2011: Where’s the Inventory?

Most years, when the calendar flips over to January, it’s like the “new inventory on” switch has been flipped. In 2009 and 2010, by the end of January there were 8-12% more listings on the market than there were at the beginning of the month. This year though, things seem to be shaping up differently:

King Co. SFH Inventory Growth

Using the log from my sidebar inventory tracker, I indexed each year’s inventory to January 1. Note how much slower inventory is growing this year compared to 2009 and 2010. By January 10th, 2009 had 4% more listings than January 1, 2010 had 8% more listings, but 2011 has just 2% more listings.

I’m expecting sales to pick up this year as prices continue to correct to sustainable levels, but if the inventory on the market is the same stale and/or overpriced junk that’s been festering for months, it’s going to be difficult to excite 2011’s buyers.


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.

46 comments:

  1. 1
    Brian says:

    Who will blink first? Potential sellers afraid of selling at the bottom, or potential buyers afraid of buying before the market hits bottom?

  2. 2
    Ben says:

    Since real estate is no longer always going up, a lot of people who used to sell and move on are not selling any more. So the desirable inventory has fallen through the floor. Almost everything I can find that meets my parameters for year built + number of bedrooms is either too expensive or undesirable.

    Both classes end up on the market for a long time until they hit the price where they sell, which is still 20% higher than bottom in dollar terms by my estimate. This has the further effect of scaring off more sellers.

    The lack of builder inventory is also a factor. Nothing new to buy == less people selling what they have to buy it.

  3. 3
    blueskitten says:

    Just anecdotal evidence, but a realtor friend of mine called me last weekend because she needed a break from the MLS. She was attempting to post a new listing and said that the MLS had recently switched to a new vendor and it was nightmarish trying to post a listing – timing out without telling her it was doing so, so she lost all the content she’d entered and would have to recreate it, and other frustrating things. She’s pretty experienced and web-savvy and was having a hard time with it and pointed out to me that those realtors out there without a lot of web experience were in an even more frustrating situation than she was. So it could be that there is just a backlog of listings that agents are still working on posting.

  4. 4
    SG says:

    ok, let’s recap.
    If inventory rises…”prices are going to drop further” (to clear excess inventory)
    If inventory stays flat…..”prices are going to drop further” (same stale inventory)

    Make up your mind. It can’t be a “I told you so” in both cases. This applies to your analysis of the december closing numbers post as well.

  5. 5
    robotslave says:

    Could you post the raw inventory numbers as well, please?

    With only the percentages, I have no way to see whether or not comparable numbers of properties are hitting the market– a high background level of inventory would flatten the percentage graph.

  6. 6
    The Tim says:

    By SG @ 4:

    If inventory stays flat…..”prices are going to drop further” (same stale inventory).

    Where did I say that?

    RE: robotslave @ 5 – Click the inventory number on the sidebar inventory tracker on the front page for the full log.

  7. 7
    robotslave says:

    In addition to date and time, the King County SFH log has four data columns. What data are in each column?

  8. 8
    The Tim says:

    RE: robotslave @ 7 – Four different sources. The last column is the most reliable, and the one that gets displayed on the sidebar. It’s also the one I used for the graphs in this post.

  9. 9

    RE: blueskitten @ 3 – Assuming you’re talking about the NWMLS and Matrix, then no.

    First, entering the listing information into Matrix isn’t that tough. About the only thing more difficult is entering the bedroom information. Second, the agent can always just send the listing paperwork into the NWMLS and they will enter it for them.

  10. 10
    Ben says:

    Tim, what is your sense as to how many foreclosures are being withheld relative to last year? In other words, I’m curious if Foreclosuregate is creating a potential pig in a python here as it appears to be doing in other parts of the country.

    What other likely explanations come to mind?

    Thanks!

