Housing Oversupply Increased Yet Again 2009-2010

It’s been exactly a year since we last took a look at the local housing oversupply, and since the Washington State Office of Financial Management released their 2010 population and housing supply estimates a few weeks ago, I think it’s high time we took another look.

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

While the OFM’s updated population and housing estimates actually show a slight shrinkage in the oversupply from 2008 to 2009, in the last year 4,613 more housing units have been built in the 3-county region than new households have been created.

Here’s a look at the total number of households and housing units added in each county since 2000:

Puget Sound County Housing Supply & Demand

Across King, Snohomish, and Pierce counties, a total of 185,488 new households have been added since 2000. During the same time, 202,146 new housing units have been built, amounting to an oversupply of 16,658 housing units. Thanks to some particularly strong population growth between 2006 and 2008, Snohomish County actually comes in as the only county to have added more households in the last ten years than housing units.

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

Puget Sound County Housing Supply & Demand

2001 (barely) and 2006-2009 all had people moving here faster than new housing stock was coming online, but the rate of housing stock growth in 2010 seems to be making up for lost ground.

Of course, all counties are not created equal. Here’s the year-by-year breakdown for King:

King County Housing Supply & Demand

In King County, we’ve added 88,983 households and 103,026 housing units over the past ten years, for a total oversupply of 14,043 housing units. This last year’s housing stock growth has been especially strong compared to household growth.

Here’s the year-by-year for Snohomish:

Snohomish County Housing Supply & Demand

Snohomish has added 49,085 households and only 47,290 housing units since 2000, for a slight housing shortage of 1,795. Snohomish has been a bit more balanced the last couple years, but still added slightly more homes than households in 2009 and 2010.

And here’s Pierce:

Pierce County Housing Supply & Demand

Meanwhile, down in Pierce County, 47,420 households and 51,830 housing units have been added since 2000, bringing the oversupply there to 4,410. That’s a growth 2009-2010 of just 389 households, compared to 2,122 new housing units. Yowza.

Since the economy didn’t really completely melt down until late 2008, I thought it would be interesting to look at just the total number of households and housing units added since the April 1, 2008 estimates.

Puget Sound County Housing Supply & Demand

Surprisingly, despite the recession and the biggest housing bust the Seattle area (and the nation) has ever seen, new housing construction in all three counties has exceeded household growth over the last two years. In other words, the housing oversupply continues to grow (or, in Snohomish County, the shortage shrinks).

  You have already voted.

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.

23 comments:

  1. 1

    I Have Trouble Swallowing That First Chart Tim

    If demand is increasing with supply or in tandem with it; why in Hades did sales jump off the cliff in 2009 and 2010?

    I’d put demand at 1998 levels today IMO, perhaps 1975 levels or older; especially if you’re talking “qualified demand”, in this dismal waged service economy we’ve evolved to since the 70s.

    Rate this comment: Thumb up 0

  2. 2

    Very good until the end. The supply situation isn’t surprising at all. As I’ve mentioned in the past, these developments don’t just start and stop overnight. And once they start (e.g. buy the land) the developer may have little choice but to continue. That might be risky too, but if the alternative of stopping means certain bankruptcy, what’s the real choice?

    Rate this comment: Thumb up 0

  3. 3
    ray pepper says:

    Bellevue makes # 4 BEST PLACES TO LIVE BY CNN! Go King County Go!!

    http://seattletimes.nwsource.com/html/bellevueblog/2012340727_bellevuemakesanotherlist.html

    This should help Bellevue too…….

    http://www.ci.bellevue.wa.us/pdf/Neighborhoods/Neighborhood_News_April_10.pdf

    Rate this comment: Thumb up 0

  4. 4
    David Losh says:

    There is a sucker born every minute, and today they are buying Housing Unit debt without any equity.

    Rate this comment: Thumb up 0

  5. 5

    Also, to the last paragraph, I don’t think anything there shows Snohomish has a shortage, because you’re just using the numbers since 2000 to determine that. If there was a large oversupply prior to then, which I suspect, then we’re just talking about the oversupply decreasing.

    Rate this comment: Thumb up 0

  6. 6

    Bellevue Best Place to Live?

    Article in part:

    “…Compared to the rest of the country, Bellevue’s cost of living is 63.60% Higher than the U.S. average….The median home cost in Bellevue is $471,830. …”

    http://www.bestplaces.net/city/Bellevue-Washington.aspx

    And these $500K homes in Bellevue were mostly built in the 50s for the lower middle class at that time. Lots of flat roofs and galley kitchens with one bathroom and no storage…LOL…I’ve owned one in the 90s in Lake Hills and it was an old money pit that gave you an electric shock if you touched the outside water faucet and the water came out brown and rusty from the street pipes. Quality living folks, but if you have kids, forget about playmates for them in the neighborhood….it’s all mostly DINKs and Boomers in that area….

    Rate this comment: Thumb up 0

  7. 7
    2kt says:

    A couple things come to mind.

    Does household creation number account for undocumented aliens, which I venture to guess in tens of thousands since year 2000?

    What percentage of new housing units are replacement for old inventory?

    When these things are taken into account, is there really that much oversupply?

    Rate this comment: Thumb up 0

  8. 8
    wreckingbull says:

    I swear, one of the best contrarian investment sources these days is Forbes Magazine. If you would have taken the exact opposite advice that Forbes offered over the last 7 years, you would be worth a fortune now.

    http://www.forbes.com/2010/02/13/wesbury-housing-starts-intelligent-investing-real-estate.html

    That magazine has pretty much dissolved into a running joke.

