Seattle-Area Housing Oversupply Still Increasing

One set of data we like to check in on occasionally is the big picture of local housing supply and demand, measured by comparing the total number of housing units to the total number of households. You may recall the last time we checked in on this data back in March: Local Housing Oversupply Could Disappear by July 2010…

Good news everyone!

The latest population estimates for King County have been released by the Census Bureau, and at the present rate of population growth, we’ll be able to use up all of our excess housing inventory by July of next year…

if all residential construction across the county completely ceased after July 2008, that is.

Our previous excursions into this data have been based on Census Bureau estimates, which are unfortunately not very timely. However, the Washington State Office of Financial Management keeps its own sets of estimates which are much more current. In fact, their latest release a few weeks ago provides data through April of this year.

Here’s an updated chart of housing supply (total housing units) and demand (total households) for the 3-county Puget Sound region, indexed to 2000:

Puget Sound County Housing Supply & Demand

Across King, Snohomish, and Pierce counties, a total of 147,591 new households have been added since 2000. During the same time, 184,378 new housing units have been built, amounting to an oversupply of 36,787 housing units.

Here’s a look at the raw number of housing units and households that were added to the region each year:

Puget Sound County Housing Supply & Demand

Only 2004 and 2005 had people moving here faster than new housing stock was coming online, and 2006 more than made up for the discrepancy in short order.

Here’s the indexed chart for King County only:

King County Housing Supply & Demand

In King County, we’ve added 65,443 households and 90,157 housing units over the past nine years, for a total oversupply of 24,714 housing units.

Here’s the year-by-year chart for King County:

King County Housing Supply & Demand

Here in King, only 2005 saw a larger addition of households than housing units. Even between 2008 and 2009, 3,304 more housing units were added than new households.

So it would seem that rather than working through our local housing oversupply, we’re still adding to it.


About The Tim

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

44 comments:

  1. 1
    James says:

    I wonder: how much of that oversupply is densely packed, “luxury” townhome/condo developments? Our young family just moved here last year, and we’ve been shocked at many of these developments (even leaving aside the outrageous 800k condos, and considering only the “normal” developments like snoqualmie ridge, or Iss. Highlands) have the commute times of suburban sprawl, the density of city living, homeowner dues, and without even being affordable. :/ Probably preaching to the choir, I suppose, but if that 2006 burst of housing developments is responsible for the oversupply, I’d expect there still to be an undersupply of “normal” homes. I doubt many people besides first-time buyers are going to buy those, and even then I wonder, why?

  2. 2
    Magnolia44 says:

    *crickets*

  3. 3
    jon says:

    The population of King County went by 25 thousand YOY as of April. Where are you getting that only 7 thousand households were added?

  4. 4
    The Tim says:

    RE: jon @ 3 – Average household size data for King County from the Census Bureau:

    2005: 2.35
    2006: 2.38
    2007: 2.39

    Making the (IMO) reasonable assumption (especially given the recession) that the 2005-2007 trend of slightly increasing average household size has continued through 2009, I used 2.40 and 2.41 for 2008 and 2009, respectively.

    Therefore: April 2008’s population of 1,884,200 divided by an average household size of 2.40 gives 785,083 households. April 2009’s population of 1,909,300 divided by an average household size of 2.41 gives 792,241 households. The difference between the two is 7,157.

  5. 5
    what goes up must come down says:

    Mag44 you hit the nail on the head — sounds like the 2010 recovery is pffffttt

  6. 6
    Kary L. Krismer says:

    I wonder how accurate this census and OFM data is? I have a hard time believing that 2006 was a low point for households added.

  7. 7
    deejayoh says:

    RE: The Tim @ 4 – I think it is more straigtforward to not normalize for household size, as this is another layer of assumptions. If you compare % change in population vs. % change in housing supply it tells the same story. Household size doesn’t change that much or that quickly anyway – and I don’t put a lot of faith in the census numbers for the in-between years. ACS is a pretty small survey.

  8. 8
    b says:

    James – I have always wondered who they built those developments for also (including the condo towers, especially in Bellevue). I think the only conclusion is that they were built purely for speculators, both people who never intended to even live in the place and also people who intended to live there for two years then sell it for hundreds of thousands in appreciation. Nobody actually wanted to live there long term, or at least the numbers that did are minuscule.