  11. 11
    Pegasus says:

    You guys are making too much out of this. First your miniscule number of days look at the numbers is nonsensical. Too short to gather anything meaningful other than noise. It could be affect by weather or what day of the week was New Years, etc. Second… we all know what the real reason is. it is the guilt trip that the real estate agents are on after telling lies to the public for decades and finally getting exposed. As this is something that hasn’t gone away and keeps festering I believe the impact on their ego is manifesting in massive depression. Each year it grows worse. Agents are reacting by trying to rewrite their previous words and predictions. As each year approaches the holidays and the time in the past was spent celebrating the ever increasing pile of commissions it is now spent in deep melancholy. This dispair is assuaged with alcohol and thus this year the benders have extended longer while the real estate market still awaits their return. And that is why the inventory numbers are slower to build this year. Yes last year they got a slight reprieve and temporary inspiration knowing the taxpayers would soon be giving them a gift of commissions. And so they did. Now they have only the darkness to look forward to. Not much motivation in that. Only solace from a bottle.

  12. 12

    RE: Ben @ 2

    Until They or Their Banks Have to Sell

    Because they ran out of stalling cash.

  13. 13
    deejayoh says:

    maybe fewer listings were pulled and resubmitted this year e.g. people left their homes on the market through the holidays?

  14. 14
    ray pepper says:

    RE: blueskitten @ 3RE: <a href='#comment-1

    You cannot be serious. My 8 year old could input a listing. Good God!

  15. 15
    deejayoh says:

    By ray pepper @ 14:

    RE: blueskitten @ 3RE: <a href='#comment-1

    You cannot be serious. My 8 year old could input a listing. Good God!

    Ray! you don’t want to reveal your cost saving strategies!

  16. 16
    hrpuffnstuff says:

    just a thought but I talked to one realtor leaving her listing off for a longer period so they could re-list without a record of being on before as it had many hundreds of days already on the clock. I think many potential sellers don’t see any urgency to rush as there are few buyers.

  17. 17
    EconE says:

    When you’ve HELOCed it to the bones and you’ve been living in it for free for the last 12-18 months with no NOD filed…

    Why list it and potentially end a good thing?

  18. 18
    ray pepper says:

    RE: deejayoh @ 15

    haaa. thats funny..love it!

  19. 19
    ray pepper says:

    RE: EconE @ 17

    bingo!………..

  20. 20
    Dave0 says:

    So… inventory is down YoY, sales are up YoY (as evidenced in the December data). In other words, demand is increasing while supply is shrinking. Could it be that we are at the bottom and prices will start to turn around? We’ve gotten past the stage of everyone thinking, and calling out, that it’s the bottom. Now the general message I hear is everyone being depressed that real estate just keeps going down. Sounds like the time to buy to me.

  21. 21
    Ben says:

    RE: Dave0 @ 20 – The macro factors don’t support anything other than a grind down – slow or fast is the question. Right now, the price decline is running at a pretty good clip.

    The main macro drivers of demand and prices: income, household formation, interest rates, and loan standards do not support rising prices. Supply is interesting, hence my earlier question about foreclosures being withheld. Remember, they weren’t making any more land in Japan either, and housing declined for a LONG time.

  22. 22
    The Tim says:

    By Dave0 @ 20:

    So… inventory is down YoY, sales are up YoY (as evidenced in the December data).

    Actually, total inventory on the market is still up YOY.

  23. 23
    lo ball jones says:

    maybe after two years people who thought they might sell and trade up are staying put.

  24. 24

    RE: Dave0 @ 20
    In 2005, inventory was rising, and sales were slowing. I was convinced that price drops were imminent, but it took a couple of years for that to happen. So, IF sales are rising and inventory shrinking, and IF that continues to happen, then yes, prices will start rising within a couple of years. But with the rumors of banks unleashing their shadow inventory, and the possibility of rising interest rates, all bets are off.

  25. 25
    corncob says:

    RE: Dave0 @ 20 – I think that, just like the housing bubble run up, supply/demand have little aggregate effect on the market right now. Bigger influences are things like mortgage availability, job/incoming stability, government props for banks/homeowners/homebuyers, etc.

    I think it is far too early to call this some sort of trend, perhaps we will know better at the end of the month.

