspected a big fallout of short sales and changes in the nwmls pendings definition. Does that answer your question?
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Greg for someone who started this discussion back at 56 with words like these:
“74% of those who voted felt closings would not hit 1500
Of course we all remember what Kary predicted ;)
So how are you doing? Fess up time. ”
you are very touchy for being called out on the details and accuracy of your own predictions.
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By Greg Perry @ 128:
On the other hand, the strength of prices and volumes could lead banks to discard all the low-ball offers they have been sitting on. If the offers weren’t high enough to accept before, they would only be accepted now if they had been waiting for a better offer and not gotten one.
As I understand it, these monthly pending numbers are rolled over to the next month like inventory, and so are not comparable to monthly sales. Am I wrong about that?
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I certainly won’t even try to argue with this prediction. Short-term predictions like this are not my game. What I will say, however, is that we will see the number of King County mortgage delinquencies more than double of where they are now by September 2010, and that distressed sales (short, REO, or foreclosure) will increase to be 50% of King Country total closings by end of 2010.
I am less certain as to what will happen to median prices, since we might start to see more high end properties wind up in distressed sales in 2010 (which could drive up over-all prices). Case-Schiller, however, will record at least a 15% YOY drop in prices by January 2011.
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RE: jon @ 132 – deejayoh’s prediction and reasoning looks like they will turn out to be really good. +1 for him. In my mind he does have a record of being slight on the bullish side compared to actual fallout but this one seems to be real good. I have no problem acknowledging that or as I said that my own prediction was poor as was my latest C/S month to month prediction.
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By patient @ 130:
Absolutely correct. Historically June is the biggest month for closed sales in any year and I was thinking 2009 would be, as well. As I continued to study the sales data and larger lag created by anemic January, Feb, and early March pending sales, on June 4, I revised the 2000+ target date to July.
BUT for this discussion, we were talking about the “guess” poll. I don’t really care. You can pin me to “pre official guess”, “official guess”, or “post official guess”, I don’t care. I think we’ll see 2000 in 2009 based on past charts, the numbers I see and basic logic. And if we don’t? We don’t. This market is unlike any market in the past and we’re learning as we go.
And….it is a GUESS! I’m with dejayoh. I think the prize should be a pie. This is a “for fun” poll and I approached my guess with past history, current numbers and an outright guess. I will be right, or I won’t. Panties need to be un-bunched, I’m thinkin’.
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By jon @ 132:
I thought it was established on another thread about this same topic that the pending numbers are only reported once, in the month the listing disappears – but I could be mistaken.
And nice to hear I am regarded as bullish. hrm. I guess anyone who doesn’t believe home prices will fall over 50% is bullish is the eyes of some. LOL
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RE: deejayoh @ 136 – “And nice to hear I am regarded as bullish. hrm. I guess anyone who doesn’t believe home prices will fall over 50% is bullish is the eyes of some. LOL ”
Not really, but I think your YoY predictions have been a bit higher than the fallout and I also think your inventory driven model predicted a more bullish outcome than the actual result. I could remember wrong though but I do have the perception of you as slightly bullish in relation to the fallout from the comments/predicitions I can remember.
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RE: patient @ 137 – You could easily correct my perception by providing a couple of pedictions where you have been more bearish than the actual outcome if you find it worth while. I kind of figure though that you couldn’t give a RA what my perception is ;-)
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Self-awareness is a beautiful thing… I am thrilled that you have now been able to accept your “bullish” nature. Don’t be ashamed, the bears will be nice to you. We bears realize how hard it is to be accepted by others, and will embrace you regardless of your mis-guided beliefs. :)
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By jon @ 108:
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By Matsayswhat @ 140:
http://www.doctorhousingbubble.com/notice-of-financial-default-california-develops-a-mortgage-tsunami-patter-reminiscent-of-the-2007-subprime-collapse-alt-a-and-option-arms-unite/
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greg can I ask do you think housing will rebound or will we still see price declines in the next six months?
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Make no mistake, the Alt-A wave will be painful in the Puget Sound. In the bubble years upwards of 30% of all new Seattle area mortgages were of a zero interest or option-ARM variety (almost all of which were Alt-A). California may have had a higher percentage of Alt-A loans, but the Puget Sound had a respectable number in it’s own right.
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RE: jon @ 141 – Nice link jon, did you catch if all the charts are for California only or if it’s a mix between Cali and national data?
