NWMLS: Closed Sales Inch Higher but Remain Far Below Pendings

Let’s take a look at July market statistics from the NWMLS. The NWMLS press release has not been posted yet, but should be available here later today.

Here’s your King County SFH summary, with helpful arrows to show whether the year-over-year direction of each indicator is positive or negative news for buyers and sellers:

July 2009 Number MOM YOY Buyers Sellers
Active Listings 9,857 +2.1% -19.8%
Closed Sales 1,727 +4.4% +10.6%
SAAS (?) 2.00 -3.0% -21.0%
Pending Sales 2,217 -9.4% +19.5
Months of Supply 4.45 +12.7% -32.9%
Median Price* $384,000 -2.8% -13.7%

Closed sales increased slightly over June, falling just shy of the 1,750 breakpoint in our May poll. My guess was that closed sales this year would top out between 1,750 and 2000. That may have been a little too optimistic.

King County SFH Closed Sales

Still haven’t broken that 2,000 mark though, despite four months in a row of pending sales in excess of 2,000.

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.

King County SFH Inventory

July came at about the same level as 2007. I wouldn’t be surprised to see some more inventory growth this year between now and September, but we probably won’t hit the 11,000 mark again.

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.

King County Supply vs Demand % Change YOY

Another slight YOY increase for sales in July. Looks like the tax credit and the increased time that it is taking for deals to actually close have managed to stretch this year’s buying season out a little longer than usual.

Here’s the chart of supply and demand raw numbers:

King County Supply vs Demand

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

No big surprise there. The median price measure is notoriously noisy, and it continues to oscillate up and down.

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994.

King County SFH Prices

So far, 2009 is tracking pretty closely to 2005. July 2009’s SFH median was just $1,000 under the August 2005 SFH median.

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: King County home sales climb to two-year high in July
Seattle P-I: Home sales up more than 10 percent in King County
KING 5: Home sales up despite heat wave

I’m sensing a theme…


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.

85 comments:

  1. 1
    Kary L. Krismer says:

    After increasing 4 months in a row, the spread between the mean and median declined this month, by about $7,000 to almost $80,000. That’s not a healthy sign.

  2. 2
    Acerun says:

    RE: Kary L. Krismer @ 1

    “Healthy” is subjective. ;)

  3. 3
    The Tim says:

    Here’s an update to the chart I posted in the comments of last month’s NWMLS stats post. It shows the year-to-date change in the King Co. SFH Median for 2008 and 2009:

  4. 4
    Kary L. Krismer says:

    RE: Acerun @ 2 – True. ;-)

    Actually for health I’m looking more at volume lately, so I should have said health of the high end market. For that you want to see the spread increase, because high priced sales increase the mean more than the median.

    I’m showing the sales over $1,000,000 in King went down about 5% from June, and that there’s a over an 18 month supply of such properties!

  5. 5
    Acerun says:

    It will be interesting to see how the main stream press portrays these results.

  6. 6
    Kary L. Krismer says:

    Tim, at some point I think you should bite the bullet and switch to using closed sales to determine the months supply. You could perhaps have an indicator on your graphs indicating it’s not valid for YOY comparison, like you have now for Actives. Using closed the supply is pretty close to six months, not less than 5.

  7. 7
    The Tim says:

    RE: Acerun @ 5 – See the update at the bottom of the post. Short answer: “Sales are up, up, up!”

    RE: Kary L. Krismer @ 6 – I’d be more inclined to drop the MOS measure all together, since “active listings” doesn’t mean what it used to anymore. If under the old measure of pending sales and active listings, 6 MOS was a “balanced market,” what is “balanced” now that sales are reported higher and listings lower? Who knows?

    Switching to closed sales only really gets rid of half the problem, while introducing a new problem of its own. What would a “balanced market” be when “months of supply” = [the new definition of active listings] / [closed sales] ? Again, who really knows? We have no way to compare to historical data.

  8. 8
    Kary L. Krismer says:

    RE: The Tim @ 7 – I know pendings are all screwed up because of short sales, but I’m blanking on why you think actives are not accurate. I know a lot of people are off the market, but that doesn’t really mean much to people who are on the market. Is there something else I’m forgetting?

  9. 9
    The Tim says:

    RE: Kary L. Krismer @ 8

    pre-July 2008
    Active Listings = All homes currently on the market at the end of the month without an offer plus homes with an offer but “Subject to Inspection.”
    Pending Sales = All homes with an offer that have moved beyond inspection and are now working out escrow / financing.