    Rate this comment: Thumb up 0

  9. 9
    patient says:

    But…but I remember our governor telling the people of western Washington near the peak of the bubble that noone should be worried about buying a home here since our job market is very strong and people are moving here in droves and this is expected to continue. Perhaps she meant for the next month or two. I mean like Ardell’s bottom call, it was just valid for a year or so kind of thing.

    Rate this comment: Thumb up 0

  10. 10
    deejayoh says:

    How accurate is that population data? OFM seems to show that they are +/- 2% or so. On a population of 2mm in King County, that’s 40k people – or about 15k households.

    Rate this comment: Thumb up 0

  11. 11
    RoflCatDown says:

    RE: patient @ 9 – As far as I can tell they (President, Governor, Political Hacks) were doing their job. Which was to tell people everything’s fine, everything’s OK, to help minimize panic that would create runs on banks and other financial institutions that would make a looming bad situation much worse.

    Whether you were able to read the signs yourself was another thing altogether. But we’re talking about a society in which a secondary language is a requirement to graduate high school but a class in basic finance and economics is not. Stupid people paid too much for a house they couldn’t afford because the bank said, “OK”. Had they run the numbers themselves and understood what it meant they might have decided against making a stupid purchase when they had little-to-no savings or financial safety cushion.

    However the idea of paying for the debt you agree to take on apparently means far more to the middle class than the upper class…

    Rate this comment: Thumb up 0

  12. 12
    Breakdown says:

    What about tiers? How difficult is to have the supply/demmand broken down by size/value/location ? I had a real hard time trying to find a house that fit my bill. The ones that I cound find were either overpriced/overfeatured or underpriced/underfeatured. I had to go far away to find something that fits my needs and even though it was still a little over priced, IMO.

    Rate this comment: Thumb up 0

  13. 13
    Scotsman says:

    RE: wreckingbull @ 8

    I can’t believe Forbes is still in business- they seem to be wrong much more often than they’re right. Maybe it’s the magazine for those who just want positive fluff? The CNBC of the print world?

    Rate this comment: Thumb up 0

  14. 14
    Scotsman says:

    Looking at this data it’s pretty clear there was more to the bubble, and still is for that matter, than just supply and demand. I think the most we can say is that a shortage of housing won’t be driving prices higher anytime soon.

    Rate this comment: Thumb up 0

  15. 15

    By Scotsman @ 12:

    <I can't believe Forbes is still in business- they seem to be wrong much more often than they're right. Maybe it's the magazine for those who just want positive fluff? The CNBC of the print world?

    Well think about it. Are you really going to be able to buy something for $3 an issue that will make you thousands? And if people know where to place their money at a given point, are they going to tell that magazine for free (other than perhaps to influence their investment before they get out)?

    It’s really just another subset of my point that people are gullible–the point I raise repeatedly when it comes to studies that purport to predict the future.

    Rate this comment: Thumb up 0

  16. 16
    Blurtman says:

    Household growth is certainly a valid indicator. As friends in Toronto and Vancouver remind me, it’s not just the locals that are driving real estate in their markets, its a lot of Chinese money. Perhaps household growth does not tell the whole story.

    Rate this comment: Thumb up 0

  17. 17
    patient says:

    RE: Blurtman @ 16 – I would think that a large part of that was due to that super wealthy “chinese” that were living in the former British colonies “fled” to countries with lax immigration laws before the colonies were incorporated with China. Fear that the big red dragon would “socialize” their assets. Canada probably got a healthy influx of wealth but also with the less desirable side effect of escalating property prices.

    Rate this comment: Thumb up 0

  18. 18
    Jonness says:

    By patient @ 9:

    I mean like Ardell’s bottom call

    I never heard about that bottom call. Did it have anything to do with bending over while buying a house?

    OK, this is not exactly a bottom call, but I weighed in on the subject over at MortgageCalculator.

    http://news.mortgagecalculator.org/interview-with-raul-black-of-housingcorrection-com-the-market-will-eventually-heal-itself/

    Rate this comment: Thumb up 0

  19. 19
    Sottocapo says:

    I think the subject of Chinese buyers in the Seattle area would be an interesting topic for a post by Tim. Our house in downtown Kirkland was bought by a Chinese investment company that had already bought an expensive view condo in Bellevue. My friends who sold their house in Sammamish also had Chinese buyers. (Both houses were sold in the past 13 months).

    Rate this comment: Thumb up 0

  20. 20

    RE: Sottocapo @ 19 – I’m not sure how you would do that. As far as I know there’s nothing recorded to indicate a foreign buyer.

    Rate this comment: Thumb up 0

  21. 21
    Edward Smith says:

    Hello, I need to disagree here on the new charts referring to added housing units. I drive around South King and Pierce Counties a lot over the past few years. And I would say there was almost no new framing in 2008 and 2009 for these areas. New home builders early this year have started building again which I believe is still to soon. There will be a massive supply of young foreclose homes on the market soon from Alt-A mortgages of 2006 and 2007.

    Rate this comment: Thumb up 0

  22. 22

    […] for King County neighborhoods (example)Housing oversupply: housing units / population comparison (example)Affordability index: home prices, interest rates, incomes (example)Affordable home prices: home […]

    Rate this comment: Thumb up 0

  23. 23

    […] limited how we could build houses, where we could build.Indeed we do, but that hasn’t stopped new housing supply from outpacing demand across the Puget Sound, even throughout the frenzied bubble years.And so, we don’t have the […]

    Rate this comment: Thumb up 0

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=""> <strike> <strong>

Please read the rules before posting a comment.