  9. 9
    The Tim says:

    RE: deejayoh @ 7 – Well, I don’t agree that household size should be disregarded, but here’s what King County’s charts look like if you just use pure population instead of # of households:

    With yearly population growth and housing unit growth expressed as a percentage gain over the previous year:

    I find it interesting that when you don’t account for household size, “demand” grew faster than supply in 2006, but that gap has been steadily shrinking in 2007, 2008, and 2009…

  10. 10
    deejayoh says:

    Thanks Tim. I agree in an ideal world household size should be included – I just don’t trust the numbers and the results are quite senstive to changes in the assumption – as your 2006 example shows.

    Of all the numbers the HH size is the most difficult to estimate and there will not be a truly definitive number until the 2010 census is out..

  11. 11
    Softwarengineer says:

    RE: The Tim @ 9

    LOOK FOR FIVE OR SIX CARS IN THE YARDS AND DRIVEWAYS

    We’re shacking up with each other more, especially family members in the 16-24 age bracket with the highest unemployment [16%] and the highest untracked unemployment [another 16-26%?]. The housing supply will keep on the exponential growth The Tim has documented, as long as the shacking together anomaly worsens.

    March 04
    I WARNED YOU AND YOU DIDN’T LISTEN
    AMERICAN MOMS/DADS; DON’T CLEAN OUT YOUR COLLEGE GRADUATES’ ROOMS YET

    If you were following Stein Report about a year or two ago; I warned all parents of college kids to “put them to work getting job experience ASAP”. We don’t need “Growthfriend” to do the jobs our college youth should be doing.

    If you are/were rich and/or naive back then and thought I was nuts, so just put them on a college loan [co-signed….LOL] or paid for their education out-right with dorm room and no student job; you may be the “rich elite growthfriend type”, but you made a terrible mistake. Now they desparately need job experience to work and the past growth into America grabbed all their job experience.

    Reference from me a year or two ago:

    “….GROWTHFRIEND WAGE REDUCTION
    I’d add this caveat to all of them: the Bureau of Labor Statistics shows the following data on the top 30 occupations with largest employment growth (2006-2016):

    http://www.bls.gov/news.release/ecopro.t05.htm

    Note: About 20% of the jobs require degrees, the rest are mostly/basically unskilled jobs. Where are the engineers? They aren’t even on the list.

    It all makes perfect sense now doesn’t it.

    The growthfriend powers have brainlessly outsourced our manufacturing engineering and research/development hopes; now they want a glut of overpopulation slaves to fill these remaining unskilled BLS jobs at slave wages.

    This is the future world your kid with a college degree and no job experience will inherit from the Baby Boomers.

    Like I said before, don’t clean their room out just yet, especially if they have no work experience or more importantly, a work ethic….”

    Well, its gotten much worse now….in fact, this chronic untracked unemployment of college kids keeps snow balling the last several years. Its like 30% of college graduates can’t find jobs in 2006, then 35% can’t find them in 2007, then 40% can’t find them in 2008, etc, etc…..

    Add to my past reference the sudden demise of business degree jobs in banking/stocks too.

    See the proof from an article from Time [by the way, Time makes US News World Report and News Week look like Globalism and Overpopulation Propaganda Rags] today:

    http://news.yahoo.com/s/time/20090304/us_time/08599188297900

  12. 12
    Markor says:

    Sure would be nice if populations stabilized. If everyone in the world had no more than 2 kids on average, the cost of housing would approach zero. Just maintain existing houses. The biggest cost in most of our lives is due to people splurging on kids.

    Three houses under contruction that I pass by every day, still aren’t completed after 1.5 years. They may be deteriorating faster than they are being built!

  13. 13
    singliac says:

    RE: Markor @ 12

    How about a cap and trade system. I’ll have 4 kids, and I’ll pay you to have none.

    Or, if you already have two kids, I’ll adopt them so you can stop filling their heads with this garbage.

    I’m guessing that you – like Software Engineer – have a “responsible” number of children and feel that it’s your duty to shame everyone else.

  14. 14
    David Losh says:

    This is a link to an article on another blog that I think answers a supply side question about how the Multiple Listing Services and National Association of Realtors manipulated data:

    http://www.bloodhoundrealty.com/BloodhoundBlog/?p=8871

    Let’s see if this works

  15. 15
    Stb says:

    By singliac @ 13:

    RE: Markor @ 12

    How about a cap and trade system. I’ll have 4 kids, and I’ll pay you to have none.