    July 2008 – present
    Active Listings = All homes currently on the market at the end of the month without an offer.
    Pending Sales = All homes with an offer, including those that have not yet passed inspection.

    They took a specific group of homes and moved them from the “Active Listings” column to the “Pending Sales” column. The result is that reported pending sales are higher than they were pre-July 2008, and reported active listings are lower.

  10. 10
    Scott Weitz says:

    While not technically related to Real Estate, I thought this chart was incredibly telling. If the economy is turning a corner, the bankrtupcy numbers in Western WA sure do not refect it with Ch.7 BKs up 70% year over year.

    http://www.wawb.uscourts.gov/read_file.php?file=2122&id=0

    I’ll reiterate my past assertions: buyers in Seattle now are catching a falling knife. Don’t believe the stock market rally. It will falter – P/E ratios are actually higher in the S&P now than they were in ’07….unbelievable.

  11. 11
    Ross Jordan says:

    Looks like we are set to drop below 2005 prices next month!

  12. 12
    DrShort says:

    I find it a little interesting that the closed sales came in higher than June. That certainly wasn’t the chatter we were hearing in the comments here a day or two ago. I thought one of the open threads had us 200 sales behind June with one day left to enter the sale. Did we really record that many July sales on Monday?

  13. 13
    Kary L. Krismer says:

    RE: The Tim @ 9 – Thanks, but I would consider that a change for the better. As a practical matter, few if any prospective buyers looked at pending inspection properties before, once they went pending inspection. So they really should never have been counted as part of the active inventory. Sure the change means the YOY would be off, but there it’s a change for the better,so I’m willing to accept that.

    It’s sort of like what I’m suggesting using closed rather than pending to determine the months supply. I’ve always used closed, because I think it’s a more accurate number–every closed actually closed! If you changed now to using solds rather than active, sure the prior numbers you did couldn’t be compared, but the numbers going forward would be more meaningful, IMHO.

    The situation with pendings, however, that’s entirely different for a number of reasons, and I’m not sure any of it is good.

  14. 14
    The Tim says:

    RE: DrShort @ 12 – Yeah, Monday at 11AM it was 1,494, then today’s report puts the total at 1,727. 233 sales entered in two days smells a little fishy to me, but I’m taking them at their word unless evidence comes to light to the contrary.

    RE: Kary L. Krismer @ 13 – I agree that the change is a better way to count that is more reflective of the real market (I said so at the time), the problem is just that it gives us nothing to compare to historically. I may go ahead and switch it anyway.

  15. 15
    Greg Perry says:

    RE: The Tim @ 9RE: Kary L. Krismer @ 6

    If one looks at ‘MOS” in a historical context it doesn’t really matter which is used (pending or closed). The main thing here is that consistency is used month to month.

    If MOS is used in a working context, only pendings work. The relationship between the recently sold (pendings), and the actives show the relative strength or weakness of a market area / price range at that exact point in time. (Important to know for a seller or a buyer).

    Well, I was correct in that July’s closing would be more than June’s closings. Still have a ways to go for my prediction 2000. Perhaps November.

  16. 16
    DrShort says:

    By The Tim @ 14:

    RE: DrShort @ 12 – Yeah, Monday at 11AM it was 1,494, then today’s report puts the total at 1,727. 233 sales entered in two days smells a little fishy to me, but I’m taking them at their word unless evidence comes to light to the contrary.

    Can anyone check the MLS database to see if they get a closed sale number close to 1,727?

  17. 17
    patient says:

    RE: Greg Perry @ 15

    “Well, I was correct in that July’s closing would be more than June’s closings. Still have a ways to go for my prediction 2000. Perhaps November.”

    Greg, you crack me up :-)))

  18. 18
    Greg Perry says:

    RE: patient @ 17

    I crack me up, too.

  19. 19
    Kary L. Krismer says:

    RE: DrShort @ 16 – The numbers never exactly match the system, presumably because they do some sort of checking/reconciling to make sure agents enter the sale on the right date (I’ve seen a lot that don’t) and probably some other things. I don’t understand the process at all, but I assume they’re trying to avoid GIGO because left to their own devices agents produce a lot of garbage.

    July the official was much higher than the system, June it was much lower. May was unusual in that it was almost right on. But the short answer is the volume number was higher than I expected, but the median very close despite the volume difference.

