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.

29 responses to “NWMLS: Sales, Prices Still Rolling Along the Gutter”

  1. HappyRenter

    The spring bounce is flat.

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  2. Kary L. Krismer

    RE: HappyRenter @ 1 – I would agree, and call the recent variation just noise, but when you look at the last chart, not many of the prior years showed that much of a bounce either, except 2006 and 2007, which most here would not consider “healthy” years.

    Maybe we’re in a more normal market, although one with low volumes?

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  3. HappyRenter

    RE: Kary L. Krismer @ 2 -
    I agree. What is then usually the “hottest” month for price increases?

    In order to figure that out, one could take the three-month average, then calculate the MOM change of that three-month average and average it over the last years back to 1993. One could do the same with the Case Shiller data, which is already a three-month average. Would that be a good idea? Or, judging from the plots it seems that July/August is generally the period of most price increases.

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  4. Kary L. Krismer

    The first chart above is the first evidence we’ve seen of “The Tim bump.” ;-)

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  5. Lurker

    I agree about a more normal market. It is interesting to compare levels now to ten years ago:

    pending sales are up around 10%, closed sales down around 20% and inventory levels about the same (if I’m reading the colors right)

    man, inventory levels were darn high in 2008.

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  6. Scotsman

    Sales (demand) up, supply (inventory) steady, prices still falling. What’s wrong with this picture? Somebody get Krugman on the horn- we’re going to need a creative explanation for this new paradigm.

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  7. softwarengineer

    RE: Scotsman @ 6

    SWE Krugman’s WAG

    Actually the Seattle area pending sales were down 22.5% from April 2010 to April 2011. That’s the number to watch. The approx 11% uptick in pending sales from April 2011 to May 2011 was still down from last year’s April 2010 peak. The more severe down tick in 2010 after the tax credit’s April 2010 deadline was “self-explanatory’.

    The bottom line is the tax credit did not affect pending home sales in King County in 2011, in that it did not goose future sales or make them at least constant without tax props. They dropped from the tax credit heydays by about 11% in May 2011.

    The rest of the nation was not as fortunate as Seattle, their MOM pending sales declined by 11.5% from April to May 2011. meaning, the tax credit YOY ineffectiveness was even worse on a national level.

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  8. Ben

    It looks like we will be under the yellow 2004 price line by August perhaps? I hope no more tax credits prevent the market from finding a true bottom. It’s been too long and I want want to join Tim in a home purchase, but just not yet. QE2 is ending, there is no will for more stimulus can kicking, and this is the typical peak for seasonal home prices. The summer and fall will be interesting in realtor land to say the least.

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  9. Kary L. Krismer

    By Lurker @ 5:

    man, inventory levels were darn high in 2008.

    More supply at higher prices isn’t surprising, but many/most of those sellers wanted to get into something else even more expensive.

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  10. Eastsider

    It would be nice if you throw in a chart of home prices adjusted for inflation.

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  11. LocalYokel

    By Eastsider @ 10:

    It would be nice if you throw in a chart of home prices adjusted for inflation.

    RE: Eastsider @ 10

    +1.

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  12. Kary L. Krismer

    By Eastsider @ 10:

    It would be nice if you throw in a chart of home prices adjusted for inflation.

    He did that with Case Shiller just last week. C-S and the median are rather highly correlated.

    http://seattlebubble.com/blog/2011/06/03/real-seattle-home-prices-rewound-to-march-2000/

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  13. Lurker

    The Tim just recently posted a graph showing real pricing if you are interested in that.

    http://seattlebubble.com/blog/2011/06/03/real-seattle-home-prices-rewound-to-march-2000/

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  14. Cheap South

    Ok, the last chart makes it official. Sadly, my price range is between the ’93-’96 lines.Tim; when do we get the off peak price comparison?

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  15. Lurker

    RE: Kary L. Krismer @ 12

    beat me to it, Kary!

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  16. Phil

    Tim, I downloaded the .xls but it didn’t contain the data necessary to generate the same chart series for KingCo Hi Tier (as defined in your June 1, 2011 post). Is the same data available for KingCo High Tier only? And, would it be possible to include Sold $/sf data to drive a plot of High Tier Sold $/sf versus month for the past several years? Probably not useful for most on this blog, but I’m interested in the high tier trends.

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  17. toad37

    OK guys, need your professional opinions. I just looked at this house.

    http://www.redfin.com/WA/Bellevue/1823-100th-Ave-NE-98004/home/506128

    It is a desirable area. There are some newer construction around that sell for well over 1 million.

    How about low-ballin’ for 475k. If they took it, sit on it for 2 years, then build a nice house and turn a tidy little profit… thoughts?

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  18. Scotsman

    Ok, I get it- you’re just trolling. I’ll bite

    Hey, why not! Location, location, location- and it’s hard to beat the NE exposure of north Bellevue, especially on the eastern side of the hill, looking over . . . Bellevue way? That’s where I’d want to buy a $1.5M home, assuming you follow the rule of thumb where the land is 1/3. The good news is labor will be cheap in two years, really cheap. Materials, harder to say. And then there’s the market for $1.5M homes- even in Bellevue. I know, I know, everyone wants to live there- except the vast majority of the people in Seattle, who hate it. But there’s always foreign money, and you know- they aren’t making any more land.

