NWMLS: Median Price Spikes as Bank-Owned Sales Dip

March market stats were just released by the NWMLS. Here’s their press release:

Western Washington housing market “energized” and showing signs of “definite turnaround”.

Northwest Multiple Listing Service brokers reported double-digit gains in both pending and closed sales during April compared to a year ago, but the most eye-catching number may pertain to prices. For the first time in more than four years (since January 2008) the year-over-year change in selling prices was positive.

While cheered by the figure that snapped a 50-month string of negative numbers for year-over-year price comparisons, Northwest MLS brokers said consumers must be realistic in their expectations. They also noted the market recovery will be slow and incremental.

That’s… a surprisingly measured response.

One thing that’s interesting to note is that Kary has been mentioning in the comments the last few days that the median price was likely to spike this month due to a lot fewer bank-owned homes being included in the mix. No mention of that in the NWMLS press release, but here’s a chart that shows the magnitude of the change we’re talking about:

Bank-Owned: Share of Total Sales - King County Single-Family

When you drop a bunch of bank-owned homes out of the mix, it’s no surprise to see the median shoot up by so much in a single month. How much? On with the stats and we’ll see…

CAUTION

NWMLS monthly reports include an undisclosed and varying number of
sales from previous months in their pending and closed sales statistics.

Here’s your King County SFH summary, with the arrows to show whether the year-over-year direction of each indicator is favorable or unfavorable news for buyers and sellers (green = favorable, red = unfavorable):

April 2012 Number MOM YOY Buyers Sellers
Active Listings 4,927 -1.0% -38.2%
Closed Sales 1,769 +7.7% +15.4%
SAAS (?) 1.43 -5.6% -23.3%
Pending Sales 2,848 -5.6% +22.9%
Months of Supply 1.73 +4.9% -49.7%
Median Price* $360,000 +9.1% +2.9%

Feel free to download the updated Seattle Bubble Spreadsheet (Excel 2003 format), but keep in mind the caution above.

Here’s your closed sales yearly comparison chart:

King County SFH Closed Sales

Following the usual yearly pattern, and remaining just barely above 2010 still. Nothing to write home about.

Here’s the graph of inventory with each year overlaid on the same chart.

King County SFH Inventory

Only three months on record since 2000 have seen lower inventory than we had this April: January 2000, December 2004, and December 2005. All in the dead of winter. Selection stinks.

Here’s the supply/demand YOY graph. In place of the now-unreliable measure of pending sales, the “demand” in this chart is represented by closed sales, which have had a consistent definition throughout the decade.

King County Supply vs Demand % Change YOY

Continuing the same pattern we’ve been seeing for about a year now.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

With a 9.1% gain month to month it’s no surprise that prices are up year over year. The question is, will this hold?

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994.

King County SFH Prices

April 2012: $360,000
April 2005: $355,000

No headlines yet at the Seattle Times or the Seattle P-I. I’ll update this post when they become available.

Check back Friday for the full reporting roundup.

Update: Here are the Times and P-I headlines.
Seattle Times: King County home prices rose in April
Seattle P-I: House prices rise in King County, surge in Seattle

  

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.

80 comments:

  1. 1

    I’m calculating the decline as being from about 22% REO last year to less than 17% this year.

    Numbers from NWMLS sources, but not compiled by or guaranteed by the NWMLS.

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  2. 2

    Let’s See, Inventory is About 70% Lower Than 2008 Today

    With closed sales 15% higher than 2008 today.

    I imagine if we reduced 70% of the food availability, people would panic and hoard food before the shelves went dry; i.e., sales would increase. Is this a trend or a normal panic reaction we have when it looks like everything is going dry?

    Is this a healthy economy rebound market or just frenzied hoarding up before the real hurricane hits?

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  3. 3
    patient says:

    At this rate prices will more than double before the year end. Hurry people this is your last chance to own, ever.

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  4. 4

    By softwarengineer @ 2:

    Is this a healthy economy rebound market or just frenzied hoarding up before the real hurricane hits?

    There’s no way you can describe the market as healthy with the lack of inventory.

    Rate this comment: Thumb up 0

  5. 5

    A point about what Tim wrote. The sales might be nothing to write home about, I would agree, but they would almost certainly be higher if there were more inventory.

    By my calculations (not compiled by or guaranteed by the NWMLS), there is less than one month of REO inventory out there. And looking at the charts from a few days ago on foreclosures, that might stay that way for some time. Banks seemingly should be raising their prices on the stuff that isn’t stale junk.

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  6. 6

    The Seattle Times article is also rather measured. I think it’s a backup reporter, and maybe they don’t even understand the significance of the numbers. No mention of even a YOY increase.

    Rate this comment: Thumb up 0

  7. 7
  8. 8
    David Losh says:

    I don’t see the correlation between bank owned, and the higher prices. It’s an assertion that has been going on for about a year, or two.

    Prices are higher, and people are paying more. The lower tier has been depleted, and we are back to flippers making profits.

    The house that Tim bought is a good example of short sale prices becoming the market place. According to another post Tim made two other flips on his block are in line with the price he paid for his short sale. As I recall Tim’s house is now the bench mark for the block.

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  9. 9

    By David Losh @ 8:

    I don’t see the correlation between bank owned, and the higher prices. It’s an assertion that has been going on for about a year, or two.

    Do you think houses in poor condition get as high of a price? REOs are generally in poor condition (even if cosmetically fixed up).

    Do you think houses sold with lousy terms get as high of a price? Which would you offer more for, a house where you could do inspections and negotiate repairs, or a house where your inspection is just take it our leave it, with no price adjustment? Buyers on REOs have to price making some negative assumptions about the house.