    Or, if you already have two kids, I’ll adopt them so you can stop filling their heads with this garbage.

    I’m guessing that you – like Software Engineer – have a “responsible” number of children and feel that it’s your duty to shame everyone else.

    ^—-Funny :)

  16. 16
    mukoh says:

    RE: Softwarengineer @ 11 – There are interesting statistics with future population growth as well. Unscientifically taking a look at poker night with my 30+ old cohorts who are mainly the upper income brackets of all 12-13 of them only three of us are married, only two married ones have kids, the other married gentleman isn’t even considering kids being 35ish. I remember my dads poker night all 10+ people would be working around wives schedules and such to get together and all had at least one child. Age brackets are the same. For future that looks pretty interesting.

  17. 17
    Markor says:

    RE: singliac @ 13

    Cap and trade would be great. Better than letting nature dictate the terms.

    Until then I’m glad to see an oversupply of housing units. Seattle may see lots more population growth (unfortunately) since it’s still a nice area. We’ll draw folk from wrecked places.

  18. 18
    wreckingbull says:

    RE: Markor @ 17 – Hey now, we need a populous younger generation. Who is going to pay for all of our Ponzi schemes such as Social Security, Medicare, and Medicaid? I need to get my money out of this pyramid before the whole thing goes up in flames. I’m hoping for one more generation.

  19. 19
    Markor says:

    RE: mukoh @ 16

    Similar thing with my friends too. My brother is having his third kid, making me lose even more respect for him since he can barely afford to feed the two he has.

  20. 20
    Markor says:

    RE: wreckingbull @ 18

    Funny! I’ve thought about that too! New Zealand takes skilled immigrants up to age 53. Currently their social security system pays everyone $2K per month starting at age 65, regardless how long you’ve been a citizen. (And universal health care, like every other modern country except ours.) I may have to more there.

  21. 21
    anony says:

    RE: mukoh @ 16 – Could be that you tend to be friends with people who don’t procreate, just because groups of friends tend to have similar lifestyles.

    Could also be that people in higher income brackets tend to have fewer kids (or people with fewer kids end up making more). Just a theory based on personal observation.

  22. 22

    RE: anony @ 21
    agony,
    Your theory is absolutely correct. Rich people tend to have fewer kids. Maybe having kids makes you poor, or , when rich people are discussing ways to use up spare time, the discussion goes to ” Shall we shop for mink and pate de fois?”, and when poor people are discussing ways to use up spare time , the discussion goes to ” We’re out of Pepsi and potato chips. Should we screw?”

  23. 23
    acerun says:

    RE: Ira Sacharoff @ 22

    It is too bad Ruth is stepping down from the high court…

  24. 24
    george says:

    Household aggregation and less house “trading” will drastically reduce the demand even at the old projected rates of growth. Throw in working off 13.8 trillion in consumer debt and even in 5 years after the new inventory is burned off you will probably have demand for at most 60% to 70% of the units built nationally in 2005.

  25. 25
    Flying Ape says:

    I wonder if the results above would be skewed in any way by people owning more than 1 property. I ain’t Mr popular but I know of at least 5-10 couples (combined income < 160K) owning more than 1 property. I know a couple that just purchased this spring and they don't plan on living in it. They purchased their current house at the peak and they have a baby on the way in a couple months but still thinks its a good investment on a 5+ year horizon. I dont know if i should pity them or just throw up…

  26. 26
    Slumlord says:

    RE: The Tim @ 4
    I am looking forward to the 2010 Census data on household size. By April of next year, unemployment will likely be between 11-14%, and we should see a dramatic reversal of the decades-long trend of decreasing household size. I am not cheering the economic conditions that are causing this; merely it is a subject of intellectual curiosity: How much have things changed?

  27. 27
    Slumlord says:

    RE: Ira Sacharoff @ 22
    The only redeeming part of your theory, which I happen to agree is taking place, is that we are creating a surplus of low-wage peons that will eventually be able to compete for third world wages. It will, I think, lead to a resurgence of manufacturing in this country in about 20 or 30 years. Just think: We can look forward to making baubles for our Chinese overlords.

