Posted by: Timothy Ellis (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 responses to “Redfin: September Sales Pre-Frozen for Winter”

  1. sp6859ch

    98391,98375.. New construction meccas loaded with insane amount of homes that were bought between 2003-2008. In Las Vegas we basically witnessed the spigot or faucet being turned off. It was amazing how we could see huge price drops month after month withing a 4 month span our pricing was decimatedabout two years ago. It is my thought that is what is happening now in the zip codes i mentioned. How about a nice 3148 sg ft benum home that went for 500k at the peak now listed by the fdic in Orting for 256k with still no offers!! I keep hearing the same thing i have heard from city to city. That the economy is different there, Joint Base, Boeing etc etc. The upcoming trustees sales imho will start go have more inventory more monthly sales and when the huge amount of short sales get turned into foreclosures you will see what liqidation is all about.. And it only takes a couple sales and then you will see your beatiful home worth as much as the model match two houses down that was totally gutted no cabinets no doors, no hvac, no tub. So what thats a comp.. Its insane but what happened in Vegas

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  2. patient

    Low volume means trending towards lower prices, why buy now? This is as a good as ever to be patient imo.

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  3. Scotsman

    But Pfft says we bottomed last spring! And Seattle folks are way too polite to ever rip out cabinets, scavenge copper wire and pipe, etc.

    Vegas is “Sin City.” Seattle is “The Emerald City” where MSFT wizards have pockets filled with gold and pink ponies throw Skittles rainbows across the bluest skies you’ve ever seen. You’ll see!

    Rates are at record lows, sellers are motivated, our technological leaders can get you the data you need and the house you want at a minimal transaction cost. It’s a great time to buy!

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  4. Lurker

    Today’s below-market deal is tomorrow’s new comp

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  5. sp6859ch

    Exactly, I was showing homes to a buyer in a development called Southern Highlands. We are looking at homes owned and built for approx 3 million that are now on the market for 1.2 milliion. I always tax star the previous owners and most of them owned businesses, had degrees and were known in the community. I left sick to my stomach at how most of these homes are totally gutted. All 8 foot knotty alder doors GONE. Gaggenau, wolf appliances gone, garage door openers gone. Sinks gone. Absolute ramshacked. You don’t think that will happen in the affluent areas in Seattle?? These sellers can salvage about 200k worth of stuff by doing this and we are a recourse state!! Imagine a non recourse state. It actually freaked me out to know that this is nothing compared to how people will act when there back is against the wall. I helped sell a clients home for 2.65 mill that she bought and built for over 5 mill she put 3 mill down. Bamm vanished. I have seen more wealth destruction in the higher end than the lower. Todays below market deal is next weeks overpriced listing.RE: Lurker @ 4 -

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  6. Brian

    Sounds like potential sellers are also trying to time the market. Hence the low inventories?

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  7. cranky cynic

    RE: sp6859ch @ 5
    “Ramshacked” – has a Seattle Bubble reader coined a new word? Definition: When you ransack a property leaving it all ramshackle. I like it!

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  8. wreckingbull

    By patient @ 2:

    Low volume means trending towards lower prices, why buy now? This is as a good as ever to be patient imo.

    For the most part, yes, I totally agree. The one wildcard is the federal government. Their actions over the last several years has left me thinking “what won’t they do?” Perhaps I am a bit paranoid, but I do indeed worry about this. Have I bought yet? No.

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  9. Lurker

    RE: Brian @ 6

    According to Redin, overall SFH Sept ’10 inventory for Seattle is up 5.4% from Sep ’09. (up .2% in King County)

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  10. Sniglet

    It might well be possible to find better deals today than 1 year ago, but a year from now the deals will be even better (and even better the year after that). Anyone buying a home today should do so with the full understanding that it will be worth less than they paid for it next year, and will likely keep dropping in value for years.

    This is NOT to say you shouldn’t buy a home. People buy new cars all the time with the full understanding that they will drop in value the minute they drive them off the lot. Homes are no different. Anything you buy today WILL be worth less than you paid for it if you try and sell it in the next 5 to 10 years.

    NOTE: I will concede that there may be edge cases where a property appreciates due to some specific local reason (e.g. a new light rail stop, factory, whatever). On the whole, though, I stand by my prediction.

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  11. patient

    By wreckingbull @ 8:

    By patient @ 2:
    Low volume means trending towards lower prices, why buy now? This is as a good as ever to be patient imo.