    Or how about an analogy? I believe Kelly Blue Book gives you three values for a car. One for a dealer sale, with warranty, one for a private sale, and one for a trade-in value. Those values can vary a lot from one another, because the sale situation is different.

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  10. 10
    patient says:

    RE: David Losh @ 8
    Good luck to agents who think that’s a good business attitude. It doesn’t matter what product or service you try to sell me, you’re out if you think you are selecting me as a customer and not the other way around.

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  11. 11

    By David Losh @ 8:

    I don’t see the correlation between bank owned, and the higher prices. It’s an assertion that has been going on for about a year, or two.

    BTW, it is simple math. The median on the bank owned SFR sales for April was well under $200,000. It was much lower than even short sales. Only about 10% of the bank owned sales were over the $360,000 median. Less than 20% of them were even above $330,000. There simply is no question whatsoever that REOs drag down the median.

    Numbers from NWMLS sources, but not compiled by or guaranteed by the NWMLS.

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  12. 12
    wreckingbull says:

    RE: Kary L. Krismer @ 7 -You were weak when we found you. Now your bearishness has become your strength. At last the dark side is your ally. Rise, my apprentice.

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  13. 13

    RE: wreckingbull @ 12 – It’s not bearishness. It’s the difference between knowing what the number is ($360,000) and knowing why the number is where it is.

    Overall the non-distressed numbers are slightly higher, most likely due to lower inventory. I’ve been following the non-distressed median for months, and it is at the high end of the range of fluctuation, if not perhaps a recent high. So it’s not like the numbers are bad, they just are not as good as what they indicate.

    It’s the same as what I was saying last month and the month before–that the median was overstating the drop in values due to the higher number of REOs. Now the REOs are lower, so compared to those two months the median has gone up more than what values did.

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  14. 14
    Marcus says:

    I’m trying to figure out how to price and trend a specific type of home. Seattle neighborhood “townhome” for sale, as defined in the King County records. But there are no shared walls. Each of the townhouses are free-standing structures. Wouldn’t this be a property that straddles the line between a townhome and a SFH?

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  15. 15

    RE: wreckingbull @ 12 – Also I would point out I was hardly bullish the last time (that I’m aware of) that Aubrey quoted me back in 2009.

    http://www.seattlepi.com/local/article/Agent-predicts-housing-slump-s-demise-1299714.php

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  16. 16
    wreckingbull says:

    RE: Kary L. Krismer @ 13 – It was a joke, but apparently not a very good one. I always rooted for The Empire.

    Rate this comment: Thumb up 0

  17. 17

    RE: wreckingbull @ 15 – That’s why I use so many of these—- ;-)

    Rate this comment: Thumb up 0

  18. 18
    Scotsman says:

    Lowest inventory AND interest rates in 13 years void all historical relationships. This is not a market in any traditional sense of the word. This is also not a market economy anyone trained in traditional analysis would recognize. Do these numbers have meaning? Of course- but I can offer an argument to refute ANY explanation you chose to put forward. How mixed up is that?

    “The Matrix” and its’ sequel have been showing on AMC. Maybe we should look there for clues?

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  19. 19
    wreckingbull says:

    RE: Scotsman @ 17 – This is largely why I am done investing in manipulated markets. No more. White flag is up. Real Estate, securities, commodities, done. My market of choice? Craigslist – the last frontier.

    Rate this comment: Thumb up 0

  20. 20
    Pegasus says:

    The pipeline for foreclosures and/or short sales has not gone away. If you temporarily halt foreclosures then we know REO’s automatically decline. Less foreclosures = less REO’s. Not rocket science or something that we need nuclear physicist Sen. Patty Murray to explain to us. If the delay in foreclosures halts price declines and reverses prices then that MAY actually reduce the amount of foreclosures in the pipeline that get foreclosed or short saled. However, if the pipeline does not get reduced by means other then foreclosure then this real estate price decline will reassert itself dooming those that are buying now to the tomb of underwater mortgages.

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  21. 21
    Pegasus says:

    RE: wreckingbull @ 19 – You are too late on your Craigslist call. You can’t even find a prostitute anymore without some cop ruining your day. The place is so overrun with scammers that it puts Congress and Wall Street to shame.

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  22. 22
    wreckingbull says:

    RE: Pegasus @ 21 – You mean the guy that wanted to sell me his BMW, but I’d have to send payment to Cameroon is not for realz? Oh no. I wonder if I can cancel my cashier’s check.

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  23. 23
    johnnybigspenda says:

    But but but but…. I thought I was going to be able to buy a house in Wallingford for $68,000 by 2015 ?

    I think we can all agree that the market isn’t great (for either side of the sale), but atleast we can call it a market again.

    They say the best cure for high prices is…. high prices. Guess what the best cure for low prices is?

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  24. 24
    David Losh says:

    RE: patient @ 10

    I’m not a sales person. We provide services; the best services your money can buy.

    Rate this comment: Thumb up 0

  25. 25
    David Losh says:

    RE: Kary L. Krismer @ 9

    I’d have to see stats on that, because in the Seattle area, let’s take Ballard, I see properties selling for a lot of money.

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  26. 26
    HappyRenter says:

    By Pegasus @ 21:

    RE: wreckingbull @ 19 – You can’t even find a prostitute anymore without some cop ruining your day.

    Unless you enroll in the Secret Service! ;)

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  27. 27
    2kt says:

    RE: Scotsman @ 18

    This is just a statistical fluke, just like end-of-year big drop. The banks pushed inventory off books at the end of fiscal year, so some sales were likely at prices that impacted median to the downside. Now more sales were from non-distressed inventory and thus the median price spike.

