Quick Look: November 2009 in Bar Charts

Time for an installment of “quick look,” a series of posts in which I present a fresh set of charts for some recent data with minimal commentary.

Today’s theme is King County SFH November stats in bar charts compared to each November since 2000.

King Co. SFH Closed Sales: October

King Co. SFH New Listings: October

King Co. SFH End of Month Active Listings: October

Note that the definition of “Active Listings” was revised in July 2008 to exclude certain listings.

King Co. SFH MOM Price Change: October

King Co. SFH YOY Price Change: October

  

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.

35 comments:

  1. 1
    Kevin says:

    Sorry I have a question that is unrelated to the post. =)

    There is a piece of news last month that the national mortgage delinquency rate keeps rising, i.e. possibly more foreclosure in the future.

    Anyone has information on the local delinquency rate? I think it’s a very important factor to forecast local prices.

    Agree, disagree? Thanks!

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  2. 2
    AndySeattle says:

    Are this November’s closed sales a dead cat bounce inflated by the hot air of the tax credit? Or, signs that the world has gone mad? Something else entirely?

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  3. 3

    I know you’re going with minimal commentary, but again I’d point out that the active listings are really below what’s indicated because of the short sale problem. I would estimate that well over 50% of buyers have no interest in short sales, so they’re really looking at something less than 1,000 listings less than what’s indicated. And that wasn’t true in prior years, except perhaps 2008.

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  4. 4
    Ray Pepper says:

    RE: Kevin @ 1

    agree 100%.

    The higher the delinquency the rate, the more pressure on the banks, the more people stopping payments in order to get the 2% Hamp, equates to more foreclosures/shortsales.

    Before its all done–they are ALL coming back in one way or another. Financials will be hit Round 2.

    33% of Homeowners upside down across the nation? These people must sell. We are a mobile society. The cost to sell in Washington is almost 10%! The homeowners don’t have the money to cover.

    This Fed bounce set out to do what it was supposed to: “soften the landing.” Effective 100%. Now we start the long grind of flat line to trend line down yoy.

    Bank on it!

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  5. 5

    RE: AndySeattle @ 2 – It’s a sign that not everyone views the world the same as most people here. October was largely tax credit, but I don’t think you can necessarily say the same thing about October.

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  6. 6
    AMS says:

    RE: Kevin @ 1 – Whenever people are overextended, in mass, and there is a slowdown in economic activity, debt servicing is going to be a problem.

    In the past the home was sold, and the loss was minimize by market increases. Even if it took a year for a foreclosure, the property values were generally increasing. Today if it takes a year, it is likely that the $350,000 to $400,000 home will be worth 10% less, or $35,000 to $40,000. Thus while the costs of the foreclosure are mounting, property values are falling. The costs of the foreclosure were expected at some level, but the heavy losses from declining property values were not anticipated. This makes Bank Failure Friday all the more interesting.

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  7. 7

    By AMS @ 6:

    In the past the home was sold, and the loss was minimize by market increases. Even if it took a year for a foreclosure, the property values were generally increasing.

    And that same market action got more people to want to get into the market. It was self-sustaining until implosion.

    At that seminar I went to one of the speakers was an AG going through some examples of mortgage fraud from a few years ago. A lot of those players were buying multiple properties. Since there were several of them, they alone also had an effect on sending the market up.

    I think when you combine all those factors it’s why you see the market price in certain areas start to extend up almost exponentially for a period of time. Again, self-sustaining until implosion.

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  8. 8
    AMS says:

    RE: Kary L. Krismer @ 7 – Is there a fundamental level of sustainability?

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  9. 9
    Scotsman says:

    There’s so much information out there that is at odds with what we’re seeing locally in real estate. I think November is largely the result of the tax stimulus. Gallup just came out today with their weekly spending report that shows holiday spending down roughly 20% from last year, a bad year in itself. That’s a huge drop, but it does match up with the tax receipts numbers that also show a similar sized drop in consumer activity. It’s hard for me to believe folks would cut all spending except that on home purchases by so much while home sales rose except as a response to a stimulus. This uptick will be short lived- there’s no foundation. We’ll soon be off to hunt for a true bottom again.

    http://www.gallup.com/poll/124616/Gallup-Economic-Weekly-Spending-Remains-Weak.aspx?CSTS=alert

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  10. 10
    BillE says:

    Kary has a good point in post #3. More and more short sales are coming onto the market and I’m not alone in ignoring them as a buyer. In some of my property searches, roughly 1/3 of the results for the area and price range are short sales.

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  11. 11
    Willy Nilly says:

    I will not consider a short sale for my purchase. I am also waiting until mid 2010 (at the earliest) before making any offers, and waiting to see the effects of option ARMs. Although real estate is supposed to be “regional”, I do not see how we are totally insulated from the pending doom in CA, NV, AZ.

