Posted by: The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

35 responses to “April Reporting Roundup: Tempered Optimism Edition”

  1. whatsmyname

    Yes Aubrey, the mix is important. But REO sales are still much higher than normal. While the changing mix means prices aren’t improving as fast as the numbers might suggest, it is because of the same reason that prices weren’t as bad as those same numbers suggested in the first place.

    The first part isn’t full disclosure, or even honest analysis, without the second part.

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  2. Kary L. Krismer

    RE: whatsmyname @ 1 – Maybe that’s my fault. I didn’t make that second point on the piece Aubrey linked. It’s a point I’ve made here several times, but that other piece was really just a short heads up in the “agent to agent” section of Trulia. It wasn’t really intended for a consumer audience.

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  3. David Losh

    “Seriously, what has gotten into these agents? Now that we may finally actually be at the bottom they’re saying everything but calling the bottom. So weird.”

    Agents are cautious because the market place is completely screwed up. Prices are high, and buyers are entering into multiple offer situations.

    According to everything you’ve written the bottom was in in 2009. What’s making this year any different? REOs?

    I think most people remember we had a massive market correction just a few years ago. Every Presidential election year the economy looks better, but this year is still very volatile.

    Caution should be the tone, because every year since 2008 we have seen the prices go up, only to go down again.

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  4. Kary L. Krismer

    I’m actually very happy with the coverage this month because there are three important messages to get out.

    1. More listings are needed.
    2. The increase in the median is not as great as it first appears.
    3. Listings should not be priced as if the increase were as great as it appears.

    I think it’s that third item which is causing the tone of the articles to be different from “normal.” Real estate agents are already hearing their clients say: “My house went up in value 9% last month, why do you want to reduce the price?” Or on a new listing: “All of your comps are from before April, I want to list for 10% more than you’re suggesting.”

    Stated differently, it’s not just buyers who complaint about unrealistic sellers.

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  5. Kary L. Krismer

    By David Losh @ 3:

    According to everything you’ve written the bottom was in in 2009.

    No Dave. Tim recently mocked Ardell’s bottom call by linking to it in a thread last week.

    You and Ardell are the only people who think 2009 was a bottom.

    Caution should be the tone, because every year since 1908 we have seen the prices go up, only to go down again.

    Fixed your post.

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  6. David Losh

    RE: Kary L. Krismer @ 5

    There is no top or bottom in the Real Estate market.

    I have no idea where that idea of there being a bottom came from, but Ardell ran with it, and it was also in the news paper, so there you have it.

    Tim is using the term, I don’t know why. Ardell’s assertion makes as much sense as today’s assertion, and now we all know that without those REOs prices are rising, so maybe she was right.

    Now you are saying that prices have gone up, and declined since 1908? Really? Help me out with that.

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  7. Kary L. Krismer

    By David Losh @ 6:

    RE: Kary L. Krismer @ 5 – There is no top or bottom in the Real Estate market.

    Wait. I thought you said there was a bottom in 2009 and one today. And now there’s no bottom, ever? That latest position actually makes some sense. You can never buy anything with assurances it will not go down in value.

    Now you are saying that prices have gone up, and declined since 1908? Really? Help me out with that.

    Prices are seasonal. It’s like gasoline. You’ll get a bump in price in the Spring almost every year, and if not in the Spring, at some other point during the year.

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  8. Kary L. Krismer

    By Kary L. Krismer @ 5:

    By David Losh @ 3:
    According to everything you’ve written the bottom was in in 2009.

    No Dave. Tim recently mocked Ardell’s bottom call by linking to it in a thread last week.

    You and Ardell are the only people who think 2009 was a bottom.

    Here’s the post I’m referring to:

    http://seattlebubble.com/blog/2012/04/30/top-floor-unit-at-1521-sells-for-27-off-2009-price/comment-page-1/#comment-165312

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  9. Julie Lyda, RE/MAX Northwest Realtors

    I’m thinking that the comments are all toned down because no one wants to end up on Tim’s Friday Flashback in a few years from now. ;)

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  10. David Losh

    RE: Kary L. Krismer @ 8RE: Kary L. Krismer @ 7

    You, and Tim have linked that post a lot, then go on with the top, and bottom nonsense like it was real.

    My point has always been there is no top, or bottom in the Real Estate market, you either make a good deal, or you don’t. Real Estate is a transaction between two individuals so anything can happen.

    The Case Schiller Index is bogus for the same reason.

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  11. Kary L. Krismer

    RE: David Losh @ 10 – The top pretty much was real, although at some point it may very well be exceeded again. I don’t think either Tim or I have said we’ve seen a bottom. I don’t make calls like that.

    I explain what is happening and why in my opinion it is happening. The future I leave to con-men and fraudsters.