    From what I am seeing the average price per square feet is in about 2% range from November 2011 in Seattle and lower vs May of last year by about 4%, the same in Redmond and Bellevue. That said, at the current inventory levels and, with adding some paper headlines, we should see some prices gains, at least for a 3-4 months this summer.

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  28. 28
    John Bailo says:

    It’s sort of like a company buying it’s own stock in order to prop up the price.

    What most people mention here is the lack of “quality” stock (homes) meaning there’s nothing but garbage on the market. Drop in a few “real homes” and they get snatched away, at the same time you’ve built demand to a frenzy because all the other stuff is unappealing.

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  29. 29
    HappyRenter says:

    By johnnybigspenda @ 23:

    I think we can all agree that the market isn’t great (for either side of the sale), but atleast we can call it a market again.

    Not if there is (almost) nothing for sale.

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  30. 30

    By David Losh @ 25:

    RE: Kary L. Krismer @ 9

    I’d have to see stats on that, because in the Seattle area, let’s take Ballard, I see properties selling for a lot of money.

    There were two bank owned which sold last month for over $1M. We’re talking median price here, not the range of prices.

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  31. 31

    One thing to note is that part of that fluctuation in the first graph is due to the change in volume from month to month. REOs tend to run at fairly consistent numbers compared to the total volume. As I noted though, for April 2011 to April 2012 both the absolute number and the percentage is down.

    Just to demonstrate that, March had the highest number of REO sales this year (2012), but that doesn’t show in the first graph due to the changes in total volume.

    Prior sentence from NWMLS data sources, but not compiled by or guaranteed by the NWMLS.

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  32. 32
    David Losh says:

    RE: Kary L. Krismer @ 30

    That makes no sense.

    I’m asking how bank owned properties would lower the year over year when bank owned, and short sales use the same Comparative Market Ananlysis, sales data, as the entire rest of the Real Estate community.

    If you wanted to say there are fewer low end homes being sold, great, but that isn’t what is being presented.

    We have lower inventory levels, and that includes bank owned.

    The point is that market is bizarre, and properties are selling for a premium.

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  33. 33

    The Seattle Times has expanded their article, and now linking to Seattle Bubble. They make this claim:

    There’s still a large “shadow” inventory of homes in foreclosure and repossessed by banks that have yet to come on the market.

    I wonder where they are getting that information? Seems entirely inconsistent with this graph, which includes all types of property.

    http://seattlebubble.com/blog/wp-content/uploads/2012/05/Preview_2012-04_Trustee-Deeds.png

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  34. 34

    By David Losh @ 32:

    I’m asking how bank owned properties would lower the year over year when bank owned, and short sales use the same Comparative Market Ananlysis, sales data, as the entire rest of the Real Estate community.

    If you wanted to say there are fewer low end homes being sold, great, but that isn’t what is being presented.m.

    Well first, bank owned and short sale properties should not use the same CMAs as regular properties. If you have a non-distressed property to list and your agent does that, run! They are costing you thousands of dollars due to their ignorance.

    I don’t know what you mean by the second sentence. There are fewer REOs being sold. Those tend to be low end. So in that regard, there are fewer low end sales occurring. But that’s not the issue. The issue is REOs as a group sell for lower prices (for whatever reason, it doesn’t matter). If you have fewer of those sales as a percentage of total sales, and as a group they are still selling for less, then the median will rise.

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  35. 35

    RE: Kary L. Krismer @ 33 – Following up on that backlog of foreclosures claim, the graph I linked I believe includes all foreclosures, including those bought by third parties which will not become REO sales. Starting in 2012 the number of REO sales started to exceed those monthly amounts.

    That graph shows 916 foreclosure sales this year. The NWMLS is reporting just under 1,700 REO sales this year (condo and SFR). So they’ve eaten though a good amount of the prior inventory, and in fact the active REO inventory is very low (under 400 condo and SFR). I’m just not seeing evidence of a shadow REO inventory as claimed in the article.

    They may be including notice of trustee’s sale data, but that can be very deceiving because of multiple notices and sales not being completed for many reasons. It’s the “pending sales” of foreclosure data. Here is Tim’s chart on that.

    http://seattlebubble.com/blog/wp-content/uploads/2012/05/Preview_2012-04_Notices-Trustee-Sale-600×436.png

    Some data from NWMLS sources, but not compiled or guaranteed by the NWMLS.

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  36. 36
    David Losh says:

    RE: Kary L. Krismer @ 34

    I think that’s the kind of thinking that has the market place so screwed up. It may, or may not be true that bank owned properties drag down the median price, it doesn’t explain why the house I was in yesterday is on the market for conservatively $25K more than Fair market Value, and it will have multiple offers. An offer came in the same afternoon the house was listed.

    People are paying a lot of money for property, wouldn’t you agree?

    As far as the BPO, it is probably less accurate than a CMA, but that is what the bank will accept.

    So what are the per cent of REOs to the sold market place historically? and are all low end properties bank owned? Because it would be kind of bizarre if bank owned properties were controlling the market place, and driving down prices.

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  37. 37

    By David Losh @ 36:

    RE: Kary L. Krismer @ 34 – I think that’s the kind of thinking that has the market place so screwed up. It may, or may not be true that bank owned properties drag down the median price, it doesn’t explain why the house I was in yesterday is on the market for conservatively $25K more than Fair market Value, and it will have multiple offers. An offer came in the same afternoon the house was listed. .

    That house will receive multiple offers because of the record low inventory numbers. Look at the graph above on supply and then realize that about 20% of that record low supply consists of short sales that many buyers don’t want to bid on. The supply is critically low. Low supply means higher prices. That’s basic economics.

    Remember, I’m not saying that all of the increase in the median is due to fewer REOs. There is actually a real increase in values to the increase in the median, and that portion of the increase is caused by very low supply.