    As a practical matter, the exact volume number of a month isn’t that important. Just this last month my wife and I had one transaction that closed on July 31, that almost went to August, and one the 2nd business day of August that could have closed in July. Neither closing was within a week or the originally scheduled closing. So just by ourselves we could have affected the number of closings by two, and we try to avoid month end closings. Also, you’d probably be surprised how much the median bumps around, even near the end of the month. A $5,000 difference from a prior month is really just noise. I think sometimes too much emphasis is placed on small differences.

  20. 20
    Kary L. Krismer says:

    RE: Kary L. Krismer @ 19 – BTW, by my count the volume difference YTD is 9 out of roughly 8,000, so it all evens out.

  21. 21
    DrShort says:

    RE: Kary L. Krismer @ 19

    Thanks for the explanation. Makes sense.

  22. 22
    shannon says:

    This is off topic but so shocking I had to say something. I looked at Newcastle recent sales on Redfin. This address says it sold:

    14256 SE 83rd St
    $1,298,706 5bd 4ba
    Sold Jun 5

    On June 5th the 2009 assessment was….$1,190.000
    Two months later they get their 2010 assessment………..$725,000!
    Do you think they might be a little upset?

    The thing is that you have to look at the taxable history to see the price drop. and not all properties have received their notices even on the same street. All four I have looked at so far in Newcastle have this same problem. They bought around assessment price and thought they were getting a good deal except now their assessment is about 25% down!

    My prediciton….prices are going to go down big time in 2010.

    I haven’t got my 2010 assessment notice yet but since I probably will be in this house for a long time it really doesn’t matter.

  23. 23
    DrShort says:

    By shannon @ 22:

    They bought around assessment price and thought they were getting a good deal except now their assessment is about 25% down!

    Assessed value isn’t market value.

    Also, I’m wondering if the county is being extra liberal in dropping assessed values to preempt thousands of homeowners from challenging their assessments. It doesn’t cost them a dime in tax revenue to do so and saves them a ton of headaches.

  24. 24
    Kary L. Krismer says:

    RE: shannon @ 22 – People shouldn’t be buying based on assessed value. It’s all over the board. You could probably find just the opposite situation if you looked hard enough.

  25. 25
    Kary L. Krismer says:

    RE: DrShort @ 23 – Aubrey’s article in the P-I yesterday did indicate they had some sort of downward bias in the new numbers–to shift the numbers lower than prior. I don’t recall the details.

  26. 26
    shannon says:

    I look at property sales a lot…my family might even say I am obsessed and what I am seeing more often than not is that people are paying BELOW assessment…..at least their 2009 assessment:)
    So I would say up to this point assessment is a GOOD base to start with. What will happen with the 2010 assessment we will have to see but I am betting that it is going to be a tug down on the prices.

    On the main page of the King County Assessment is a warning telling people about “substantial” drops in their home value 2010 due to the economy.
    From what I am seeing, I would say they mean it!

  27. 27
    DrShort says:

    Still no press release posted from the NWMLS?

  28. 28
    Kary L. Krismer says:

    RE: DrShort @ 27 – Apparently not! On our private page there’s still just an announcement that it will be coming.

    Wait, I found it, but I don’t have a public link.

  29. 29
    David Losh says:

    I got the 1727 number when I checked closed King County sales yesterday. The difference in the numbers is because the 1st was on a week end.

    The way the system works is the agents can input listing changes, if they take a little class, or the secretary in the office can input, and some agents, and companies fax in the input changes to the NWMLS.

    An agent can still get paid a commission and forget to input the change in staus from Pending to Sold. It has to be reconcilled at some point and that is usually at the end of the month.

    There again many buyers or sellers prefer the end of the month for leases, or mortgage payments.

    It doesn’t have to make sense it’s just the way the system is.

  30. 30
    David Losh says:

    An assessment is for the purpose of taxation. There is a formula only the County Assessor knows, or understands. There is no science associated with it. There is a value based on land, plus a structure, if there is one.

    One of the classic disputes is for a view. You can be in a view area, but have no view, or be in an area of great views and never be assessed for it.

  31. 31
    cheapseats says:

    I personally agree that the tax assessed value should not be relevant. Well I should say that normally I would agree.