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  12. StillRenting

    RE: Kary L. Krismer @ 4
    We went to an open house in Woodinville in March that has been on the market since January and hasn’t gone pending since, yet just this week they raised their price $16k. It seems to me that if their house were underpriced they would have sold by now. Perhaps they are getting the “feeding frenzy” fever.

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  13. Kary L. Krismer

    RE: StillRenting @ 12 – Could be.

    Although once, in the realm of strange but true, before the peak an agent was running up against a foreclosure sale date. She’d done everything she could to get a buyer, and the only thing she could do (without making it a short sale) was raise the price. That attracted an agent’s attention and she got a buyer!

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  14. David Losh

    RE: Kary L. Krismer @ 11

    because it’s between two individuals you can have some reasonable expectations.

    If Real Estate is an investment, which I think it is, then I have to make decisions about future performance.

    Making predictions is what market places are all about.

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  15. Kary L. Krismer

    RE: David Losh @ 14 – People buying and selling can make whatever predictions they want. That’s up to them. It probably shouldn’t be their primary consideration, at least in the context of owner-occupied.

    Agents making a bottom call to get buyers, or turning bearish to compel sales, is an entirely different matter. As I’ve said in the past, I’d like to see agents making predictions of the future be a licensing violation, or at least an ethical violation for those of us who are Realtors.

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  16. deejayoh

    RE: David Losh @ 14RE: David Losh @ 10RE: David Losh @ 6RE: David Losh @ 3 – Your continual prattling on about there not being market tops and market bottoms is inane. Perhaps a definition of a market bottom that the rest of the world accepts would be useful for you:

    Definition of ‘Bottom’
    The lowest point or price reached by a financial security, commodity, index or economic cycle in a given time period. A specific time span is usually used to determine a bottom – most commonly, 52 weeks – but that timeframe could stretch over years, or remain intraday.

    So for real estate, it’s pretty well accepted by the rest of us that the “cycle” is longer than a year and as Kary points out, we clearly saw a top to this cycle. Your constant reference to the seasonal cycle as if it provides the only reference point for the top and bottom just makes you look more obtuse than usual..

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  17. Kary L. Krismer

    By deejayoh @ 15:

    Sky is green because David Losh says so?

    You need to pay better attention. Losh will say the sky is green because Ardell says so. ;-)

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  18. David Losh

    RE: deejayoh @ 16

    I don’t see Real Estate in your definition here:

    52 weeks doesn’t make for an estate, or account for Real Estate as a part of an over all portfolio.

    Let me get the next definition out for you:

    ob·tuse/əbˈt(y)o͞os/

    Adjective:

    1.Annoyingly insensitive or slow to understand.
    2.Difficult to understand.

    The fact is that property has gone through a ton of changes in the past ten years. Every time I turn around there is some other big plan the government has, or the stock market has, or the global market place has.

    So looking at charts, and graphs is a diversion. You want it to be simple, but it isn’t. You want it to be ETrade, but it isn’t.

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  19. David Losh

    RE: Kary L. Krismer @ 17

    Quippy!

    I was as horrified as any one when I first found Ardell’s posts, and began asking around if she was for real. I couldn’t understand it, because she was so off the wall. Over time I discovered she was actually talking to an audience that appreciated her insights.

    Ardell has insights into the business of Real Estate. She puts those out there every day, good, bad or indifferent.

    She has given you good, solid information about Real Estate matters which you continually argue about for no reason, and no response.

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  20. Ira Sacharoff

    RE: Kary L. Krismer @ 15
    I disagree with you here, Kary.
    If someone buys a house because the real estate agent predicted that prices were going to skyrocket, doesn’t the buyer have some responsibility in putting stock in what a commissioned salesperson has to stay?
    I make predictions all the time, and I have clients ask me what I think will happen in the future. I tell them what I think will happen. My opinion is never based on whether I will potentially profit from my advice. In fact, five years ago I was telling clients that it was a very risky time to be buying a house and that it seemed very likely to me that we would see substantial price declines, that waiting it out while renting wasn’t a bad idea. But you would prefer that agents were more like trained monkeys, only able to fill out forms? I represent home buyers, but even though today’s prices and low interest rates make buying a house look alluring, the selection of homes currently available for sale is terrible. The nice stuff gets multiple bids, and I’m doing a lot of work with zero compensation. I predict that that the inventory of homes for sale is going to increase and the selection will improve. I further predict that Kary will continue to not make predictions, and he will continue to believe that agents who do make predictions should either be fined, penalized, or executed.