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  38. 38

    By David Losh @ 36:

    So what are the per cent of REOs to the sold market place historically? and are all low end properties bank owned? Because it would be kind of bizarre if bank owned properties were controlling the market place, and driving down prices.

    The NWMLS didn’t add a field for bank owned properties until maybe 3-4 years ago, so the historical normal would be difficult to determine. It’s almost certainly lower than today though.

    No, not all low end properties are bank owned. But I don’t know why you’re having so much trouble with this idea that removing REOs, which have a median much lower than the total sales, increases the median. Let’s use an example.

    You’re playing pool (billiards). When all 15 balls are on the table, the median number for the balls is 8. Assume you’re playing “Rotation” and the lowest 4 balls are removed from the table first. The median is now 10. The impact on the median of removing lower value balls is to raise the median.

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  39. 39

    By David Losh @ 36:

    Because it would be kind of bizarre if bank owned properties were controlling the market place, and driving down prices.

    Drilling down further on your post, how is this in any way bizarre? Banks are good at making loans. They are not so good at selling property. Some of them are absolutely horrible at selling property. Because of that, they will get lower prices and have to ask lower prices. You could say the same thing about the conditions of their properties and the impact of that on what they can ask.

    The same thing happened starting back in 2008 or so with new construction. Builders had over-built and wanted to get rid of their excess inventory. They started pricing their product lower, and that had the effect of reducing the values of resale properties. While the resale properties might have had larger lots in better locations, and better construction, at some price point a lot of buyers are going to say they want a new house if the price differential is only say $10,000.00. That drew demand away from the resale houses, and lowered the prices they could recover. The same thing happens with REOs. Almost every person that buys an REO draws demand away from other sales.

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  40. 40
    David Losh says:

    RE: Kary L. Krismer @ 38

    It’s simple that it is all sales hype.

    For two years the Real Estate sales force have been telling people that REOs, and short sales were a “good deal” when they were selling at fair market value. Just because properties were selling for 30% less than peak didn’t make them good deals and the price of property has continued to decline.

    Prices of property going up is a real thing not to be explained away. Prices of property going up is a problem for buyers when the trend is for prices to decline, even as little as 10%.

    There is exhuberance in the market place that isn’t well founded.

    A better explaination is the number of people who will buy this year no matter what. People are buying, and taking the lumps because they want to own a home.

    There should be real warnings that time is on the side of the buyer, and this market place will also pass, like it always does.

    We are in a period of sales hype. Agents are creating hysteria to generate sales, because they need commission dollars.

    Let’s be real here, that the commission sales portion of the Real Estate is a problem when left to the hands of ametuers looking to score some big bucks.

    There are some, a few, legitimate Real Estate agents who can guide a buyer through the gauntlet that we have today. They are in the business for the long haul, and have a pipeline that they have cultivated.

    People should take the time to find an agent who can help them, rather than a person to “write it up.”

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  41. 41

    By David Losh @ 40:

    <For two years the Real Estate sales force have been telling people that REOs, and short sales were a "good deal" when they were selling at fair market value.

    I’m not sure who was saying that. REOs are a “good deal” because you can get them for less money than other sales, although at higher risk. That doesn’t mean they are selling at FMV. If anything it means they are selling below FMV.

    Perhaps that will help you understand. If you remove a bunch of sales that are selling for less than FMV the median will tend to rise.

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  42. 42
    David Losh says:

    RE: Kary L. Krismer @ 39

    It’s a mistake to assume banks, who are in the business of managing property, assets, and answering for balance sheets, are lowering prices. Banks sell for as much as they can get, they have no emotion, or skin in the game.

    If you wanted to talk about condition, you can, but banks make decisions about condition very day, and have the resources to make a property pencil.

    You can say crap properties that needed work sold for cheap, but that’s the same no matter what. Builders, and banks both have seen the opportunity in the past couple of years to clear the books, but that was to a specific market segment in both cases, the people who needed new, and the fixer buyers.

    Well, while those market segments got what they wanted, this year the flippers are back, and builders are unloading carp at premium prices.

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  43. 43
    David Losh says:

    RE: Kary L. Krismer @ 41

    You would have to show me where banks are selling for a discount. What I see is that banks are in line with the trend of lower property prices, and in many cases they are the Real Estate market.

    That doesn’t change the fact that the buyer needs to be aware that they are paying above Fair Market Value to play in today’s market place.

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  44. 44

    RE: John Bailo @ 28

    Where’s the Beef?

    You’ve got SWE rolling on the ground in laughter now, with the “wild allegation” that a 1920 Seattle home somehow can be a good one or a horrifying money pit. Proof please?

    And I need more than cosmetic pictures, I need a 5-10 year old “documented” study of the Seattle area museum pieces and the maintenance logs please too. I’m a scientist type and don’t belive you folks that bought homes after 2006 [about 60% of Seattle Bubble bloggers per Tim’s survey results] and will call purple orange to justify your escrow paper signature.

    Now down thumb me for offending your “Polyanna” non-scientific attitude.

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  45. 45

    RE: David Losh @ 42 – You’re assuming banks are competent. They are not.

    Look at short sales. Any moron could figure out in two minutes that you’re going to get less for a property if you can’t expect an answer for 120 days. But how long did it take banks to figure that one out? For at least 4 years now they’ve been getting significantly less money than they could on just about every short sale because the banks are too incompetent to understand the obvious.

    More directly on REOs, locally it took them about 2 years to figure out that they should remove the prior owner’s possessions before putting them on the market. It took them about the same amount of time to figure out that they could get more money than what it cost if they painted and re-carpeted the house.

    Currently some of the banks are requiring the buyer to pay the real estate excise tax, not realizing that will be factored into the price and the only impact of doing that is to reduce the demand for their listings because not every buyer has 3.5% plus 1.78% to put down on a house.