    However, I have recently noticed several people complaining on various blogs about it. One even was wondering if he could pull an offer he was making because the new values came in lower than the offer he was making. Just because it doesn’t necessarily make sense doesn’t mean that it will not have an impact…

  32. 32
    S-Crow says:

    RE: Greg Perry @ 15 – I had a funny thought pop into my head regarding your “maybe November” comment. It was about consumers doing the Cash for Clunkers deal: that these folks were obtaining new debt for the privilege of buying a new car and potentially removing them from the buyer or refinance pool.

  33. 33
    hinten says:

    That can’t be good.
    http://news.yahoo.com/s/nm/20090805/bs_nm/us_usa_housing_deutschebank

    It really did feel like a little sigh of relieve over the last month in our neighborhood. Taking a step back it looks more like the real s***storm is just about to begin.

    What I also find interesting that just based on my own subjective searches in the $1mm range there is dramatic discounting going on but less than what feels warranted.

  34. 34
    Scott Weitz says:

    Hinten-

    Nice article…that is scary. We’re going to see some radical legislation in the next few years.

  35. 35
    Greg Perry says:

    RE: S-Crow @ 32

    No kidding. Think about it….. $4500 for a 15k car.

    $8,000 for a $400,000 house.

    Government $$ for cars is a better deal as far as free money goes.

    And if you buy a new SUV, maybe in a pinch you could live in it.

  36. 36
    Softwarengineer says:

    RE: Scott Weitz @ 10

    You got it Scott.

    Tim’s charts show prices down, closed sales up….meaning? IMO it means the sellers are lowering their prices and dumping as fast as they’re able, today’s 14% loss covers next years 24% loss?

    If I was in RE debt this year, I’d unload fast too on the cheap….its better than a worse loss next year….the dummies are this year’s buyers IMO [unless you can’t rent for personal reasons and/or you don’t care if you lose money].

  37. 37
    Softwarengineer says:

    RE: Greg Perry @ 35

    LOL…..

    I noticed Hyundai Sonata’s for $19K then the $4.5K discount and other to make it $13K….when did Sonata’s go for $19K? The dealers raised the prices for the discounts to pocket them?

    I bet the $8K for houses goes to the sellers too…LOL

  38. 38
    ray pepper says:

    RE: Kary L. Krismer @ 1

    Kary, just wanted to make a comment way off base. Its late and Tim is asleep. I apologize you are right. The roads in Tacoma stink. Since we had our little arguement I have been watching the roads. When I hit the pothole today on North 14th I saw your face, from this blog, laughing at me.

    Now I most likely need to take the Accord in for an alignment..

    Dangggggggggg. I hate to be wrong.

  39. 39
    Rack says:

    By Softwarengineer @ 36:

    RE: Scott Weitz @ 10

    You got it Scott.

    Tim’s charts show prices down, closed sales up….meaning? IMO it means the sellers are lowering their prices and dumping as fast as they’re able, today’s 14% loss covers next years 24% loss?

    If I was in RE debt this year, I’d unload fast too on the cheap….its better than a worse loss next year….the dummies are this year’s buyers IMO [unless you can’t rent for personal reasons and/or you don’t care if you lose money].

    Of course prices are down, and does the increase in sales mean “Knife Catchers”, or does that the market has stabilized?

    I guess we will be able to answer that next year.

    I have always said this, if you buy cheap now, which there are deals to be had you have hedged your bets a little bit.

  40. 40
    Kary L. Krismer says:

    RE: cheapseats @ 31 – Well you also get people commenting on Zillow valuations, and I’ve yet to see it matter in a transaction.

  41. 41
    Kary L. Krismer says:

    RE: hinten @ 33 – First, I really don’t trust Deutche Banks. They have some of the worst of the REO properties out there, properties in such poor condition you wonder why a bank ever gave a loan on the property. How would a bank that makes such loans have any kind of valuable insight?

    Second, there’s no way to determine from public records whether a house is underwater. These types of studies are complete nonsense.

  42. 42
    Kary L. Krismer says:

    By Greg Perry @ 35:

    RE: S-Crow @ 32

    No kidding. Think about it….. $4500 for a 15k car.

    $8,000 for a $400,000 house.

    Government $$ for cars is a better deal as far as free money goes.

    And if you buy a new SUV, maybe in a pinch you could live in it.

    Maybe the government should give each first time home buyer a Chevy!