    For the most part, yes, I totally agree. The one wildcard is the federal government. Their actions over the last several years has left me thinking “what won’t they do?” Perhaps I am a bit paranoid, but I do indeed worry about this. Have I bought yet? No.

    I hear you though anything the gov. can do will pretty much involve spending which I predict will be a lot tougher after the mid-term election. Including the constant bleeding of the GSEs.

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  12. LA Relo

    I intend to buy this winter. I plan to low ball any offer that is not a steal, and point out prevailing economic trends to justify it. If they don’t want to sell, I’ll wait a few months for prices to drop.

    There is absolutely no reason to expect prices to do anything but flat line at best for the next 5 years.

    Until averages incomes meet and surpass the traditional ratio needed to afford the average price, home prices will fall.

    Even then, interest rates will have to rise at some point in the next few years, driving prices down further.

    Then you have an aging population and a younger generation inheriting nothing that is saddled with college debt.

    We know the short term picture for housing is bad, but the long term picture for housing is not good either.

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  13. Scotsman

    RE: LA Relo @ 12

    “We know the short term picture for housing is bad, but the long term picture for housing is not good either.”

    “I intend to buy this winter.”

    Well OK, then. This is the part I just can’t wrap my tiny little brain around. It’s like saying “sure, It’s a long fall off that cliff, but lemmings have been doing it for generations, so I think I’ll take the plunge with the spring run.”

    Seattle Bubble is too stressful for me- it makes my head want to explode most of the time. I love you guys, but I can’t take it. ;-) We’re heading out today for Boston and other New England hot spots to let daughter #2 look at colleges, so I won’t be posting for a week or so. That may be a long enough hiatus to let me break the SB habit, we’ll see. Good luck to all.

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  14. whatsmyname

    RE: Scotsman @ 13

    No way. You will be back.

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  15. deejayoh

    By Sniglet @ 10:

    It might well be possible to find better deals today than 1 year ago, but a year from now the deals will be even better (and even better the year after that). Anyone buying a home today should do so with the full understanding that it will be worth less than they paid for it next year, and will likely keep dropping in value for years.

    This is NOT to say you shouldn’t buy a home. People buy new cars all the time with the full understanding that they will drop in value the minute they drive them off the lot. Homes are no different. Anything you buy today WILL be worth less than you paid for it if you try and sell it in the next 5 to 10 years.

    NOTE: I will concede that there may be edge cases where a property appreciates due to some specific local reason (e.g. a new light rail stop, factory, whatever). On the whole, though, I stand by my prediction.

    Sorry, but you sold your house in 2003 because you thought was overvalued – and seven years later you still could not buy it back for what you sold it for. Anyone relying on your ability to predict housing prices should know your track record.

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  16. sp6859ch

    My friends sold there home in the Puyallup area for 367k 7 months ago the exact same model match around the corner just sold for 290k then another one was just listed for 279,990 and has been on the market at that price for a couple weeks with no offers. HMM. That is the kind of swattage i am talking about that will in the blink of an eye take you back to pricing way before 2003. It happens so quick your head won’t have time to spin before it pops…. If i knew how to use the computer worth a lick i would post the addresses. People in Vegas that tried to time the correction a year ago got swatted again, and it is the same in most California cities. Everybody likes the median price staying the same or going up rational. Well i have news for ya with all the higher end homes being forelosed and making it to the reo market it is artificially keeping the median sales prices stagnant to rising. Look behind the numbers, you need to be in the field personall to see whats happening..If you buy a home now you are worse off than buying a car, dang its automatically not worth what you paid for if its listed because chances are you are the only one interested in it.., add your buyers closing costs then your commission plus closing costs when you sell and you are about 10% under from the get go. 30k down on a 300k purchase. I agree a house can be a home and there are several several factors besides the money part of it. If you google the huge cities built in China that now stand vacant don’t be ignorant to think that cannot happen here.RE: deejayoh @ 15 -

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  17. ray pepper

    “There are deals to be had if you are able to move fast to pounce on an attractive listing, willing to negotiate, and can be patient with the process of searching for the right home.”

    I agree, now through December is indeed the ideal time of year to find a good deal.