    Or even worse. Some REOs won’t qualify for FHA solely because they don’t have a $500 stove installed! So they are reducing their potential buyers from those with 3.5 percent to put down to those with 10 or 20 percent to put down.

    Banks are stupid. They don’t know how to sell properties. Because of that, they get lower prices.

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  46. 46
    patient says:

    Give buyers more funds to compete for fewer properties and this is what happens. Banks are keeping more distressed owners in their homes through write downs and delays in processing foreclosures. This has an impact on the median but the massive stimulus in terms of temporarily manipulated mortgage rates will impact almost all price ranges just as the tax credit did which will impact C/S. It is a tax credit on steroids and it will most likely cause a little bubble since it is a temporary measure and when removed we could see the same scenario as with the tax credit, a pop.

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  47. 47

    By David Losh @ 43:

    RE: Kary L. Krismer @ 41 – You would have to show me where banks are selling for a discount. What I see is that banks are in line with the trend of lower property prices, and in many cases they are the Real Estate market.

    You have access to the NWMLS right? You can look it up yourself.

    Take Ballard, area 705, where the agent also listed the community as Ballard. In the past 180 days there were 132 SFR sales, with a median of $389,500. Nine of those were REO, and the median on those was only $300,000, over 20% less. The maximum price for the REOs was only $390,000, just $500 more than the median of the larger group. If you remove the REOs from the mix, the median goes up to $398,500.

    Numbers from NWMLS sources, but not compiled by or guaranteed by the NWMLS.

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  48. 48
    David Losh says:

    RE: Kary L. Krismer @ 45

    Those are dangerous assumptions for a buyer to have.

    Clearing out bank properties has more to do with the third party billing that banks used for a while before turning that back over to the listing agents who are still overwhelmed.

    Short Sales, and REOs have been flying out the door, at premium prices, that have been ahead of the curve of downward prices.

    You work at Keller Williams, the home of Kendra Todd the short sale queen. I’m sure in your sales meetings ,and memos, that speeding up short sale approval would fix it all. The fact is that market segment has been hot, and what? 30% of the market place?

    So banks must have been doing something right if they cleared the REO inventory in four short years, and now there are none.

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  49. 49

    By David Losh @ 48:

    You work at Keller Williams, the home of Kendra Todd the short sale queen. I’m sure in your sales meetings ,and memos, that speeding up short sale approval would fix it all. The fact is that market segment has been hot, and what? 30% of the market place?

    Again, I have to ask if you’re really an agent. First, the Keller Williams which Kendra Todd is associated with is not the same brokerage that I work at. Do you not understand the organization of the various brokerages? Second, Kendra Todd does REO, not short sales. Third, banks probably don’t really listen to agents.

    And finally, the reason they cleared everything out was because they sold things cheap! Again basic economics.

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  50. 50
    David Losh says:

    RE: Kary L. Krismer @ 47

    You would have to look at each of those properties to know Fair Market Value.

    That is why it’s extremely dangerous for people to make assumptions based on what they see on the computer.

    OK, from a different perspective, I know a Real Estate picker who cuises neighborhoods for another Real Estate agent. He’s looking for good deals. In some cases other people are looking for spot lots. Those prices were hitting as low as $150K, and were not bank owned. One corner lot sold for closer than $100K. It now has a nice new construction that sold for $550K.

    This year fewer people are inclined to sell for less, because they see shiny new construction springing up all over.

    It’s the market place.

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  51. 51
    David Losh says:

    RE: Kary L. Krismer @ 49

    I’m really an agent, and know that Brokerages are there to make money.

    Agents are there to make money, and that’s why they make claims like REOs are cheap. Buyers should be very wary of sales talk.

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  52. 52

    By David Losh @ 50:

    RE: Kary L. Krismer @ 47

    You would have to look at each of those properties to know Fair Market Value.

    That is why it’s extremely dangerous for people to make assumptions based on what they see on the computer..

    I would agree you need to determine FMV for each property. But when REO listings have a median less than half of non-distressed properties month after month, the assumption is hardly “extremely dangerous.” And when the results fit with exactly what you would expect given the disadvantages of the typical bank’s addendum, again the assumption is not “extremely dangerous.”

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  53. 53
    Chris says:

    RE: Kary L. Krismer @ 35

    Kary – thanks for all the good info. This graph shows the 916 foreclosure sales

    http://seattlebubble.com/blog/wp-content/uploads/2012/05/Preview_2012-04_Trustee-Deeds.png

    Does this graph imply that this “shadow” inventory is growing? (Maybe the better question is how am I misinterpreting this chart?)

    http://seattlebubble.com/blog/wp-content/uploads/2012/05/Preview_2012-04_Notices-Trustee-Sale-600×436.png

    Trying to reconcile the data to your estimate of 1 month of inventory and holding firm for the forseeable future (foreclosure sales = foreclosures)

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  54. 54
    David Losh says:

    RE: Kary L. Krismer @ 52

    It is extremely dangerous to assume banks are stupid or incompetent.

    Like in my example, lots of people were unloading properties, not just banks. Banks were dumping low end, low quality properties the same as every one else.

    I sold in 2006, and 2007 my little paper clip portfolio of properties. Like many agents I had my five rentals for my retirement. I could have kept those, and refinanced into a greater cash flow, but I was thinking why? Why would I reaffirm debt on an asset class that was sure to lose more equity?

    Banks are no different than every other investor in the market place. Deals were done, and now properties are coming back as flips, and spot lot construction.

    If you only look at REOs or bank properties that is all you will see. They weren’t good deals. Better deals were had in private sales.

