Nov. Reporting Roundup: Pretend Pending Party Part 2

It’s time once again for the monthly reporting roundup, where you can read my wry commentary about the news instead of subjecting yourself to boring rehashes of the NWMLS press release (or in addition to, if that’s what floats your boat).

GOING OUT WITH A BANG by Flickr user Ian

First up, let’s have a look at the source material from the NWMLS itself. Here’s their press release: November’s home sales rose modest 2 percent, surprising some Northwest MLS Brokers

Northwest MLS director OB Jacobi described last month’s gain in the number of transactions written as “surprising.” “That’s surprising, since November is typically one of the slowest sales months of the year, and this year we essentially lost a week to poor weather conditions.” Jacobi, the general manager at Windermere Real Estate Company, also reported increased activity at open houses last month.

I covered this yesterday, but it is worth repeating. The only people that the minute year-over-year increase is “surprising” to are people that were not paying any attention last year when November pending sales fell off a cliff thanks to the originally-scheduled expiration of the homebuyer tax credit. So, all I see when I read the above quote is Mr. Jacobi saying “I don’t really pay any attention to what’s actually going on in the local housing market. At all.”

“Everyone is wondering how long interest rates are going to remain low, but that’s impossible to predict with certainty,” observed Lennox Scott. “At the moment at least, they’re at near-historic lows, but every one percent increase in interest rates reduces buying power by 10 percent. And this can have a significant impact on a person’s ability to buy a home,” he stated.

Gee, do you think it might also have a significant impact on a person’s ability to sell a home? Just maybe?

Poking fun of agent nonsense is fun, but all good things must come to an end. Time to get on with this reporting roundup!

Eric Pryne, Seattle Times: Area home prices slip from a year ago

The median price of houses sold in King County slipped to a new post-bubble low last month, according to statistics released Monday by the Northwest Multiple Listing Service.

The number of sales also fell, dropping nearly one-third from November 2009’s total.

“We’re not out of the woods yet,” said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.

While closed sales of single-family homes fell sharply last month, pending sales — offers that were accepted in November but haven’t yet closed — rose 3 percent in King County. The listing service highlighted that increase in its official statement, calling it a “pleasant surprise.”

It was the first year-over-year increase since the tax credits expired this spring.

But last month’s total is better than November 2009’s only because many potential buyers were backing off a year ago as they awaited the planned expiration of the tax credit, Crellin said.

What’s more, he added, an increasing number of pending sales — especially short sales — don’t close for months or don’t close at all. Considering all that, the listing service’s emphasis on the November increase is “a bit overstated,” Crellin said.

I’m seriously having a hard time getting used to Glenn Crellin talking so much sense. Kudos to him for making such a dramatic turn from the cheerleading nonsense he used to spout so regularly during the bubble, and Kudos to Eric Pryne for continuing to dig into the numbers for the real story instead of just rehashing the NWMLS press releases.

Aubrey Cohen, Seattle P-I: Are we recovering from homebuyer tax-credit hangover?

The expiration of a homebuyer tax credit in April has pushed home sales well below last year’s levels ever since. But now there’s a sign that might be changing.

King County had 1.5 percent more pending sales in November than a year earlier, the Northwest Multiple Listing Service reported Monday. It’s a small rise, but year-to-year pending sales had dropped by more than 20 percent every month since April.

Aubrey had originally posted a story that wasn’t much more than a press release rehash. When I pointed out last November’s dramatic pending plunge, he updated the post with some additional context:

Tim Ellis, editor of Seattle Bubble, noted that the tax credit originally required sales to close by the end November 2009, meaning pending sales fell off that month (down 32.8 percent from September 2009).

Congress extended the tax cut on Nov. 6, 2009, to allow deals to be reached by the end of April and close by the end of June (later extended to September). This means that November is the first and only month until next May when a month where the tax cut didn’t apply will be compared with a year-before month when the tax cut also didn’t apply.

Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, agreed that last November’s uncertainty slowed pending sales and noted that current financing issues mean that pending sales are more likely to fall through or drag out than they would be in normal times.

Better late than never, for sure. Thanks for updating the story, Aubrey.

Mike Benbow, Everett Herald: Home sales keep dropping

Both sales and prices of homes in Snohomish County continued to fall in November, with the median price dropping 7.26 percent from a year ago, the Northwest Multiple Listing Service reported Monday.