  28. 28
    Tony says:

    RE: singliac @ 13 – Pollution and hunger could be brought into check quickly if people would stop having so many kids, so his argument is entirely valid. This planet already has way too many people and is on the way to a population die-off within a few generations. What is that called when something grows at an unsustainable rate but everyone thinks it can continue forever? Oh yeah, a bubble…

    Adoption is a praiseworthy option if you want to have more children without “adding” another person to the planet.

  29. 29
    what goes up must come down says:

    oh but Tony you miss the point the whole thing is about how people find it necessary because it is THEIR offspring — see that is what is special who gives a RA about the rest of the world

  30. 30
    Sniggy says:

    By Tony @ 28:

    RE: singliac @ 13 – Pollution and hunger could be brought into check quickly if people would stop having so many kids, so his argument is entirely valid
    Adoption is a praiseworthy option if you want to have more children without “adding” another person to the planet.

    Thats a bunch of crap. The people here just need to pollute less. We are freaked out all the sudden by pollution because we have seen it in movies, but the fact of the matter is that in most civilized urban areas, air quality is better than it was in the 1950’s. Remeber people used to burn coal, and wood for heat back then.

  31. 31
    David Losh says:

    Population is relative to the location. Globally over population kills people by starvation and disease. Genocide is also a means of insuring that the right kind of people populate a region.

    Population as it relates to the Puget Sound region comes down to jobs. Even though people talk about how beautiful it is here if you don’t have a job it’s hard to live. We built the area with the idea we would have continued job growth.

    When South Lake Union started to build the idea was to have a biotech, and computer tech center there. It was the same for North of Lake Washington, Microsoft was going to continue to expand. My thinking was that we would increase trade with Pacific Rim countries and especially China.

    Boeing seemed to be a great draw for jobs. I think the merger with McDonald Douglas determined a lot of future development with the idea government contracts would keep the jobs here in Seattle. Microsoft then further pushed development goals for the region.

    Now with a global recession I wonder how many people will be leaving the region to look for jobs elsewhere.

  32. 32
    noegruts says:

    By David Losh @ 31:

    “Genocide is also a means of insuring that the right kind of people populate a region.”

    David you really are a prize moron. You should at least try to engage your brain before opening your mouth.

  33. 33
    Civil Servant says:

    Perhaps to Mukoh’s point at 16 above — from the ladies’ perspective, I see what you see. Of my female friends and work colleagues in the 30-40 age bracket (so it’s not entirely a selection bias), only the one with the software-exec husband has kids — she is home with them — and only the wealthy trial lawyer has them on the priority list. Over the past 5-ish years, several people I know told me that they’d figured out they could either afford to have kids or to own a house in Seattle, ever, while not constantly living from paycheck to paycheck. These are people who, for instance, work for nonprofits and reached hard to buy small houses in Ballard, so please don’t think they’re just being greedy and hoarding their money for fine wines and Volvos. They love Seattle and were willing to make a sacrifice to buy property and stay here, is all.

    I think I make fine money (though, ha ha, not by the standards of the Seattle Bubble forum) and when I do the math on a theoretical half-mortgage plus day care, I can practically feel my ovaries shuddering.

  34. 34
    David Losh says:

    RE: noegruts @ 32

    I’m sorry. Are you offended?

    What do you think genocide is? Maybe you think it’s just a story in the news paper. Genocide is real, it goes on today. Starvation is very real and will continue to get worse.

    An insult is not an argument. If you want to contradict me then engage your brain.

  35. 35
    truthtold says:

    In 2009,
    so many things a gal and guy can do aside from happily buying overpriced homes and creating several progeny. This doesn’t seem to be understood but hey, that’s their choice.
    In 1955, I’ld have stuck my little head into the sparkling oven (better be gas) or taken up booze due to horror and the wrong nature.
    More options is good stuff for all: only convents suffer when horizons expand.

    Forgive the off topicness.

  36. 36

    RE: Civil Servant @ 33

    ….and the other option is to not have kids, and not buy a house in Seattle. Then the challenge might be where to spend all that surplus cash.

  37. 37
    what goes up must come down says:

    hey sniggy it is nice you pick the 50’s how about 1850? no doubt then you are right in those small urban areas like NY (as compared today it was small) yep there is a good chance air quality was worse but hmmm at that time if you went 50 miles outside of NY there was almost NO one. So maybe you should think a little yourself about the relative comparisons.