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  55. 55
    deejayoh says:

    By Kary L. Krismer @ 33:

    The Seattle Times has expanded their article, and now linking to Seattle Bubble. They make this claim:

    There’s still a large “shadow” inventory of homes in foreclosure and repossessed by banks that have yet to come on the market.

    I wonder where they are getting that information? Seems entirely inconsistent with this graph, which includes all types of property.

    http://seattlebubble.com/blog/wp-content/uploads/2012/05/Preview_2012-04_Trustee-Deeds.png

    There is also a monster under the bed, and a boogeyman in the closet. All based on the same understanding of facts.

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  56. 56

    RE: deejayoh @ 54

    Shadow Inventory In Seattle Is Undocumented

    But nationally Core Logic isn’t calling it a boogie man; they’re calling it a live terrorist in our mist:

    “…On Wednesday of this week, Corel Logic reported that as of January 2012, the U.S. had approximately 1.6 million units of residential shadow inventory. This is a little more than half of the 3 million total properties that are currently seriously delinquent, in foreclosure status or bank-owned properties (known as REOs, for real estate owned)….”

    http://www.investorplace.com/2012/03/the-shadow-inventory-darkening-housing/

    Now, down thumb me for documenting my allegation. The Seattle Times gets kudos for careful journalism on “Seattle Shadow Inventory” from SWE BTW.

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  57. 57

    RE: softwarengineer @ 55 -National numbers don’t document the claim.

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  58. 58

    By David Losh @ 51:

    RE: Kary L. Krismer @ 49 – Agents are there to make money, and that’s why they make claims like REOs are cheap. Buyers should be very wary of sales talk.

    Re-reading this, I don’t think anyone has said that every REO is cheap. It’s just that as a group then tend to sell for below median and drag the median down.

    It’s still not uncommon that a bank will price an REO too high and have to go through one or more price reductions to get a buyer. Although it does seem like more banks are pricing to start a bidding war.

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  59. 59

    RE: Kary L. Krismer @ 56

    Neither does anyones’ allegations.

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  60. 60

    By softwarengineer @ 58:

    RE: Kary L. Krismer @ 56

    Neither does anyones’ allegations.

    I agree. That’s why I asked for data to support the allegations in the Times’ article. ;-)

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  61. 61
    David Losh says:

    RE: Kary L. Krismer @ 57

    Bidding wars are happening everywhere.

    What I’m stressing is that banks are sellers, in many cases with more resources than any other group of sellers in the market place.

    Banks are never out of touch, or selling a property by chance. I think they have been very smart in getting some very high prices for poop.

    Investors, or those holding dirt, have also been selling for cheap, in some cases they sent the property back to the bank because of the cost to sell, which they didn’t want to pay.

    Now we have a lot of properties that may have been poop in the past, and are now flips selling for a premium, which would also drive up the median.

    It’s all just a matter of assertions, but buyers need to beware, prices are really high, and they should check the emotions at the door.

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  62. 62
    tim2 says:

    Like I said a couple of months ago, March 2012 Seattle bottom.
    Don’t over think it.
    Supply down (no new homes being built).
    Demand up (job growth in Seattle market and a demographic bulge known as echo boom moving into home buying age).

    Supply down, demand up. Bottom.

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  63. 63
    deejayoh says:

    By softwarengineer @ 55:

    RE: deejayoh @ 54

    Shadow Inventory In Seattle Is Undocumented

    But nationally Core Logic isn’t calling it a boogie man; they’re calling it a live terrorist in our mist:

    “…On Wednesday of this week, Corel Logic reported that as of January 2012, the U.S. had approximately 1.6 million units of residential shadow inventory. This is a little more than half of the 3 million total properties that are currently seriously delinquent, in foreclosure status or bank-owned properties (known as REOs, for real estate owned)….”

    http://www.investorplace.com/2012/03/the-shadow-inventory-darkening-housing/

    Now, down thumb me for documenting my allegation. The Seattle Times gets kudos for careful journalism on “Seattle Shadow Inventory” from SWE BTW.

    Per your article

    And housing’s biggest problem continues to be a blizzard of backlogged foreclosures, aka “shadow inventory,” which before the recent agreement with the 50 state attorneys general were backed up in the pipelines of the major banks.

    Thats the lead. These backed up pipelines are a judicial state issue. Most of these 1.6MM backlogged foreclosures are in these states. According to your same source (corelogic)

    “The overall delinquency level was unchanged in March, remaining at its lowest point since July 2009,” said Mark Fleming, chief economist for CoreLogic. “Non-judicial foreclosure markets like Nevada, Arizona, and California are experiencing significant improvements in their shares of delinquent borrowers. Some judicial foreclosure states are also improving, like Florida, but not to the extent of non-judicial markets.”

    I’ve tried to explain this before. Washington is a non-judicial state. Foreclosure volumes are dropping and backlogs are not an issue. Perhaps this will help

    The difference between states depends on what process they use in the foreclosure process. The states that use a non-judicial process are responsible for the decline in foreclosures. These states don’t require the bank to go to court to initiate the foreclosure process.These 24 states saw their foreclosures fall 28% in a year. These states include Arkansas (79% drop year-over-year), Nevada (62% drop), Washington (55%), Arizona (41%), Texas (31%) and California (21%). This is very welcome news for these states, which saw some of the worst foreclosure rates during the past few years.

    On the other hand, the 26 states that use a judicial foreclosure process saw their foreclosures jump 10% from 2011. In these states, the bank must go through court to make sure the homeowner cannot pay the mortgage before initiating the foreclosure process. Foreclosures were halted last year while the Federal courts investigates accusations of bank improprieties.

    Now that the $26 million settlement has been reached, these states are experiencing an increase as banks get back on track. These states include Indiana (45%), Connecticut (38%), Massachusetts (26%), Florida (26%), South Carolina (26%), and Pennsylvania (23%).