    Or, you could just by it and hold it- the original 1951 painted cabinets have a certain charm, and the tastefully upgraded ’60′s wood paneling is always popular- in Kent. Looks like any easy way to lose a hundred grand- but what do I know?

    That area, despite being close in, was the last to start to redevelop during the bubble. When I went to Bellevue High in the ’70′s it was the land of forgotten shopping centers and cheap apartments. there was a reason then, and it still holds true now. A joyless hollow, a land forgotten. Go for it!

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  19. toad37

    RE: Scotsman @ 18 -
    Hi Scotsman, I appreciate your viewpoint. Thanks. My Realtor said building costs have dropped to $120-130 per sq. ft. Will have to verify this.

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  20. corncob

    By toad37 @ 19:

    RE: Scotsman @ 18 -
    Hi Scotsman, I appreciate your viewpoint. Thanks. My Realtor said building costs have dropped to $120-130 per sq. ft. Will have to verify this.

    Building prices are whatever you want them to be in a pretty wide range. For houses in the $1m+ category you are going to have to spend a lot more than $120-130/ft for the finishes the customers will expect.

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  21. toad37

    RE: corncob @ 20
    Sounded light to me as well. golly Realtors. :-)

    I’m waiting to here back from my brother-in-law. He builds homes in that range.

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  22. Scotsman

    RE: corncob @ 20RE: toad37 @ 19

    I’m not sure about Bellevue, but many communities have GFAR maximums of 35% of the lot size, so you’d be limited to something under 3500 square feet for the house. To get to $1.5m at that size it’s got to be pretty spectacular. That won’t happen @ $130/sft.

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  23. toad37

    RE: Scotsman @ 22 – I wouldn’t argue that. I just text my friend who is a professional architect, here is the convo- I kid you not-

    Me- How much does it cost per sq. ft. to build a nice house locally?
    Him- That varies. Nice is a broad term. $100 / sf
    Me- Would $120 be really nice?
    Him- Not sure on residential rates these days. Cheap material and labor may get you a killer house for that.

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  24. deejayoh

    RE: toad37 @ 23 – Architects are not great estimators of construction cost – so good luck building something for $100/sq other than a cracker box.

    Buddy of mine just finished a place in Clyde Hill with a deal from another friend as the GC (he just wanted to keep his subs busy) I am pretty sure it was well north of $200/square. That’s with basically no GC margins.

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  25. toad37

    RE: deejayoh @ 24
    That is good information Deejayoh, thanks. It’s looking like the consensus here is that 120-130 ain’t going to cut it… I’ll keep researching, thanks for input.

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  26. Kary L. Krismer

    By Scotsman @ 22:

    RE: corncob @ 20RE: toad37 @ 19

    I’m not sure about Bellevue, but many communities have GFAR maximums of 35% of the lot size, so you’d be limited to something under 3500 square feet for the house. To get to $1.5m at that size it’s got to be pretty spectacular. That won’t happen @ $130/sft.

    Keep in mind you have to pay for the lot too out of that 1.5M, and that a few days ago I posted a link to the lot selling for 14M.

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  27. ARDELL

    RE: toad37 @ 25

    I checked with a builder a while back and the rate was $165 if you stuck with “in stock” type of materials. With new construction down, especially on the high end, the cost of custom or semi-custom finishes has skyrocketed, due to decreased demand. They are no longer pumping those things out in high quantities to keep prices low.

    You are better off building a house with readily available and lower cost materials, than dreaming up something as to interior finishes that creates custom work and custom prices. That’s why some start off at $165 per sf and end up at over $200 per sf. It’s not the builder costs as much as the buyer’s chosen material costs.

    People tend to choose wisely when selecting the builder…but then get carried away with expensive finishes, and wind up much higher per sf than their original bid and intent.

    The increased cost of custom finishes is also one of the reasons you saw high end jobs being abandoned completely with no interior work done. When the cost of the interior finish materials doubled, the builders just walked away, as the increase in material costs sucked up their profit margin.

    That’s also the reason most builders have dramatically limited the options available to a few styles they can buy more cheaply and in bulk. They also make the buyer pay in advance for any upgrades, and that money is forfeited if you don’t close, as they won’t be about to get custom prices from a different buyer. Even if you have a finance contingency in your contract, that does not cover monies you paid in advance for upgrades, even for a tract home.

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  28. toad37

    RE: ARDELL @ 27 -
    Thanks Ardell, excellent info. I’ll report back when I touch base with my brother-in-law. HE builds the high end stuff and will tell it to me straight.

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  29. toad37

    RE: Kary L. Krismer @ 26
    Hi Kary, looks like you missed this… the lot would be scraping this in a couple years-

    http://www.redfin.com/WA/Bellevue/1823-100th-Ave-NE-98004/home/506128

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