    **********

    Wow, how I disagree with the above statements from you Tim. If you could only see what I see each and every Friday and the sheer number of homes that are going to enter the market place in the coming years you would advise everyone to continue to wait and watch. I would advise most Buyers who are ACTIVELY seeking a home to visit their local Trustee Sales on Fridays to watch how low prices can actually go. Watch how many homes the banks are taking back. This will scare the money rightback into your wallets.

    If you MUST buy target the REO’s when looking on the MLS. Why bother educating sellers that their prices are INSANE. Let them try to unload..They will get the picture in another 12 months.

    With the lack of any further stimulus on the horizon the money is best kept in your pocket unless you find a REAL GEM and the only place I find them now is at The Trustee sales and an occasional REO listing. The customer service is horrible from these REO agents but they don’t give a golly. They know their listing will sell before any others.

    Don’t be a bagholder friends and when people tell you to buy..Listen to the response and then ask yourself what would it cost to rent that home? I think you will find nearly everytime it will be far less expensive to stay put.

    Trendline down down down until further notice!

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  18. ray pepper

    RE: Sniglet @ 10

    agree 100% with this Post….

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  19. David Losh

    RE: deejayoh @ 15

    I also know apartment building owners who sold in 2003 because they thought the market was over inflated.

    What sniglet did though is bring a new perspective to Real Estate that has proven to be very true.

    Do you see prices going up in the near future?

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  20. Lurker

    RE: deejayoh @ 15 – Perhaps he couldn’t buy it back for what it sold for (yet) but he was able to sell it for what was at least paid for it. May people in the last five years can’t say that. They may not be able to for several years either, who knows.

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  21. Jonness

    By sp6859ch @ 1:

    So what thats a comp.. Its insane but what happened in Vegas

    Hey, I thought “what happens in Vegas stays in Vegas.” Then again, I completely agree with you. Once the foreclosure spigot gets turned in Seattle, most bubbleheads of the past are going to have looked like optimists. :)

    This isn’t rocket science. Why should I pay more for a house than buyers paid in the midst of a massive housing bubble runup in a red-hot economy at a time when unemployment was low and unemployed food stamp recipients qualified for $500K home loans and everyone else was pulling hundreds of thousands in free equity and showering the economy with money and growth? Now that everyone has a tight fist wrapped around their money, people are defaulting on their loans in record numbers, home sales are in the sewer, and there is enough shadow inventory out there already to distress the market for years, I’m supposed to pay more the home? Come on, I might be stupid, but I’m not that stupid!

    Oh, so some people believe Bernanke will roll the printing presses and inflate us out of the mess. Unfortunately, the U.S. is caught in a massive liquidity trap. Bernanke can add liquidity but we already have plenty of liquidity and the market is still stuck. Sure, he can get a few asset bubbles going here and there, but for the most part he can’t do anything to help the problem and risks complete destruction of our economy if he continues to interfere and forestall the much needed correction.

    IMO, anybody who buys a house in the current Seattle environment is either stupid, sick of waiting, or has an extreme amount of courage that I lack. As for me, I’m becoming more afraid by the day of what I see is setting up behind the scenes at the macro through micro economic levels. This is getting downright scary again. I already found the house I want to buy, but now I am too scared to pull the trigger. Apparently everyone else is too, because it’s been sitting for over 90 days. Actually, it went pending three weeks ago and came back on the market a week later. I figure the buyer either got cold feet or could not qualify to borrow the money. Either way, the house continues to sit. I’m tempted to pick it off this winter on an extreme lowball, but I think I’ll wait. In a year, the normal price will be lower than today’s lowball, and my downpayment (or mad money if I choose) will have grown considerably. I’m beginning to see the current climate as one of those rare opportunities to act wisely and financially set myself up for life. And all I really have to do is “nothing.”

    You guys can risk your money in this if you want, but I’m hanging on a while longer. IMO, the overall trend is still down. I’ve stuck to this trend prediction for many years now, and I’m as convinced now as ever.

    For those who think house prices are about to bubble back up, show me the money. Where is it going to come from? If you can’t supply a reasonable argument for where the money comes from, your argument has little to no value.

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  22. Jonness

    By deejayoh @ 15:

    Sorry, but you sold your house in 2003 because you thought was overvalued – and seven years later you still could not buy it back for what you sold it for. Anyone relying on your ability to predict housing prices should know your track record.