    Non-judicial states never had the “pause” in processing foreclosures that drove this backlog.

    As for homeowners that “want” to sell but can’t because they are underwater or don’t like the price – the answer is simple. They don’t really “want” to sell. And when they do, those homes will come on the market as a trickle, not a flood. Homeowners are not going delinquent (remember 30/60/90 day lates are declining), they aren’t mailing back the keys (declining NTS) and they aren’t in any hurry to put their home on the market and lose money. There is not a rationale that says there is going to be some tsunami of “underwater sellers” coming to market all at once. They will come on slowly as prices reach the level at which they truly “want” to sell.

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  64. 64

    Don’t forget the governing Growth Management Act!

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  65. 65
    David Losh says:

    RE: tim2 @ 61

    According to the charts the bottom was in in 2009, and 2011.

    The bottom is in every year, but this year we do have building. Everywhere I look in Seattle there are cranes building big stuff.

    What you mean is the Real Estate agent sales hype that they aren’t building single family homes, so we better jump on that.

    The reality is that home prices are up here, but down across the country, you should pay attention to that, and the global economic climate.

    The family home is over priced with cheap payments due to historically low interest rates. We can afford that because Seattle pays high wages. New York, SanFrancisco, Palo Alto, all the same, good incomes push up prices. Those high wages don’t add value to the property, it just drives up prices.

    Mortgage payments are as low as rents are high. Rents are high because of a lack of supply. As we add supply to the rental market rents will be lower, and mortgages will seem more expensive. Interest rates won’t go much lower.

    In time the trap of a property you can only sell for a loss will sink in. If you can’t sell, and you need to move, you’re stuck.

    You might need to move, or want to move, for a better job, or you were downsized, or your contract is up. We are in difficul financial times, so if you purchase that family home you need to be smart, and realize you need to buy value, rather than payment.

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  66. 66
    ESS says:

    Seems there needs to be more breakdown of information when doing house prices in “the greater Seattle area”.

    Differentiation between houses sold in various areas of Seattle and Bellevue, towns adjacent to Seattle/Bellevue market, and housing that located much further away, but yet in the area that is being described. The same size and conditioned house will obviously bring vastly different prices depending where the house is located, but most of the information provided at present does not break down the information that finely.

    Differentiation between houses that are either underwater or repossessed by the bank as compared to owner occupied house sales where the owner has taken care to present the house in a tip top sales condition. Seems to me that while distressed property drags down the prices of all property in sold in any given area, it isn’t a real fair comparison. More often than not, the buyer of the distressed property would have to expend money for supplies and labor, or at best supplies and sweat equity. I would be interested in the amount a new owner spends on fixing up a house that was purchased under less than ideal conditions, and how many hours of time was expended in improving the house to owner occupied selling condition

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  67. 67

    RE: ESS @ 63 – You can get some information breaking out King and Snohomish Counties here:

    http://www.nwrealestate.com/nwrpub/common/mktg.cfm

    Not sure if there’s a public map showing you exactly what the boundaries are for the various areas.

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  68. 68
    greg says:

    anyone that has tried to work with a bank with a short sale, see the house go to foreclosure then sit for a few months with water running through the roof and then finally go on the market and then finally get sold for 100K less than the reasonable offer made at the time of short sale knows that in general making the statement that banks are incompetent is correct.
    banks were filled incompetent before the bubble when they were happy with 0% down with little job security. and they are still incompetent now.
    banks still haven’t figured out a way to clean up the short sale market. they have had years, and there are lots of people trying to figure out a way to work with them and make money. so yes i’d say there is sufficient proof that banks are totally useless with dealing with their (potential) real estate assets efficiently.

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  69. 69

    RE: greg @ 65 – Fannie and Freddie recently announced that they will try to have an answer within 30 days, and if not will explain why weekly. That’s at least a step in the right direction, but even 30 days is really too long.

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  70. 70
    deejayoh says:

    By Kary L. Krismer @ 59:

    By softwarengineer @ 58:
    RE: Kary L. Krismer @ 56

    Neither does anyones’ allegations.

    I agree. That’s why I asked for data to support the allegations in the Times’ article. ;-)

    Since my other comment is in moderation purgatory…

    Data vs. Allegations
    http://charts.foreclosureradar.com/washington/king-county/inventories-month
    Backlog down 27% YoY and 10% MoM.

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  71. 71

    There is very little shadow inventory in our area. When we address the potential shadow inventory for current delinquent borrowers, according to Corelogic’s figure of 1.6 million they have this to say:

    “Shadow inventory also remains concentrated in states impacted by sharp declines in states with long foreclosure timelines”.

    “Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would include New York, Texas and New Jersey, account for half of the shadow inventory.”

    I’m curious where Arizonia and Nevada are on that list.

    Here is a chart for the King County REO Absorption Rates from 2010 – March 2012.

    http://3.bp.blogspot.com/-p4VNM6u_L18/T5hnESFYz9I/AAAAAAAABA0/dVKyJ1uPIhY/s1600/King+County+Absorption+Rates+2010+-+March+2012.png

    As you can see, REO sales are outpacing foreclosures by quite a margin. There is less than a 30 days supply of bank listings today.

    This also shows us that banks are not “sitting” on inventory in this area. There may be some instances where an REO doesn’t come on the market right away, but that would not be the normal and usual practice.

    Also, I was at the Core Class today (Realtor Education) taught by Annie Fitzsimmons (Attorney) and she said that just in the last 2 months she is seeing an increase in judicial foreclosures in our State. The reason: this is the perfect way to go after the “strategic defaulter”. The one that has the money to pay, but is willing to sacrifice their credit to get out from the debt (underwater mortgage).