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  21. Kary L. Krismer

    By David Losh @ 19:

    RE: Kary L. Krismer @ 17 – I was as horrified as any one when I first found Ardell’s posts, and began asking around if she was for real. I couldn’t understand it, because she was so off the wall. Over time I discovered she was actually talking to an audience that appreciated her insights.

    I agree, but that’s largely because they’re being mislead due to her convincing style of writing. Just a few examples:

    She thinks a client should get their earnest money back just because their agent gives a Form 35R to escrow. That is clearly wrong, for a number of reasons. At that Core class I keep mentioning, the speaker mentioned that if the selling broker is holding the earnest money they would have better control over the return of the earnest money. That’s perhaps the lesson Ardell should be teaching, but instead she’s passing out incorrect information. That means her clients don’t realize the risk they are taking whenever they deposit earnest money.

    On the “Arm’s Length Notice” the agents are sometimes required to sign on short sales, she thought that signing the form required the agent to spy on their own client and consent to the other agent spying on their client. The fact that no other agent (or attorney) in another forum agreed with only got her to write a blog piece about how right she was!

    http://raincityguide.com/2011/01/20/short-sales-the-new-mortgage-fraud/

    In that piece she says: “I appear to be the ONLY person in almost 200 comments, most all from agents, who thinks the agent is supposed to check that the seller has moved out on the day of closing,. . . ” (Original emphasis.)

    That of course doesn’t give her a clue that she is wrong because she then asks: “So you tell me…Am I RIGHT or am I RIGHT?” Original emphasis.

    I will point out that if you read her words right under quoting the contract language at issue, it’s clear she doesn’t even know how to read English. But she thinks she can explain contract language to clients!

    Finally, years ago she was arguing that a seller shouldn’t have to disclose that their listing is a short sale! That’s clearly wrong because the seller not being able to sell the property is a material fact which needs to be disclosed. Of course her position on that had absolutely nothing to do with the fact that at the time she was trying to sell short a property she owned. /sarc

    Having a convincing writing style doesn’t mean you know what you are talking about.

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  22. Dweezil

    Rising prices by itself would get agents excited, but with so few potential transactions(inventory), its not surprising that agents aren’t popping open the bubbly yet.

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  23. Kary L. Krismer

    RE: Dweezil @ 22 – Volume matters more to agents. Higher prices mainly help in that it would mean fewer short sales, and that would lead to higher volume.

    The question I’ve been having is would this report of higher prices get more buyers into the market or out of it? Will they think they don’t want to be involved with it, or will they thing they better jump in before prices go even higher? I don’t know what the net effect will be.

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  24. deejayoh

    By David Losh @ 18:

    RE: deejayoh @ 16

    I don’t see Real Estate in your definition here:

    52 weeks doesn’t make for an estate, or account for Real Estate as a part of an over all portfolio.

    Let me get the next definition out for you:

    ob·tuse/�b�t(y)o�os/

    Adjective:

    1.Annoyingly insensitive or slow to understand.
    2.Difficult to understand.

    The fact is that property has gone through a ton of changes in the past ten years. Every time I turn around there is some other big plan the government has, or the stock market has, or the global market place has.

    So looking at charts, and graphs is a diversion. You want it to be simple, but it isn’t. You want it to be ETrade, but it isn’t.

    So you proved that I know EXACTLY what “obtuse” means. I am pretty sure your picture is next to it in the dictionary

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  25. Ira Sacharoff

    By Kary L. Krismer @ 23:

    RE: Dweezil @ 22 – Volume matters more to agents. Higher prices mainly help in that it would mean fewer short sales, and that would lead to higher volume.

    The question I’ve been having is would this report of higher prices get more buyers into the market or out of it? Will they think they don’t want to be involved with it, or will they thing they better jump in before prices go even higher? I don’t know what the net effect will be.

    You don’t know, but you have an idea, don’t you? What do you predict?:)

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  26. Kary L. Krismer

    RE: Ira Sacharoff @ 25 – LOL. Really I don’t know. Higher prices should discourage buyers (basic supply and demand theory), but there’s also the herd mentality and the fact that falling prices were keeping people from wanting to buy. Shouldn’t rising price make those people want to buy?

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  27. MM

    well, over the last few weeks i did a very non standard statistic. i listed the new homes on the market only for the last two weeks and than i listed the homes that go pending for the same period. surprise-surprise. week to week or day to day, the number of new homes is aprox the same or increasing but the number of homes going pending is decreasing significantly. i know that there are a lot of homes pending(subject to lander approval) but at the current pace, in two three months the inventory will increase significantly. add to that the new elections in france, greece, the fact that those countries live and understand life at a different level that us, the fact that those france people will chose people over banks, the bank scare that such a choice will trigger in us.
    you will have very different market conditions in the summer months. not to mention about the reality setting in again, people realizing that those new great jobs are for flipping burgers, and that actually nobody really hires for the good paying jobs. and i know that there are a few companies that hire for good jobs and through the back door they lay off people that were doing the same jobs but were too expensive, but that is still a minus overall.

    but a herd is just a herd…

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  28. Scotsman

    Rain is killing the market. Once the sun comes out it will be a buying/selling frenzy. Ardell will be moving her bottom like never before. Ray will be tripping over GEMS. Ira will be selling to his loyal customer base. David will be cleaning and prepping. Kary will still be sitting at his keyboard.