  26. 26
    Ron Nelson says:

    Seattle PI Just had one of there stories printed, Not sure if this is Old News?
    http://www.seattlepi.com/local/433252_invest11.html

    Zillow ranks us/Seattle the 4th. Worst Real Estate market to invest in..

    Seattle is the fourth-worst U.S. market to invest in this year, Seattle-based real estate website Zillow.com reported Tuesday.

    Blame the fact that the area did pretty well during the housing boom and hasn’t fallen as far as many other previous hot spots since the crash.

    Zillow looked at how out of whack home prices are with their historic relationship to incomes and rents, the state of foreclosures and which direction prices have been heading recently.

    The site found some good places to invest, including many hard-hit California markets where prices may have over-corrected in the downturn.

    “Affordability is at a historic high, and there are lots of opportunities out there for average homebuyers and investors alike,” Zillow PR Manager Katie Curnutte wrote on the company’s blog.

    “To be clear, we’re not talking about people looking for a quick flip, but sophisticated investors who are interested in making a long-term investment in properties that will generate rental income. These types of investors usually expect modest value appreciation, so are focused more on regular positive cash flow.”

    See this gallery for the 10 worst investment markets, followed by the 10 best.

    Also Tuesday, Zillow reported that home prices nationwide have now fallen farther than they did during the Great Depression.

    Specifically, it said: “the Zillow Home Value Index has now fallen 26 percent since its peak in June 2006. That’s more than the 25.9 percent decline in the Depression-era years between 1928 and 1933.”

    But the site also noted that an improving economy should boost the housing market, gradually

  27. 27
    Leigh says:

    In my little micro climate here in Portland, Mount Tabor area to be precise, houses are being pulled off the market. Some middle of the road $ only lasted a few months with minimal price drops and then became rentals. The higher end, around $800k-1.2million are just sitting for many months before being pulled off the market, if ever pulled.

    I thought there was a min # of days (90?) a house had to be OFF the market in order for it to be assigned a fresh MLS #?

    Anyway, the correction around these parts is taking a long time due to this. And I’m guessing many folks are wondering what is in store for them in the near future as they hadn’t been unable to unload their mortgage.

  28. 28
    Jonness says:

    “But the site also noted that an improving economy should boost the housing market, gradually”

    November Case-Shiller will most likely reveal the Seattle region was in free-fall (lost more value than October). December data will most likely reveal many low-IQ types pulled the trigger early due to misunderstanding rising rates (evidenced by weak price support in CS). January data will most likely provide further evidence that December buyers with low-IQ’s bought too early while high-IQ types stayed on the fence waiting for lower prices while saving a huge down payment (correction resumed).

    Nostradamus

  29. 29
    Pegasus says:

    Tim….I think this would be more fun if we run the numbers every TWO days. That way we can make up anything and sooner or later it will turn out true. There is NOTHING scientific going on here with your story other than there are fools who will believe anything……

  30. 30
    Condoseeker says:

    If numbers don’t lie, how come some are more believable then others?

  31. 31
    Ben says:

    RE: Jonness @ 28 – I like your style. Well said.

  32. 32
    ARDELL says:

    There’s actually a very simple “explanation” though nothing has only one reason.

    In the past, the mls numbering system identified the year it was listed. 2007 started with 2700xxxx, 2008 was 2800xxxx, 2009 was 2900xxxx. 2010 started with 100. Agents, including me, would not want to list on Dec 30 and get a 2009 listing number vs waiting to the first week of the new year to get a number in the beginning of the new year’s sequence.

    This was more important when pubic sites and even the mls did not have a “cumulative” days on market data field. We scanned the listing numbers to pick out new listings from stale ones.

    Agents would normally not list a property in the last week of December, and sometime before that, but instead hold it until after the 1st of the year, causing more to be listed the first week of the new year than in a normal week.

    This year the mls system simply continued the numbering system from 2010, so there was no reason to hold a listing in the last couple of weeks in December in order to get “a 2011” listing number. There is no visual “staleness” associated with a listing put in on December 30 vs Jan 3.