    I am not expecting any significant dump of foreclosures on the market in our area anytime soon.

    This chart: King County Distressed Property Sales shows the amount of distressed sales vs. non-distressed sales for those that are interested.

    http://2.bp.blogspot.com/-k8wJ42hUOAU/T6R-SKVlWPI/AAAAAAAABBk/D90XZP9k2Xw/s1600/KIng+County+Distressed+Property+Sales+by+Month+April+2012.png

    Corelogic Reports: http://www.corelogic.com/about-us/researchtrends/shadow-inventory.aspx#

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  72. 72

    RE: Julie Lyda, RE/MAX Northwest Realtors @ 71 – I had a transaction last year where the bank probably had it on the market within 30 days of the sale date and sold within 60. Whatever it was, it was fast.

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  73. 73
    David Losh says:

    RE: greg @ 68

    The problem with getting a property cleaned up has to do with bank policy, the same as short sales have to do with bank policy. Not all properties qualify as a short sale. It depends on the seller, and the hardship.

    Banks write down, and write off phantom losses on some properties, and still sell the properties for full asset value.

    The cleaning of a Bank Owned Property is dollars, and cents. Our company has a $10K rule, that we never expect to get more than that. Banks need to get a return for what they do, and in the world of Bank Owned Property the banks need to pick, and choose what is the most profitable, and what has to be done.

    A good example is an oil tank that has leaked for decades. They have to clean that up, they have no choice, it’s the law. When you deal with thousands of properties you have the luxury, and ability to share profits, and losses.

    If you thought that short sale was a good deal you should have made the bank an offer, and made it work, one way or another.

    Banks are also in the business to make money, and REOs are full of tricks.

    It’s always a mistake to think banks are stupid. That is an emotional response in an area of Real Estate that is all about money, and nothing else.

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  74. 74
    Jonness says:

    By softwarengineer @ 2:

    Is this a healthy economy rebound market or just frenzied hoarding up before the real hurricane hits?

    IMO, it comes down to jobs. 1981 was the last time the labor participation rate was as low as it is today. Imagine where we would be if the government wasn’t borrowing $1.5 trillion/yr to prop up the economy. While that might seem like much to people, U.S. Individual Income tax only comes to $1.1 trillion. This level of borrowing in order to artificially prop up the economy is clearly unsustainable. This is not a normal recession. It is a long-term structural problem for which nobody has been able to figure out a realistic cure that doesn’t involve a prolonged period of pain and suffering. Ignoring the problem and mindlessly borrowing more and more money without any attempt to target the spending is not going to fix anything. It will just prolong the problem and make it worse.

    That said, a coworker just jumped ship in order to grab a $210K/yr salary in the IT dept of a local firm. So am I to believe this means he will buy a house north of I-90?

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  75. 75
    tim2 says:

    Re: David @ 65:

    Really don’t disagree with anything you say. But it doesn’t change the fact that the fundamentals have hit their inflection point and the market has changed and we have experienced a bottom to the Seattle housing market.

    All the construction you see is apartments. No new condos or homes. Supply is down. Foreclosures in our area are slowing so that part of the inventory is decreasing. Keep in mind the foreclosures came in waves. First the sub-prime loans exploded in 2007, 2008; then the alt-a loans in 2008, 2009; then the poor guys that got laid off in the recession 2009, 2010. But the stupid loans have worked their way through the system,, and the layoffs have subsided. So now we have job growth in Washington state (demand) and no new housing (supply), therefor bottom, the real bottom. March 2012.

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  76. 76

    I just realized that the graph I posted for the King County Absorption rates was for March, so here is April.

    http://2.bp.blogspot.com/-k8wJ42hUOAU/T6R-SKVlWPI/AAAAAAAABBk/D90XZP9k2Xw/s1600/KIng+County+Distressed+Property+Sales+by+Month+April+2012.png

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  77. 77
    David Losh says:

    RE: tim2 @ 75

    You are making very good points.

    What I see is that the economy has changed, which means the demand has changed.

    I think it will be hard for people to go back to normal, especially with the internet, when we just had a massive global economic correction. It would be hard for some one coming out of school to settle down with a Volvo, two kids, and a house payment. Actually it makes no sense to do that, if you have student loans.

    Then we have this whole idea that Real Estate doesn’t always go up in value. We have yet to even start unwinding that idea. In many parts of the country property prices, today, are extremely high. I was out in Monroe two days ago, and my goodness, why would any one pay those kinds of prices?

    There is just a lot of correction in the housing market to do, and that in turn makes for more volitility in the broader markets.

    Right now, I would invest in other things, like business ventures, before dumping money into Real Estate. I just don’t see the economic sense to buying property.

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  78. 78

    RE: Julie Lyda, RE/MAX Northwest Realtors @ 76 -Very useful graph. What sticks out there for me is that it demonstrates just how bad the banks are at approving short sales. The number approved many of the early months was close to the number approved in some recent months. The banks are not getting better at it, even though they are possibly getting faster.

    For those of you without access to the NWMLS, there are currently over 1800 SFR short sales in King County in some sort of pending status, but the most short sales sold in one month is less than 200. So that’s more than a 9 month supply of pending short sales!

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

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  79. 79
    whatsmyname says:

    RE: Julie Lyda, RE/MAX Northwest Realtors @ 76
    Thanks for posting your chart. I noticed an interesting thing. While the MLS numbers at the top of the page show a sizable increase in both closed sales and sales pendings from April 2011 to April 2012, your numbers show a decline in the number of sales. Can you enlighten me on this?

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  80. 80

    RE: whatsmyname @ 79 – Good catch. I think there was probably an input error on the 1682 figure of non-distressed sales for that month.

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