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  12. 12
    AMS says:

    RE: Willy Nilly @ 11 – Pending doom?

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  13. 13
    Kevin says:

    I am just curious – why do you guys not consider short sales when making offers?

    Is it because short sales are rarely approved?

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  14. 14

    RE: AMS @ 12

    Let’s Be More Optimistic

    Instead of pending doom, let’s call it tax receipt corrections or budget trimming.

    Sounds far more pallidable than “butcher axing”….LOL….unless your job is part of the budget trimming.

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  15. 15

    RE: Kevin @ 13 – Rarely approved and most approvals simply take a long time. Short sales are better suited for investor clients who might not care too much about a closing date. Most people who want to live in a house want some idea when they can move in, as well as some assurance that they can move in.

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  16. 16
    Ray Pepper says:

    RE: Willy Nilly @ 11

    Not considering short sales is a terrible terrible mistake. We have closed each one we got signed around and I’m here to tell you if you are patient they can be a GEM. Look at EVERYTHING when you decide to buy.

    Case in point West Seattle. Our Buyers wanted a 395k townhouse. While they were deciding…. BAMMMMMMMMM two short sales appeared across the street on the SAME type units both listed 50k less. Suddenly the seller of the 395k lowers his price to 378k still 33k above the short sales. Our buyers were concerned about short sales.

    For 33k+ we educated the Buyer that they would have to be BRAINDEAD to not enter the short sale transaction on the EMPTY units considering the seller of the 378k unit had “no more room to move”. I suspect the seller is quietly waiting for these to get sold because they don’t have a chance in hell at selling theirs with these 2 across the street.

    Always Always LOOK AT SHORT SALES. Don’t let any Agent tell you different!

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  17. 17
    Scott is Rad says:

    I agree with Ray, a short sale may be frustrating and take an extra month or two, but personally I’d consider that a small price for the chance to save what could amount to a full year’s salary… or more…

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  18. 18
    Urban Artist says:

    Thanks to good advice on this site I would probably look at Bank owned houses first. If I wanted to look at short sales I would not know how to find them. I have even seen some houses in Ballard that I suspect are vacant, I’m not sure where to start with those either. I’ll probably sit on the fence a bit longer.

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  19. 19

    RE: Urban Artist @ 18 – Bank owned are possibly even priced better than short sales (unless the bank fixed them up). The main downside to them is that the contract they use will be more one-sided, and sometimes they are so badly written you need to walk because an attorney review would be way too costly.

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  20. 20

    RE: Urban Artist @ 18
    Listings are supposed to state that they are short sales, but a lot of them don’t. The MLS listing does state whether it’s a short sale, so if you’re curious and suspect a home might be a short sale, send me or another friendly neighborhood real estate agent an email.

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  21. 21
    Willy Nilly says:

    RE: AMS @ 12

    One of the reasons I moved out of CA –

    http://moremortgagemeltdown.com/download/pdf/T2_Partners_presentation_on_the_mortgage_crisis.pdf

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  22. 22

    […] not going to print them here; Tim at Seattle Bubble does a great job breaking down the numbers. I encourage you to go to his site to take a look for […]

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  23. 23
    AMS says:

    RE: Willy Nilly @ 21 – So you moved from a market that was well into its correction to one that had yet to start? Is that like moving from the valley and heading toward a peak?

    (I know you suggested that you are renting.)

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  24. 24
    Scotsman says:

    Another reason prices won’t be rebounding soon- estimates are that up to half of the jobs lost in this cycle won’t be coming back… ever.

    http://www.bloomberg.com/apps/news?pid=20601039&sid=afDdQ4LBwBHg

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  25. 25
    shawn says:

    RE: Scotsman @ 24 – It really depends on what jobs “may be gone forever” and what jobs will be replacing the lost jobs, that is if the lost jobs will be replaced.

    What is amazing is that this whole real estate bubble blew up. And yet most politicians, the press, and most of the public keep yammering on about how things will be great if we can get back to the mania we were at before. We are still in the denial phase. This pretty much explains why we have not seen the correction yet, the one we know is coming.

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  26. 26
    R says:

    RE: Ray Pepper @ 4 – “33% of Homeowners upside down across the nation? These people must sell…”

    Why do these people have to sell? Just because the value of someone’s house on paper is less than their mortgage doesn’t really mean much if they can make their payments. People always confuse paper gains/losses with realized gains/losses, but the only ones that matter are realized gains and losses. In fact, many people with paper losses (e.g. Underwater house, stocks, cars) simply can’t afford to sell and realize the losses. In other words, since the transaction costs are high, as you pointed out, and there isn’t really a better place for their money, there’s no point in selling.