    With all due respect deejayoh, the bloodbath is not over yet. Selling in 2003 could turn out to be the event that kept him from going underwater and losing his home. Nearest I can tell, he was right about his house being overvalued in 2003. The trouble is, not too many others could see it. But a time is coming where they might.

    That being said, the smart people pulled all their equity at the peak and got free rent for 3 years and counting. Sniglet’s smart, but he’s not as smart as those guys. They have what’s known as “accidental genius” which trumps thinking and working any day of the week. :)

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  23. Jonness

    By sp6859ch @ 16:

    That is the kind of swattage i am talking about that will in the blink of an eye take you back to pricing way before 2003.

    I’m already seeing homes priced at less than their 2003 sold price, and they are still sitting. Some of these are owner-occupied, not beat up, and would have sold in a day for that price not long ago. It’s important for the doubters to realize, prices are plummeting as we speak, and the foreclosures haven’t even hit the market yet. There is a very good chance things could get extremely ugly in the future. It doesn’t mean it will happen, but the odds of it occurring are increasing.

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  24. Lurker

    RE: Jonness @ 23

    Not that this is anywhere close to LV but I have to admit that I was pretty surprised on seeing how many places were going to foreclosure auctions (NTS) around here. Trendy Seattle zip codes with 30-40 pending auctions each.

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  25. sp6859ch

    I went to Vestus website and signed and sent an inquiry to use their services and also REIF, REal Estate Investment firn and no reply. I left them both messages on Monday. Anyone else have a contact person up there, Besides these two and datasnap that provides trustees sale services. I also inquired on Datasnaps site for information and no call yet. Vegas is brutal, huge huge reductions. Anyways off to the BofA tent at the PGA tournament at TPC Summerlin to go be a lurker and listen listen listen. And eat free dove barsRE: Lurker @ 24 -

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  26. Sniglet

    you sold your house in 2003 because you thought was overvalued – and seven years later you still could not buy it back for what you sold it for. Anyone relying on your ability to predict housing prices should know your track record.

    It’s absolutely true that I sold early. I haven’t kept that a secret from anyone. Heck, I have mentioned that in my weekly economics show numerous times… That said, picking the TOP of a bubble is gollyably hard. There were people saying that tech stocks were overpriced for years before they finally crashed in the .com bust, only to see the same stocks they thought were overpriced double or tripple before they actually tanked. Were people who sold their stocks in ’96 fools? What about the person who rode Enron stock to the top and then found it worthless?

    All I can say is that I feel better not having a huge mortgage under me, particularly when I fear that prices will just keep going down. That helps me keep my peace of mind. If I was independently wealthy, and able to purchase a home in Bellevue (where my family wants to live) without taking out a large mortgage, then I would happy do so in an instant, even with my prediction of future price declines. Each of us have to answer these questions about what we are comfortable with for ourselves.

    Whatever else one can say about me, I at least live my life in a way consistent with my beliefs.

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  27. Sniglet

    RE: Jonness @ 22

    he was right about his house being overvalued in 2003

    I firmly believe that the price I sold my Bellevue home for in 2003 was OUTRAGEOUSLY over-priced based on rational economics. The prices that the market ultimately rose to were simply more incredibly ridiculous.

    This is why I feel that prices still have a LONG way to go before we hit bottom. Things got so out of whack over the last 30 years (and maybe the whole post WW II period) that there is a lot of catching up to do to bring prices back in line.

    That said, I increasingly suspect that this correction might be EXTREMELY long in duration, lasting decades of slowly dipping prices. This is where I see the experience with Japan as extremely instructive. I know that there are obvious differences between the economic situations of the US and Japan, yet it is still very interesting to see that it IS possible for a real-estate recession to last for decades, with prices in a persistent, yet ever-so-slow, spiral downwards.

    Seattle may never see massive price drops in any one year, but given a decade or more, people could wake up and realize that they have, in fact, taken a 50% or 70% hair cut on their homes.

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  28. Drone

    By Sniglet @ 27:

    Seattle may never see massive price drops in any one year, but given a decade or more, people could wake up and realize that they have, in fact, taken a 50% or 70% hair cut on their homes.

    And that’s exactly the problem. I’m sick and tired of waiting. I’m sick and tired of moving my crap from one rental to another, never having enough storage space, worrying about noise for neighbors. I am sick and tired of having every one of my friends hound me about not buying. I am at the life stage where buying makes sense. It’s emotionally draining not to.