  43. 43
    patient says:

    RE: Kary L. Krismer @ 41 – Before any of these incentives where in place I stated that for me to take on one of these over priced Seattle homes the incentive would need to be 5-10 years of no income tax. With a 20% reduction since then in prices it’s currently more like 5 years than 10 but $8k is a complete joke and total waste of money. As it happens 5 years of no income tax for us would be pretty close to the incentive/price ratio of the cash for clunkers deal.

  44. 44
    cheapseats says:

    RE: Kary L. Krismer @ 40 – Kary, Those might both be fair points. It is possible that DB is looking at their property positions and assuming that they are a fair representation of the larger market. They really did not give much data in support of their position.

  45. 45
    patient says:

    It would be quite interresting to have a chart with a snapshot of accumulated pendings vs. closed to see the ratio changes throughout the year. Something like one bar for each month representing accumulated pendings with accumulated closings in a different color. If delays in closings is the main factor the accumulated gap should narrow as soon as pendings starts to decrease in fall.

  46. 46
    ray pepper says:

    CNBC finally reporting the obvious. By 2011 50% of homeowners who carry a MTG will be upside down………..

    OUCH! Took long enough for them to get this message out..”Underwater Mtg’s and efforts out there now are not near enough.”……………you don’t say…………

    My oh My are they coming back. In numbers we cannot even imagine.

  47. 47
    Kary L. Krismer says:

    RE: ray pepper @ 45 – Already discussed Ray. That’s about as bad as all the other information that CNBC spews out.

    There’s no way that they could possibly determine how many homeowners are underwater because debt levels are only public record at three points in time:

    1. When the deed of trust is recorded (assuming not a HELOC)
    2. When a notice of trustee’s sale is recorded.
    3. When a deed of trust is released.

    Now in any given year, I doubt 50% of the houses fall into one of those three categories, so how could they possibly know the information they are purporting to convey?

    Oh, and that ignores the fact they don’t know value either.

    Oh, it also ignores the fact that they don’t know what values will be in 2011.

    Typical CNBC. Good deal of nothing.

  48. 48
    Kary L. Krismer says:

    RE: patient @ 44 – Actually, you could do something similar by aging Pendings and looking at results for cancelled and sale fail release by month. That would take a considerable amount of time, however.

  49. 49
    ray pepper says:

    RE: Kary L. Krismer @ 46

    I have been a CNBC junkie for nearly 20 years. I was very depressed when I learned Seth Tobias was not going to make another appearance on CNBC (or Bloomberg for that matter).

    http://nymag.com/news/features/43914/

  50. 50
    Scott Weitz says:

    RE: ray pepper @ 48

    I hear you, Ray. Does anyone else miss Dylan Ratigan??

    Kudlow should be fired…he’s the most irrational journalist I ever seen ….there is no bad news in his world.

  51. 51
    ray pepper says:

    Kudlow is an idiot and drives me nutts. Dylan Ratigan pissed me of a few times when I held BAC at 4.00. I don’t like the Asian chick on Fast Money but I have a serious crush on Erin Burnett thats affecting my marriage . I’m also sick of Joe Kernen. I don’t think he is funny and if I see that tech guy David Poe one more time I will turn off the LCD.

    Silvia Wadhwa the German Correspondent is also something rather special. Have you ever seen her with all those tattoos?

    She was wearing a Tank top one day and I coudn’t believe what I saw.

    http://media.cnbc.com/i/CNBC/Sections/CNBC_TV/CNBC_Europe/Bios/Wadhwa_Silvia/Wadhawa_Silvia_240x250.jpg

  52. 52
    Eastside Westside its all Good says:

    Re 2010 Valuations

    I’ve been seeing Bellevue down about 15-18% across the board. As for valuations, with due respect Kary, I’ve been dealing with an issue that makes me somewhat cynical, where our realtor says the valuation is valid when it supports the asking price and not relevant when it is way below asking.

    Is anyone else surprised at the quantity of inventory coming on below 2005-06 pruchase prices?

  53. 53
    Mark says:

    Ray, that woman looks like Meat Loaf. And yes, Kudlow is an idiot. Cramer isn’t any better. Sorry, I don’t like Erin either. Mark Haynes(sp) and David Faber are about the only two people on that station that are worth watching.