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RE: Sniglet @ 143 – A friend of mine just got his 5y i/o 0-down jumbo recast to another $600 a month, now pushing $4k. That and his wife lost her job a while back. It’s tough to watch their struggles as they love their home but realizes that the situation is unsustainable. Unfortunately I don”t thik this is very uncommon.
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I remember going to a barbecue at one of my wife’s mother’s groups in Kirkland back in 2005. The husband of the lady hosting the event was a mortgage broker, and was telling me of how stunned he was that almost all of his customers were burying themselves in mortgages with payments that were at the very edge of what their incomes could afford. He waxed philosophical about how the attitudes of how to manage debt had changed a lot since he was a young man.
Not for the better, it would seem. We are going to have to re-learn those old values the hard way.
In any event, both the statistical and anecdotal evidence (from conversations like the one I just mentioned) would indicate that the Seattle area is going to suffer significantly in this credit deflation depression. We are NOT immune, we’re just lagging a bit.
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By Sniglet @ 100:
Sniglet – just remember the Japanese had money saved in the bank as their mess developed; we have credit card debt. They stay put in the same city all their lives, we move like gypsies. They are highly educated; etc…..
The US will lead in technology!! Sure! Solar panels, batteries, wind turbines, electric cars, trains, etc, etc. Let’s suppose the US catches up with the rest of the world and every top company is founded in the US; where will the factories be located??….You know the answer; so we are back to square one.
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RE: Sniglet @ 146 – They have a good chunk of savings and about $80k “equity” left from the lowest estimate on selling price from a handful of realtors they had over for an analysis and are now preparing to sell. So they are still not in an iminent risk of foreclosure but they do realize the obvious risk if they wait any longer. My guess is that many 5y i/os are in a similar siuation and more are going to be added. It’s not pretty.
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By Sniglet @ 100:
King County SFH Median 06/03: ~$295k
King County SFH Median 07/07: ~$475k (+61%)
King Count SFH Median 06/09: ~$395k (+34%)
Just sayin’
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By what goes up must come down @ 142:
Here is an article that I wrote in early 2007 that sums up most of my market philosophy.
http://workingforyou.typepad.com/feature_article_pricing_t/
I work very different than most agents in that before taking buyers out to look at properties, I ask them to come in for a meeting that lasts for 1 -2 hours, depending on the amount of questions the buyer has. I use a power point presentation that keeps me on track. For 14 years my “market slide” has shown the following:
1. What is a Buyer’s market?
2. What is a Seller’s market?
3. What about appreciation. Will your home appreciate on a daily basis?
4. What are our seasonal trends?
5. What’s happening in today’s market.
This slide kept ME grounded as much as anything could in the huge run up from 2002, as it forced ME to have a frank discussion with EVERY SINGLE BUYER about market appreciation. I have always believed “what goes up must come down”. So, 10% plus appreciation rates were a temporary bonus for some, I never felt this would sustain. My words to every buyer for over 14 years is “all markets correct”, and I believe this.
Next 6 months? It depends on the neighborhood, price range……and absorption rate. I suspect the high end will continued to be troubled. Whether we believe in government stimulus….. or not….. the gov will do everything it can to throw at housing to get it going. Watch for more stimulus. I think prices may stabilize in the best neighborhoods. Outlying areas will continue to struggle. I really do not like measuring markets MOM by median price, especially with segments of the market, like the high end, eroding overall pricing. When I work with a buyer, or a seller, I do my best to figure out what is happening in their specific market.
By the way, I also believe what goes down, will come up.
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Sniglet @ 129
Good post…that’s been one of the toughest parts of this ‘great recession’. Many friends and colleagues don’t want to hear about how bad things are or how bad they will get. They’d prefer to bury their heads in the sand.
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By Sniglet @ 146:
The statistical evidence is essential, because the alt-A foreclosures will hit at about the same time that Seattle area overbuilt inventory runs out, assuming population trends continue. It appears that move-up buyers are active again now, but we don’t know if they will continue to be enough to absorb the alt-A distress sales.
So what do the latest results do for the meme that sales will increase once the price goes down far enough? Over the past three months, the volume of sales has been increasing as the price increased. Have buyers blinked?
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Population has little to do with demand for housing. In the last year we have seen demand for housing shrink in absolute terms, nationwide, even as the population has increased. People are adjusting their housing needs by doubling up, moving back with parents, looking for roommates, and so on. Many families are deciding they can have the kids share rooms, and increasing numbers of home-owners are now renting out rooms to help make ends meet.