Last month’s combined median price for single-family homes and condominiums was $254,975, meaning half the homes sold for more and half sold for less in November.

The median price for condos was $200,000, an 11.3 percent drop from a year ago. The median for single-family homes was $260,000. Prices are now near the same level as they were in 2005.

By comparison, prices rose slightly in King County, where the median price of $340,000 was up by 0.9 percent from a year ago.

Wow, what a useless measure. Why throw condos and SFH into the same bucket when different numbers are provided for each? Especially when the individual price measures for King County condos (-11%) and SFH (-3%) are both moving in the opposite direction of the combined median? Unless you were attempting to intentionally mislead people, I don’t see what purpose that serves.

John Gillie, Tacoma News Tribune: South Sound housing market a jumble

If you’re waiting for a turnaround in the Puget Sound housing market, you’ll have to wait a while longer – if last month’s sales statistics are any indicator.

But real estate professionals, ever the optimists, saw good news in the pending sales numbers. In the four-county Puget Sound region (King, Pierce, Snohomish and Thurston counties) pending sales rose by more than 2.8 percent from 3,829 a year ago to November’s total of 3,939. That’s the highest total since November 2006, the listing service noted.

John Gillie loses points for pointing out the “rise” in pending sales without giving us any of the context about what was going on last year.

Rolf Boone at the Olympian must be on vacation, because they just ran a slightly modified version of Gillie’s piece from the Tribune: Housing market a jumble

(Eric Pryne, Seattle Times, 12.06.2010)
(Aubrey Cohen, Seattle P-I, 12.06.2010)
(Mike Benbow, Everett Herald, 12.07.2010)
(John Gillie, Tacoma News Tribune, 12.07.2010)
(John Gillie, The Olympian, 12.07.2010)

  

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.

13 comments:

  1. 1

    To Quote the Tacoma News Tribune Article Above

    “Everyone is wondering how long interest rates are going to remain low…”

    Not for long, at the current rates outlook. Looks like current [today’s] federal treasuries are needing higher interest rates to dump. Article in part:

    “…After the auction, the broader bond market extended its losses, pushing yields in the opposite direction. Yields on benchmark 10-year notes /quotes/comstock/31*!ust10y (UST10Y 3.13, +0.20, +6.76%) rose 19 basis points to 3.12%, the highest since at least July.

    http://www.marketwatch.com/story/ussells-3-year-notes-bond-market-extends-losses-2010-12-07?siteid=bnbh

    The stock market nose-dived today after the horrifying 10 yr bond news pushing interest rates higher. The good news, Obama proposes shaving 2% off our Social Security deduction for 2011 [that’s a net pay increase, like a 2.6% gross pay increase, before bracket creep]….the news didn’t say if this also means a reduction in SS benefits though.

    Rate this comment: Thumb up 0

  2. 2
    wreckingbull says:

    Unbelievable. Lenny is still beating his one-trick pony of buying power and interest rates. Does he really think that reduced purchasing power has no effect on home prices, or does he just conveniently ignore this in his quest to sell more homes?

    Rate this comment: Thumb up 0

  3. 3
    Scotsman says:

    I get the sense that, more and more, they all come to Seattle Bubble for the real analysis.

    In the Seattle Times piece Peter Hickey is quoted at the end as saying sales have picked up because “people are tired of being scared.” So now they’re going to try being stupid instead? I grew up with Peter and remember when he bought his first very used Lexus and went into the business. He is a realtor’s realtor, the penultimate champion of “now is a great time to buy. . houses always go up!”

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  4. 4
    mukoh says:

    By softwarengineer @ 1:

    To Quote the Tacoma News Tribune Article Above

    “Everyone is wondering how long interest rates are going to remain low…”

    Not for long, at the current rates outlook. Looks like current [today’s] federal treasuries are needing higher interest rates to dump. Article in part:

    “…After the auction, the broader bond market extended its losses, pushing yields in the opposite direction. Yields on benchmark 10-year notes /quotes/comstock/31*!ust10y (UST10Y 3.13, +0.20, +6.76%) rose 19 basis points to 3.12%, the highest since at least July.

    http://www.marketwatch.com/story/ussells-3-year-notes-bond-market-extends-losses-2010-12-07?siteid=bnbh

    The stock market nose-dived today after the horrifying 10 yr bond news pushing interest rates higher. The good news, Obama proposes shaving 2% off our Social Security deduction for 2011 [that’s a net pay increase, like a 2.6% gross pay increase, before bracket creep]….the news didn’t say if this also means a reduction in SS benefits though.