  54. 54
    Softwarengineer says:

    RE: Eastside Westside its all Good @ 51

    Money Pit Homes to Sell

    The money pit across the street from me would have bankrupted most of us bloggers to just get $29K added to its $110K base and its all newer remodeled exterior/interior hasn’t attracted one vulcher at $139K…..now, imagine trying to sell your used place “as is” for other than the totally devalued 2010 tax assessment…LOL

    I know, use sweat labor instead….LOL….but even Dave warned against do-it-yourself projects devaluing the house because it looks subpar and/or you picked all the wrong colors and materials out….

  55. 55
    David Losh says:

    RE: Kary L. Krismer @ 46

    Here’s question: How many homes traded hands between 2000 and 2007? Second is how many mortgages or second mortgages were given?

    I think the reporting may be inaccurate, but I also think a lot of money traded hands through mortgages. Now that the music has stopped, and there are no more equity positions to go after, the numbers may be pretty close to being true.

    Simply, in the world of mortgage money, the equity in 50% has been tapped. Maybe.

  56. 56
    Kary L. Krismer says:

    RE: David Losh @ 55 – Sounds like a shot in the dark.

  57. 57
    David Losh says:

    RE: Kary L. Krismer @ 56

    I don’t think so. There have never been so many Real Estate agents and Loan Originators. Never. I talk with old timers, older than me, and we agree there is nothing like what we have seen.

    There is no way that the amount of construction that just took place will be sold in my life time. Think of the millions of units that were literally thrown up, pun intended, in the past ten years. Now that demand has dried up, if it ever exsisted to begin with, there is no way those properties will ever be solvent income producing loans.

    Add that to the number of people who are walking away, then the number of people who borrowed equity, and it adds up.

  58. 58
    Kary L. Krismer says:

    RE: David Losh @ 57 – I doubt any of the people you’re talking to have any solid information on any of those things, other than the amount of construction. And rather obviously, if it’s different than what they’ve seen, they wouldn’t have any experience as to where it’s going to lead.

    I just wrote a piece on the Deutsche Bank study over at SREP–called: Have We Become A Nation of the Extremely Gullible?

  59. 59
    Greg Perry says:

    By Kary L. Krismer @ 42:

    By Greg Perry @ 35:

    RE: S-Crow @ 32

    No kidding. Think about it….. $4500 for a 15k car.

    $8,000 for a $400,000 house.

    Government $$ for cars is a better deal as far as free money goes.

    And if you buy a new SUV, maybe in a pinch you could live in it.

    Maybe the government should give each first time home buyer a Chevy!

    Kary, I think you found the key to unlocking the entire economy! Now that’s stimulus!

  60. 60
    mukoh says:

    RE: David Losh @ 57 – Dave your figures on constructions are doubtfull yet if unfounded based on your misinformed opinion. Snoco is clipping off 200+ sales on new homes in a month, while only 60-70 permits are issued per month on average over the last 7 months of this year. Go figure.

  61. 61
    David Losh says:

    RE: mukoh @ 60

    Again your comment makes no sense.

  62. 62
    David Losh says:

    RE: Kary L. Krismer @ 58

    Sorry, it’s just a fact of life that tons of money flowed into mortgages. Construction is lending based. There’s no other reason for it to have taken such a dramatic increase. Demand? Where was the demand?

    A seperate world of Real Estate is mortgages. You are making assertions that contradict what I have suspected for some time. These reports of future value seem to confirm my suspicions.

    Show me where there is any reason for a home in Bothell, that sold in 1998 for less than $160K, is now worth $350K and some Real Estate agents are calling that a fair price for a starter home.

    People refinanced, homes sold, construction took place. all of which generates data. aside from that, as we move forward, and people buy into a declining Real Estate price those mortgages will also be, as they say, be underwater.

    It all seems extremely reasonable.

    Real Estate is a highly predictive market. It got way out of hand. The correction will come, now over time, but it was a done deal in 2005. We are four years, going on five of a market correction.

    I read your post, but there wasn’t any substance. Prices are declining, that will continue, now we have to pay it off. We will all pay.

  63. 63
    Kary L. Krismer says:

    By David Losh @ 62:

    <Real Estate is a highly predictive market. It got way out of hand. The correction will come, now over time, but it was a done deal in 2005. We are four years, going on five of a market correction.

    Huh? The peak in Seattle was July, 2007. We’re in the third year.

  64. 64
    Kary L. Krismer says:

    By David Losh @ 62:

    I read your post, but there wasn’t any substance. Prices are declining, that will continue, now we have to pay it off. We will all pay.