  38. 38

    I have some concerns about how precise or fuzzy the tie is between the # of households statistic and the # of housing units statistic.

    First, there are always some vacant housing units as new ones wait to be sold and as people have to move before getting their places sold or rented – just as there are always some people between jobs and unemployed.

    Second is how minor the apparent difference is between the two measures, and how systematic it looks over time. Looks like it has grown systematically from 0 (meaning the indexes were force-matched at 2000, with not indication of what the ‘oversupply’ number of units was then) to about 3% today. See Tim’s Novenber 5th post in this series.

    Third, it looks like much of the rising oversupply numbers are from overbuilding condos, as several have noted above. My question is: is there an emerging shortage of low-to-mid-priced single family homes that may be masked by the rising oversupply of condos.

  39. 39
    Softwarengineer says:

    RE: Chuck Reiling @ 38

    HI CHUCK, WELCOME TO OUR BLOG

    IMO SFHs in Seattle are facing the same, if not worse [because of their over-inflated prices] scenario as the like $300K Seattle condos…..you said it, constricted incomes with more local overpopulation wage/job constriction predicted on and on….no end to the gloom IMO.

    The elite would love it if the approx 50% of us that still have decent household incomes made for a robust economy, actually, some Seattle-ites would swear this is reality…..the cold hard facts are, that 50% has mostly already bought in and they aren’t in the mood to grab up even rental investments that pay about half the mortgage payment….leaving us with, the bottom half of Seattle’s household incomes to shoulder the home purchases, called “first time home-buyers”.

    Whether the elite believe it or not; the “first time home-buyers” are the first domino in the RE board game. If the first domino doesn’t fall [it hasn’t lately] the rest of the dominos sit there waiting [or the seller pushes one over by butcher axing the price some more, if they’re able to].

  40. 40
    Sniggy says:

    By what goes up must come down @ 37:

    hey sniggy it is nice you pick the 50’s how about 1850? no doubt then you are right in those small urban areas like NY (as compared today it was small) yep there is a good chance air quality was worse but hmmm at that time if you went 50 miles outside of NY there was almost NO one. So maybe you should think a little yourself about the relative comparisons.

    Well without genocide, we will never get back to those population levels.

  41. 41
    The Tim says:

    By Sniggy @ 40:

    Well without genocide, we will never get back to those [1850s] population levels.

    Maybe, maybe not.

  42. 42
    David Losh says:

    RE: Chuck Reiling @ 38

    Your answers are on the ridges above Issaquah. Those are town house units. What are those town houses worth? The CMA probably says $300K. Where will the money come from, where is the job center and if given a choice where will people live? In my opinion that area was better suited for $300K single family dwellings on lots. In ten years I can see those Issaquah town houses selling for $120K to $160K.

    The price of the housing units in Seattle and Bellevue are more to the point. Town Houses are a buffer between single family homes and high density condo construction. We have just circled the down town core with town houses. Hey, you can find those town houses as far away as Issaquah.

    We have yet to begin building down town Seattle or Bellevue. Even if we do build what will be the price point? Every body keeps talking about “luxury” condos. Where are the low income, and middle income condos that are also a part of the Comprehensive Plan.

    Most people have forgotten that we do have a Plan for King County, It’s tied to the Growth Management Act. The only things that have been built are the cheap, and easy, like “luxury.”

    We have a hard time selling what we have, there are thousands of projects that are promised, and it looks like migration to Seattle may be slowing.

    I think people get confused about pricing. When the price of a property comes down to core value the property sells. That looks like demand. What is happening is that properties are way over priced and agents refuse to make offers.

    We have tons of over priced supply and agents keep going back to sales data to justify those prices. When $500K houses are selling for $350K and 600 sq ft is at $100K you’ll see demand meet supply.and there is plenty; more than enough.

  43. 43

    […] projects back-loaded price declines as house prices currently look overvalued.We have discussed the local housing oversupply here at length in the past, and it does appear that homes are still somewhat overvalued compared to […]

  44. 44

    […] have discussed this nonsense here in the Seattle market extensively over the last few years. Our latest look at the data suggested a local housing oversupply of 36,000 housing units.Although it has been quite a while […]

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