    You gotta move it move it!

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  29. Scotsman

    RE: MM @ 27

    Come November Obama will be moving us “Forward!” Wait for it. ;-)

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  30. David Losh

    RE: deejayoh @ 24

    I understand that like many on this site, you want to believe that the Real Estate market, or financial markets, will stabilize, and the world will go on like normal.

    It won’t, and every day here more people bring up excellent reasons why it won’t. That’s why I read the blog.

    The guy who just sold me a new pair of shoes is a big time Real Estate agent who also realizes that the Real Estate market is completely screwed up.

    So you are right, I’m presenting a market place that is
    1.Annoyingly insensitive or slow to understand.
    2.Difficult to understand.

    Many things have happened in the past four years that I could have never imagined, like the tax credit, low interest rates, or a feeding frenzy report every year.

    What I know is very simple. Buy at levels before 2003, and maybe back to 1998, depending on what data you believe. Make your purchase knowing that, and pay the house off, quickly. The bank is the enemy, and more evil than ever.

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  31. deejayoh

    RE: David Losh @ 30 – Market advice from the guy who was still trying to flip houses in 2008.

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  32. Kary L. Krismer

    RE: deejayoh @ 31 – There was a house bought in my neighborhood at the very end of December, 2007 which was flipped for almost a $200,000 profit ($320,000 to $518,000), ignoring the costs of fixing it up, costs of sale, etc. Since they only held it about six months, I assume there was a net profit after accounting for the costs.

    So flippers who knew what they were doing were still able to flip properties at that time.

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  33. David Losh

    RE: deejayoh @ 31

    My last property sold July 2007, and that was with a partner who refused to sell earlier.

    BTW, I never flipped houses. The properties we sold were a part of my portfolio. The stucco house that I use for advertising we tore completely apart because no one would buy it in it’s condition.

    We’ve torn apart, and put back together a great number of properties for myself, and others because I can.

    Most of the time I would buy houses to sell. At the end, when I saw there was nothing more to get out of the properties I had, we did what we had to to get them sold.

    There was the stucco house, the one that was rat infested, it was my first listing back in 1984, and the little house in Greenwood that needed extensive work.

    Now as I said earlier, I could have rented them out, refinanced, and improved my cash flow, but I figured why would I. It would be reaffirming debt that I don’t think will give me any real equity position.

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  34. Jonness

    Seriously, what has gotten into these agents? Now that we may finally actually be at the bottom they’re saying everything but calling the bottom. So weird.

    They all saw Paul Krugman on CNN yesterday arguing we are in the midst of a depression. This came 15 minutes after Ken Rogoff pointed it will take years before people can deleverage their debt and start spending again. And of course, this came right after the horrifying April jobs numbers were discussed.

    Ideas that were considered “crackpot” just a few years ago have now fully integrated into the mainstream.

    Interestingly, the idea that concerns most economists is the massive fiscal cliff we are slated to fall off of in 2013. As for me, I’m not really worrying about it. Politicians can always figure out a way to spend more money, and 2013 will be no exception. I’m more concerned about the long term consequences of continuing to borrow more each year than people actually pay in Federal income taxes.

    Local house prices have no immunity to market forces of supply/demand. We are currently getting some upward pressure on prices due to crappy supply. There is also some reality in the upward prices, as the 0-interest rate policy is having some effect and consumer confidence has increased. This was pointed out in the housing data a few months ago by a company that tracks real-time data as opposed to the CS lag.

    I’ve stated for some time, the economy will continue to be volatile and swing through periods of strength and weakness. IMO, this is not the bottom of prices, but even if it were, it would still make sense to save a 20% downpayment in this environment.

    Certainly, our government will attempt to print out of this mess. If they succeed, then we will have horrible inflation in a few years, and a decade of time will make current house prices a memory. But, that is only one possible outcome and should not be counted upon.

    Money is extraordinarily cheap right now, but the temptation to borrow must be balanced with an understanding of consumer debt levels over the last 30 years.

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  35. John Bailo

    So the game is they will “trickle” quality homes out into the market, and parched buyers with cash, tired of seeing ramshackle, moss covered huts will snatch up these “bargains” with aplomb.

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