    However, the economics don’t make sense, and might not for a very long time. I’m faced with the choice of losing my money on a bad “investment”, or slowly going insane beating back the bottom-callers. I’m still renting for now, but I don’t know realistically how long that can last. Perhaps more importantly, I don’t know how much longer the wife will put up with it :)

    A house, or an apartment, is just a place to live. But the cult of ownership is deeply imbedded in our collective DNA, and that’s a hard thing to fight forever.

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  29. Sniglet

    RE: Drone @ 28

    I’m sick and tired of waiting. I’m sick and tired of moving my crap from one rental to another

    I understand. These are good reasons to buy a house. I only suggest that you should buy with the full understanding that whatever you buy today will keep dropping in value, year by year, for a long time in the future. So long as you buy a modest place that you can reasonably afford to have depreciate without hurting your lifestyle, then go ahead and buy it.

    Before you buy, just ask yourself this hypothetical question: will I seriously regret buying this place if it is worth 50% less than I paid for it 10 years from now? If you really don’t mind the thought of the place dropping 50%, then go right ahead and buy.

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  30. redmondjp

    RE: Drone@28
    And if you really do want a house which I completely understand, keep in mind how much of a massive moneypit and maintenance hog a home can be (just finished 15 hours of pressure-washing the roof over several days with my small electric unit that is not powerful enough to damage the shingles, but gee I’ll never get that time back). I bought my 1977-built home in 1998 and have been working on it ever since. In hindsight, I’m wondering if I would have been better off purchasing a newer townhome (ideally one side of a duplex with a 2-car garage in the middle) that would have required tremendously less work on my part over the past 12 years (I had my agent looking for those as well when I was looking), freeing up time that I could have spent hiking, camping, etc.

    The other thing about owning is you can get stuck with a really bad neighbor and boy do I have one. He just tried to get an anti-harrassment order against our other neighbor who he doesn’t like – the judge almost was laughing during the hearing yesterday morning and dismissed it (fortunately he got a good judge).

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  31. Blake

    RE: Drone @ 28
    Re: “I’m sick and tired of waiting. I’m sick and tired of moving my crap from one rental to another, never having enough storage space, worrying about noise for neighbors. I am sick and tired of having every one of my friends hound me about not buying. I am at the life stage where buying makes sense. It’s emotionally draining not to.”

    I completely agree… very frustrating for me as well.
    I want a decent place to live and build roots. I don’t care abotu the “investment” angle…

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  32. wreckingbull

    RE: Blake @ 31 – If someone came up to you and offered you several hundred thousand dollars, tax free, to rent for 4 years instead of buying, would you take it? ‘No’ is a valid answer, but that was certainly not mine.

    Just another way to look at the situation. Yes, the inconvenience factor can be difficult, but I have also been able to rent a home that I would never be able to afford, even at today’s prices. It is a very common scenario for one to have an extra 200K in purchasing power today for the price of not buying in 2006.

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  33. sleepwalker

    With the glut of new landlords, I’d try and get a multi-year lease on a rental if you’re sick of moving and living in homes you hate. Just because you can rent a 1br for $650 doesn’t mean you have to. Sure it means saving less for the eventual “purchase”, but you have to sacrifice somewhere.

    By Blake @ 31:

    RE: Drone @ 28
    Re: “Iâ��m sick and tired of waiting. Iâ��m sick and tired of moving my crap from one rental to another, never having enough storage space, worrying about noise for neighbors. I am sick and tired of having every one of my friends hound me about not buying. I am at the life stage where buying makes sense. Itâ��s emotionally draining not to.”

    I completely agree… very frustrating for me as well.
    I want a decent place to live and build roots. I don’t care abotu the “investment” angle…

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  34. LA Relo

    By Scotsman @ 13:

    RE: LA Relo @ 12

    It’s like saying “sure, It’s a long fall off that cliff, but lemmings have been doing it for generations, so I think I’ll take the plunge with the spring run.”

    Only if I find the right price for what I want. If not I wait. I don’t expect prices to rise steadily for years, and I’m at a place where I’d be okay with that, but I’m not going to pay market value. Take 20% off market value and we can talk.

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  35. Buford

    According to Clear Capital, Seattle is #7 in the
    “15 US Housing Markets at the Forefront of the Double Dip”

    http://www.businessinsider.com/housing-markets-in-double-dip-2010-10

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