    SWE -3.03 a whole 0.03% decline is a nose dive? Is the glass half emty or half full?

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  5. 5
    brainiac says:

    RE: Scotsman @ 3

    Not trying to be a word Nazi here, but actually penultimate means “next to last”. I only know this from a story from my former CFO about how he used it to describe his bosses performance (which was how he came to know the definition).

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  6. 6
    Ahau says:

    Tim–sorry for the OT comment here, but do you know what the deal is with the difference between the NWMLS’ numbers for November and Redfin’s?

    Redfin released their numbers for November this morning (or some time yesterday), and they’re showing a median SFR price in King County of $374K ($15K above NWMLS report), and they’re showing a MOM increase in both median price (+1.9%) and $/sqft (+5%).

    Any insight for us?

    Thanks!

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  7. 7
    The Tim says:

    RE: Ahau @ 6 – Probably due to the fact that the NWMLS “November” numbers aren’t really composed solely of homes that sold in November. They’re rolling in all the late-reported sales from previous months, as well. It’s possible that for some reason the late-reported sales in this month’s report were mostly abnormally low, dragging down the median reported by the NWMLS.

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  8. 8
    LA Relo says:

    Until the gov’t stops meddling every now and then as prices continue to plummet, even YOY data becomes unreliable.

    The media must love it because they have even more discretion with which to mislead lead people.

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  9. 9
    Ahau says:

    RE: The Tim @ 7 – Actually, I *think* this might be some mix-shifting. Here’s my case: NWMLS reports sales in two categories: SFR and condo. Redfin reports in three: SFR, Townhome, and Condo (though townhomes don’t show on their charts). In NWMLS reports, I think some townhomes are getting lumped in with SFR, and others are lumped with condos.

    In October, SFR’s made up 82.4% of the MLS total reported sales. In November, they made up 82.04%.

    However, in October Redfin’s SFR category made up 76.3% of the total, and in November, they made up only 73.6%. Redfin shows a mix shift towards condos/townhomes, but MLS does not; I think perhaps more townhomes were reported as SFR in November (by the MLS) than in October. This shift would lower the median sale price.

    FWIW, I also think this townhome issue is playing a part in the overall disparity between the SFR sales reported by NWMLS and those reported by Redfin. Over the last seven months aggregated, NWMLS has reported more SFR sales than Redfin (about 65 more), but Redfin’s total number of sales (SFR+Townhome+condo) eclipses NWMLS by more than 800. Redfin continues to update it’s information, and will increase it’s reporting for any given month, the month after it initially publishes it’s numbers (for example, in early October they reported 1109 SFR sales for September, but in November they revised it up to 1249, whereas NWMLS reported 1158 in early October and published no revisions that I’ve seen).

    I…hope I’m still making sense. I’ve been staring at spreadsheets for too long.

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  10. 10

    RE: Ahau @ 9RE: The Tim @ 7 – I think The Tim is correct. It’s the late reported sales dragging things down. I didn’t manage to find settings that duplicated the NWMLS volume, but a quick search indicated a drop in median of roughly 10k due to late reported.

    Estimate from NWMLS sources but not compiled or guaranteed by the NWMLS.

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  11. 11
    Macro Investor says:

    The altos median price chart on Tim’s home page is all anybody needs to know. It’s fallen off a cliff the last 5 months. Just in the last 3 days I noticed the median fell another $10,000. And that is for Seattle, the strongest sub market we have.

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  12. 12
    Scotsman says:

    RE: brainiac @ 5

    Thank you. It won’t happen again! ;-)

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  13. 13
    Ahau says:

    RE: Kary L. Krismer @ 10 – Thanks, Kary and Tim. I graphed Redfin’s median with NWMLS’ median, and I see that Redfin dropped a lot more in October than NWMLS, and then ticked up in November while NWMLS tanked, so low-priced late reports from October would explain this.

    I still see issues with the mix shifting, but since I don’t have access to the MLS, nor an excess of spare time, I’m not going to dig deeper into the data to see where it’s coming from and what it’s affect is.

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