    Pointing out a study is bull has no substance? It’s numbers out of thin air. Debt level–pick a number. Value–pick a number. Decline in prices over time–pick a number. Put those together, and get a meaningless result.

    Zillow tried this same thing a while ago, and I was just as hard on them. The percent of properties that are underwater is something that simply cannot be determined even as to the present day. Add in a predicted price change in two years, and it gets really absurd.

  65. 65
    David Losh says:

    RE: Kary L. Krismer @ 63

    Sorry, the market was out of control in 2005, Just because it over shot to a peak in 2007 doesn’t say that the problem hadn’t already developed.

    In 2005 to 2007 Real Estate agents kept saying everything was fine. In 2008 and 2009 Real Estate agents are saying we are bouncing.

    Bouncing? Please give me some numbers for bottom bouncing?

    There are no numbers. There is debt that inflation will not be taking care of. Real Estate agents are going to, at some point come to grips with that.

    Global credit crisis, economic melt down, are still just a few months behind us.

  66. 66
    ray pepper says:

    RE: Mark @ 53

    MeatLoaf now that is funny. I was thinking more like Roseanne Barr.

  67. 67

    RE: ray pepper @ 66

    Maybe it’s Meatloaf’s and Roseann Barr’s love child.

  68. 68
    Rack says:

    By Ira Sacharoff @ 67:

    RE: ray pepper @ 66

    Maybe it’s Meatloaf’s and Roseann Barr’s love child.

    I wonder how well she sings the national anthem.

    http://www.youtube.com/watch?v=DrFW2aYHVR8

  69. 69
    mukoh says:

    RE: David Losh @ 61 – David, things obviously don’t make sense to someone as involved in real property as you are. I agree.

    Your comment at 62 is obaminal at best. Construction BECAME lending based in 2000s. Most people were operating on cash to lending margins of 50% before then it became 90% off highest appraisals, thats when every cleaner and finish carpenter became a “builder”.

  70. 70
    David Losh says:

    RE: mukoh @ 69

    I do understand what you are trying to say. You do make the point I made very early on in our exchange. Yes, every one became a builder. Thousands of people became builders. They are real estate agents, loan originators, and/or builders.

    I am not a builder. New construction is something that I have avoided. I did have a company in the 1980s that finished condo projects for a buddy of a buddy.

    Now you on the other hand must have some stake in the building business.

    Best of luck to you, but the fact remains you’re right once again, at a 90% LTV all that new product will be under water if it isn’t already. Even the Polygon Town Houses in South Everett that sold for $199K to a group of buyers lined up around the block are, in my opinion, like driving a new car off the lot.

    I’m sorry.

    Let’s start on you. you have an upper income life style to support, with kids, and employees. You live in Edmonds and have friends who work at John L Scott. You know all the builder news and must believe that the builder business will continue as soon as the inventory depletes. You did have the fishing trip with the owner of the Title Company.

    You’re in the thick of it. Your finger is on the pulse.

    You should take a step back. Maybe look at things with some perspective. There is an answer in all of this you keep fighting. You did just buy an unfinished apartment building for $1.2 Million Dollars at $80K per unit. That should be for all cash like the other all cash deals you are talking about. I hope this isn’t one of those foreclosure hard money deals.

    It doesn’t make any difference, it’s all good, the economy is turning the corner. Jobs are pouring into the region, rents are stable, and prices will hold steady.

  71. 71
    David Losh says:

    RE: mukoh @ 60

    There is a sucker born every minute. Sales are brisk, there are multiple offers.

    Wait where have I heard all of that before?

    It’s the press release from the NWMLS that came out this week.

    It must be true, you’re right once again.

  72. 72
    mukoh says:

    RE: David Losh @ 70 – That is the opposite of what I think. I think 60% of the cleaners/plumbers/finish carpenters who became “builders” will be gone. Its not rosy for the future either however builders who are here and have their own money are now making 25% margins on homes. Which is good. It won’t be rosy for the other 60% packing it up to the court house.

    BTW lets not bring in personal incomes into this, you might not be able to swing that one.

  73. 73
    Rack says:

    Crazy thing that Polygon development in south has contractors working long shift to get the houses knocked out.

  74. 74
    David Losh says:

    RE: mukoh @ 72

    You brought up personal incomes, It’s what you do. You’re an elitist.

    It makes no sense, you make no sense.