    As Tim said: “Actually, total inventory on the market is still up YOY.” There is not the normal backlog from Dec 2010 who waited until the first days of 2011 to list, because there was no reason to do that for the first time in many, many years. Maybe in history.

  33. 33
    Ben says:

    RE: ARDELL @ 32 – Occam’s razor. Thanks.

  34. 34

    RE: Ron Nelson @ 26 – When Cramer says we are the worst, that will be bottom. He did inadvertently call the top by saying we were the best.

  35. 35

    RE: ARDELL @ 32 – I think Ardell may be onto something there. I always thought that worrying about the MLS number was stupid, because no one searches by MLS number unless they’re interested in a specific piece of property, and everyone can determine how long a property has been on the market. But there probably were a lot of agents that did think it meant something.

  36. 36
    TJ_98370 says:

    RE: Pegasus @ 11

    Depressed, alcoholic real estate agents dealing with guilt – that definitely generates a disturbing mental image.

  37. 37

    By TJ_98370 @ 36:

    RE: Pegasus @ 11

    Depressed, alcoholic real estate agents dealing with guilt – that definitely generates a disturbing mental image.

    And if you deal w/ real estate agents on a regular basis, you’d know that a lot of them have this public persona of being cheerful, chipper, enthusiastic, optimistic, and almost cloyingly fake sweet. That would be hard to maintain when you’re a depressed, guilt ridden alcoholic.
    I may have my issues, but nobody has ever accused me of excessive cheerfulness.

  38. 38
    Pegasus says:

    By TJ_98370 @ 36:

    RE: Pegasus @ 11

    Depressed, alcoholic real estate agents dealing with guilt – that definitely generates a disturbing mental image.

    It’s as accurate as a cause as the rest of the baloney reasons given for the differences except maybe ARDELL’s. By the way mine was satire over trying to place real meaning on a very short window of data…..

  39. 39
    Pegasus says:

    By Ira Sacharoff @ 37:

    By TJ_98370 @ 36:

    RE: Pegasus @ 11

    Depressed, alcoholic real estate agents dealing with guilt – that definitely generates a disturbing mental image.

    And if you deal w/ real estate agents on a regular basis, you’d know that a lot of them have this public persona of being cheerful, chipper, enthusiastic, optimistic, and almost cloyingly fake sweet. That would be hard to maintain when you’re a depressed, guilt ridden alcoholic.
    I may have my issues, but nobody has ever accused me of excessive cheerfulness.

    That is why the year end benders when work stops or slows down. All those phony happy faces takes its toll on the psychi. Ira is it true that a lutefisk a day keeps the blues away and also clients?

  40. 40
    Ron Nelson says:

    RE: Kary L. Krismer @ 34

    I Totally agree that we are at the Bottom in many of the Real Estate Markets..

    Just Not In Seattle Market, the Bottom is still a ways and probably a couple of Years in the Making here..

  41. 41

    RE: Ron Nelson @ 40 – I was just joking about Cramer. Or did he make an announcement today that I missed? ;-)

  42. 42
    Ben says:

    RE: Ron Nelson @ 40 – From examination of the CS data, out of the 20 cities, Washington, DC and Los Angeles maybe have a chance at being in a “bottoming” process. Have you looked and the data? Download the Excel data and look at the absolute level and the trends.

    http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff–p-us—-

  43. 43
    Lo Ball Jones says:

    The typical “Seattle home” looks like most people’s semi-finished basement in the rest of the country.

  44. 44

    […] (powered by Estately):If these estimates are correct, it looks like the dearth of new listings I mentioned earlier this month is starting to put some downward pressure on overall inventory, especially up in Snohomish […]

  45. 45

    […] explained Kathryn.Redfin’s data and our agents’ experience in the field confirms what I pointed out a month ago: inventory is unusually scarse across most of the Seattle area. One thing that I found particularly […]

  46. 46

    […] year was fairly bad (which I pointed out less than two weeks into the year), but at least there was some increase in selection between […]

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