Thus, housing demand is highly elastic, and is much more correlated to economic growth and incomes than population.
Like I have said earlier, this blip in the Puget Sound housing market will pass late this year, or in 2010, and demand for housing will contract. The Alt-A recast wave will contribute to this, but broader macro-economic issues will be the biggest factor as unemployment grows (with more lay-offs from Seattle’s major employers), and consumers continue to increase their savings rates (and corresponding debt reduction).
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By Sniglet @ 153:
This graph says otherwise:
http://www.alanpope.com/May09/PugetS_NewCon_Res.pdf
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By jon @ 154:
All that graph shows is the number of new construction SFHs and condos listed and sold through the NWMLS. It has nothing whatsoever to do with population.
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By The Tim @ 155:
It shows that inventory of unsold new houses in the Puget sound has dropped by 3000 in the past year, and extrapolating to next year will reach a level that will drive prices back up. It is at that point that people will really start to double up.
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RE: jon @ 156 – Again, you’re looking only at the new construction that happens to be listed on the NWMLS. This is a small piece of the overall local housing inventory picture that includes used houses on the NWMLS as well as bank-owned foreclosures, FSBOs, and new construction inventory that are not included in the NWMLS stats at all.
e.g. – Do you really think there are only 7 units available for sale right now at Olive8? Because that’s all that is currently listed on the NWMLS, and all that would be included in that chart you linked to.
To assume that prices will be driven up merely by a dip in new construction inventory on the NWMLS is a pretty major leap of logic.
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But this doesn’t demonstrate any correlation to population. There is NO direct correlation to housing demand and inventory, housing stock, or population. Demand for housing is highly dependent on things like financing availability, employment, wage levels, etc.
For example, if a given region experiences massive amounts of lay-offs I can virtually guarantee that the inventory of unsold homes will skyrocket, and demand will shrink, even if the the over-all population increases.
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RE: jon @ 156 – The drop in inventory as a result of less listings than normal is an interresting subject. Especially how sustainable this is, builders need to build to survive and many owners want or need to sell. On top of that you have a predicted increase in short sales and foreclosures. We have been stuck at about 10k units in King co. SFH for the whole of 2009. It will be interresting to see how the balance shifts one way or the other going forward.
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RE: The Tim @ 157 – I’m not familiar with what Pope reports, but the NWMLS only has a fraction of the new construction reported because the builders only list representative units–thankfully! It would make it much more difficult to search if they listed everything.
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By The Tim @ 157:
All that my point depends on is that the true inventory is roughly proportional to what is listed. The true inventory is really what is going to determine prices, not monthly sales, which is mostly people going between between one housing unit and another and so not affecting net supply or demand.
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By Kary L. Krismer @ 160:
If it is really just representative units, that indicates entire developments are leaving inventory. For some undeveloped areas that could because they have mothballed it, but given that prices and sales are increasing, I doubt that is the explanation over the last few months.
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RE: jon @ 162 – What I have seen is that most big builders don’t list on the MLS because they don’t want to pay a seller’s commission. The retain companies like Williams Marketing to do their sales for them or do it in house. When they start listing units on the MLS it’s either because they a) only have few units left so they let the marketers go or b) they are desparate for some foot traffic.
That said, I don’t see any evidence that supports an assertion that decreases in new home inventory are correlated with home price changes. It’s just an assertion at this point. Love to see it
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By deejayoh @ 163:
Take a look at the ten year data from that site, http://www.alanpope.com/10yearPuget.pdf
The two years with the lowest inventory are 1999 and 2005. Those are the years with the highest YOY % price increase according to the data in The Tim’s spreadsheet. 2006 started out strong for YOY prices, but then dropped off, just as inventory was increasing. The years 2000 and 2004 had a little bit higher inventory and a little bit lower YOY% increase in price.
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RE: jon @ 152 –
I would like to see population trends that show population growth in the Pacific Northwest.
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By jon @ 161:
1) That’s a pretty big assumption.
2) Your assertion that home prices will be “driven back up” depends on additional factors, whether you care to believe it or not.
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RE: deejayoh @ 149 – I’d be bitter if I had lost out on all that potential money.