    You’re saying the opposite of what? Huge margins? Building for profit?

    Yeah, kid, you’re the big time. However you come onto a blog about the over priced housing market to brag about how much money you make by building over priced housing units. Why?

    Actually you don’t say what you do. You never actually say anyhting. You make absolutely no sense.

  75. 75
    David Losh says:

    RE: Rack @ 73

    Yes, they are one of the business models the mukoh guy is referring to. He retold a story of urban legend as though he was the principle player, he may be, it was about a Polygon project in South Everett.

  76. 76
    mukoh says:

    RE: David Losh @ 74 – Ok. Just to clear it up. I do not build, nor am I a BUILDER. However know people who do it WELL. Please accept apology for any profit taking, making sure that margins are good, and making a profit in a business. Really am sorry.

    An urban legend? David lots of people are urban legends in someones mind who completes absolutely no transactions.

    Never have I talked about Polygon, however someone I know was outbid by polygon in that particular idea. They are running well with it and have lots of sales.

  77. 77
    Jonness says:

    By Eastside Westside its all Good @ 52:

    ]Is anyone else surprised at the quantity of inventory coming on below 2005-06 pruchase prices?

    What surprises me is the idiots currently listing their homes for more than they bought them for in 2006-2007-2008. My advice is, if the house is listed for more than the 2005 sold price, wait for the bank to pick it up. Then buy it dirt cheap as an REO.

  78. 78
    Rack says:

    By Jonness @ 77:

    By Eastside Westside its all Good @ 52:

    ]Is anyone else surprised at the quantity of inventory coming on below 2005-06 pruchase prices?

    What surprises me is the idiots currently listing their homes for more than they bought them for in 2006-2007-2008. My advice is, if the house is listed for more than the 2005 sold price, wait for the bank to pick it up. Then buy it dirt cheap as an REO.

    I agree, or wait for it to short, but calling them idiots? For every idiot selling over market there could possibly be an idiot buying over market.

  79. 79
    David Losh says:

    RE: mukoh @ 76

    Again it’s another riddle. What do you do?

    Rose Construction turns out an excellent product, but you’re telling us she’s in trouble. Are they doing well?

    The profit to the builder is unquestionalble, the end user seems to be the ones with the problem. As you know what I advocate is if people chose to buy new construction they should plan on paying down the principle balance to get equity. There is no other way. It’s like driving a new car off the lot.

    There are millions of housing units. There are people who will buy new. In a few years those units will be worth less than the purchase price. It’s the resale that will continue to drag the economy. So, once again, you are correct, there is a large magin, profit, in turning out new construction housing units.

    Banks are also extremely profitable.

  80. 80
    Rack says:

    “Banks are also extremely profitable”

    Have been, but not right not they are not.

    Not even solid ones like USBank.

  81. 81
    Kary L. Krismer says:

    RE: David Losh @ 78 – I wonder if the appeal of new construction will go away with the changing market? Although right now a lot of new construction is priced very competitively. I suspect though, that most of those are projects that you wouldn’t really want to buy into, but that’s what I’d say about most new construction projects in any market.

  82. 82
    Racket says:

    RE: Kary L. Krismer @ 80

    Kary, probably not unless there is a huge noticeable depreciation on new houses.

  83. 83
    David Losh says:

    RE: Kary L. Krismer @ 80

    I found out yesterday that one of my clients has a degree in Real Estate Development from MIT. He’s working on a web site called http://www.valueappeal.com it’s to lower your tax assessment.

    I could go on about Real Estate development or planned development, but there has been a shift in the past few years that is questionable, in my opinion. If you take planned development from a financial engineering stand point and make it profit motivated the end user could end up with a pile of poop at resale.

    I worked for a builder long ago who used to count nails. The fewer nails you used the more the profit.

  84. 84
    Kary L. Krismer says:

    RE: Racket @ 81 – Well until about a year ago new construction sold at a huge premium to resale. There was no way you could sell one within a year for break even, unless that year happened to have a 15% appreciation in prices generally.

    Of course, that doesn’t mean you couldn’t have refinanced through WAMU 4 months later for 20% more than you paid. ;-)

  85. 85
    mukoh says:

    RE: David Losh @ 78 – Rose construction? You mean Rose Homes? They just had all of their projects go into foreclosure and are being sued, I think Ken will be living in less stellar surroundings soon. His home with great view will be repoed as well.

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.