    Also, that 33% stat doesn’t say how much (or how far) upside down the homeowners are. Remember, 100% of buyers will be upside down for some period of time where the buyer finances the purchase of an
    asset and doesn’t provide a down payment that at least covers all the transaction costs. Or, in terms of unrealized losses, 100% of homeowners (who purchase a property in an arm’s length transaction) start out with an unrealized loss on the purchase because the transaction costs cause their basis to always exceed the contract price paid.

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  27. 27
    Ray Pepper says:

    RE: R @ 26

    R. You must be new here because I have stated this for at least 2 years.

    It has nothing to do with being upside down. We are a MOBILE society. People MUST move due to job, divorce, illness, family issues, and hundreds of other reasons. We do not live in our homes like our parents did.

    In Washington State it costs nearly 10% to sell with a conventional Agent. When you add this to a 30% plus population who are upside down and another 10% who are marginally even on the value of their home you will see why Short Sales will be with us for at least a decade . These short sales will keep a lid on any appreciation of values for a very long time.

    Its not a question of IF just WHEN all these homes either get short saled or foreclosed on.

    That is why I advise EVERYONE to watch short sales as a value proposition. It will be far better and efficient in 2010. Its already better now then it was in January.

    Short sales will be as common talk among your friends as trading the techs was in 2000 or buying real estate in 2004. The sellers simply have no choice. They do NOT have the money to cover the negative amounts and the banks that remain will be taking the losses on the books for a very very long time.

    (watch the video and never bet against Meredith)

    http://www.cnbc.com/id/34325134

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  28. 28
    AMS says:

    RE: R @ 26 – “In other words, since the transaction costs are high, as you pointed out, and there isn’t really a better place for their money, there’s no point in selling.”

    I have a friend–well the more I think about this situation, I should write I HAD a friend–who owns some properties in Vegas. In December 2005 I strongly suggested that he sell all his Vegas properties.

    I wish I could demonstrate the hand waiving. Property values are expected to go up 20-25% per year. Renting is easy, and you can basically ask whatever rent amount you want. Blah, blah, blah.

    Today he’s an “unrealized loss” of about 65%.

    When do you think he will get back to 2006 values? Isn’t that a lot of lost time?

    I have also written about my friend who purchased gold back in 1979 and recently sold “at a profit.” I suggested it was “30 lost years.”

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  29. 29
    Kevin says:

    I also disagree the claim that “the 33% people underwater must sell”.

    The percentage of people underwater and the percentage of people who must sell (relocation, illness, etc) are almost two completely separate numbers.

    I know a LOT of people who are underwater but have stable family and job. And they will never sell just because the price declined.

    The realistic chance where you will get a deal is from people who just lost their jobs, through REOs and short sales.

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  30. 30
    AMS says:

    RE: Kevin @ 29 – Maybe we can agree on this:

    Those who are underwater are also those who are in the worst possible position. In other words, the risk is much greater. If they must sell, then it’s far more complicated, unless they have large sums of cash.

    In other words, 33% are in a higher risk category, even if some of the 33% do not need to sell today.

    Also the 33% might get trapped in a declining market. Such person cannot sell, and thus must hold until the market returns such that he is above water, which might be many years. In the mean time, those in this siutation are servicing the debt. What if the market does not return soon enough?

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  31. 31

    RE: Kevin @ 29 – And to repeat my often repeated story, if I’d sold when the condo market went south in the early 80s I would have missed out on making over 100% gain, and as it turned out if I’d held on longer it would have been over 200% gain. So selling based only on the current value can be rather short-sighted.

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  32. 32
    AMS says:

    RE: Kary L. Krismer @ 31 – And buying high hoping to sell higher is a strategy that many used, especially at the peak of the bubble.

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  33. 33

    RE: AMS @ 32 – Herd mentality. It’s generally best to ignore the herd, but if you can’t do that, counter them.

    To put that in the context of real estate, you wouldn’t have been buying in 2007 because of the returns of the prior years made a lot of people want to buy. If you could ignore them you would buy when you have some particular need or desire to (the best approach). If you were to counter them you would have bought in February, 2009, when almost no one was.

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  34. 34
    AMS says:

    RE: Kary L. Krismer @ 33 – a.k.a. Contrarian market theory.

    Using this theory, a buy signal will happen when the general consensus suggests that things will get worse.

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  35. 35
    The_Dude_Abides says:

    RE: Ray Pepper @ 27

    M. Whitney has been dead wrong for 9 months.
    It was a magnificent call when she said C couldn’t possibly continue paying their oversized divvy in ’08. I would recommend folks to not only listen to Whalen, Whitney, Roubini, Denninger, CR, et al, but also John Paulson, Jim Paulsen, Bob Doll to even things out. In times of great stress such as this, the surviving companies usually come out of it stronger.
    Please don’t confuse me with a happytalker…I’m going to start my search for a ‘gem’ this Spring and I hope to pay between $100-$200/sq ft…is that bearish enough? That house on the water on Bainbridge Island was an amazing buy in a previous thread.

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