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RE: jon @ 164 – yes, I made a post on this a long time ago. There is a inverse relationship between the change in overall inventory levels and the changes in price – with about a 1 year lag
But that chart is for all inventory, not just new construction (as was my analysis). I don’t see how you can make the leap that one component drives the change.
By Mikal @ 167:
Bitter? You might even state a strong belief that home prices will fall below where they were when you sold! ;^)
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Whatever the true inventory is, that’s only half of the equation. Demand is the other half and we know this about demand:
1. Easy loans with no money down are gone.
2. Bridge loans are difficult to find for move up buyers.
3. Loans for those with poor credit are difficult to find.
4. Equity that move up buyers would have used for down payments is reduced or gone.
5. Stock market savings are reduced.
6. Job losses are high.
7. Private mortgage companies are getting much stricter.
8. Housing is no longer seen as a “can’t miss” investment.
9. Several key Seattle area employers are gone or cutting back and there doesn’t seem to be many up starts taking their place.
10. Employee stock options and stock rights are generally worthless.
11. California buyers are no longer coming to Seattle with bags of cash from their home sales there.
The only positives for housing demand are low interest rates and reduced prices. I’d agree that there appears to be a backlog of buyers out there who held off buying last year. I’d even throw myself in that group. But what I have doubts about is whether any pent up demand is sustainable. Will there be any demand once the “fence sitters” are through.
What percent of the population that could have qualified for an average sized mortgage in 2005 can no longer do so in 2009? If I had to throw out a number, I’d say 15 – 20%.
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RE: DrShort @ 169 –
I will say that there are people who own and will stay put. There are people who rent and will never think of doing anything else. There is a certain per cent of people who have to move and i think we saw that this year.
I agree that once the fence sitters are done pent up demand will be done. Once the curiousity wears off I think Real Estate will be something of a dream for most people.
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By DrShort @ 169:
That;s a long list. That’s why it is so important to look at real demand and real supply. Otherwise we are left discussing only Sniglet’s head-fake following by a quadruple dip with full reverse, degree of difficulty 8.0.
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RE: jon @ 154 –
WE’VE PASSED THE CREDIT LIMIT ON THE ORWELLIAN NEWSPEAK “GROWTHFRIEND”
A major corporation [IBM] coined the phrase, “Innovation for Growth”.
Up until about 2006 or 2007, we had a Greenspan lever to reduce mortgage interest rates and raise house prices with population growth….if FOX news is correct [and it appears correct in all my other economic blog sites]and the $787B stimulus that was “imminent” is still only 5% spent….what does that mean to credit for the growth population?
IMO, it means America is flat broke.
Credit to build for more growth overpopulation has expired. The Greenspan lever broke off.
The party is over, time to throw the empty beer containers in the trash.
How about magic technology innovation bringing in industrial base JOBS to replace this phony glueboard manufacturing with “Growthfriend” debt?
IMO, we’re looking at 10+ years before we see any new invention tech JOBS, or as one blogger put it above, it will likely be all outsourced anyway and we’re back to square one.
Even the CEO of General Electric agrees with me in principle, America must take back its manufacturing or die. He suggested raising our current 9% manufacturing workforce to 20%….I say we need 80%.
I’m talking TVs, cars, computers, etc….we don’t need new tech too late, we need old tech right now!
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By Softwarengineer @ 172:
And that would require barring imports from countries with lower cost of labor or better technologies. Then those countries would bar imports from us, and we would all be out of a job.
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RE: Greg Perry @ 150 – greg much appreciated, I agree with what you said about the govt, it is not about weather it is right or wrong but I believe it is what will happen
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RE: Softwarengineer @ 172 –
I’m going to address this later in an open thread because it is way off topic here. Manufacturing means very little to the finished product. Jobs are what you keep talking about. We can pay every one in the country minimum wage, no matter what the skill level, and every one would be employed.
It will take time to research an argument.
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…and if you are wrong, then you are incredible.
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Looks like most of you were wrong in the recent seattlebubble poll:
http://seattlebubble.com/blog/2009/05/17/poll-guess-the-maximum-1-month-total-closed-sfh-sales-in-king-co-for-2009/
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[...] As we head into winter, I’m comfortable now calling the winners in May’s poll: Guess the maximum 1-month total closed SFH sales in King Co. for 2009. 1,750-2,000 takes the prize. Only 12 of 123 voters selected the correct answer. Congratulations to deejayoh and me, as well as four other registered commenters. [...]
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