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.

64 responses to “Quick Look at April Supply & Demand”

  1. Kary L. Krismer

    Back out short sales and those numbers look even worse! (For buyers.)

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  2. Blue Fern

    Although the ratio of listings to houses sold is skewed, looking at the timeline with some optimism it looks like we are do for a jump in the ratio soon within the next couple of years. I would say the buyers market will not last long from the trend we have seen over the past decade.

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  3. yosef

    A gut observation – just monitoring listings, don’t have metrics to support it, but I think inventory could catch up soon. Seems like many more homes coming on the market now on the eastside as news is getting out that it’s a good time to sell. Could cool down the market.

    But really, does anyone know what will happen next, no.

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  4. David Losh

    This was in my e-mails today from Trulia:

    http://pro.truliablog.com/industry-2/rising-home-prices-coming-to-a-market-near-you-2/?ecampaign=anews&eurl=pro.truliablog.com%2Findustry-2%2Frising-home-prices-coming-to-a-market-near-you-2%2F

    We have rising home prices, and rents!!!!

    I understand there are a lot of people who want to buy. What I don’t see is a reason to sell.

    What’s the motivation to sell unless you are underwater, and want out of a mortgage. What’s the motivation to sell unless you have a mill stone?

    What are you going to do with the money? up size? down size? and for what? Where is the equity position or improvement in quality of life?

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  5. whatsmyname

    “Prices in most places are better for buyers today than they were a year ago,”
    Really? Based on what? Otherwise, Bravo.

    For those who are disappointed with the MLS numbers, I have a simple solution. Switch your attention to the Altos research numbers in the sidebar. By their measure, inventory has gone steadily up (over 1,100 since January), and the May median is still below $340,000. Yay, buyers are on top again.

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  6. David Losh

    and the rumor mill continues:

    “NEW YORK — Home prices rose in March for the first time since last July, helped by tighter housing inventory, data analysis firm CoreLogic said on Tuesday.

    CoreLogic’s home price index gained 0.6 percent from February, but was still down 0.6 percent compared with March a year ago.

    Excluding sales of distressed properties, prices climbed 0.9 percent on a yearly basis. Homeowners in danger of foreclosure, or in “distress”, often sell their homes at significantly reduced prices.

    “This spring, the housing market is responding to an improving balance between real estate supply and demand, which is causing stabilization in house prices”, Mark Fleming, chief economist at CoreLogic, said in a statement.”

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  7. Scotsman

    New inventory showing up out in the sticks. Some of it is the same stuff that shows up every year, chasing the market down. (shoulda taken that $40K hit a couple of years back- would be $100K+ ahead). Based on past closed sales I’d say pricing is optimistic. Still thinking of looking for rentals. This isn’t the time or place.

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  8. Scotsman

    RE: Blue Fern @ 2

    It’s pretty dangerous trying to drive by looking only in the rear view mirror. Especially when you’ve had a “little optimism” to drink.

    Sell, sell, sell!

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  9. Chuck C

    By David Losh @ 4:

    What’s the motivation to sell unless you are underwater, and want out of a mortgage. What’s the motivation to sell unless you have a mill stone?

    What are you going to do with the money? up size? down size? and for what? Where is the equity position or improvement in quality of life?

    The motiviation for some is to upsize. For example, if prices cratered so that my current house was worth 100 bucks, then I could get a pretty sweet new place for 500 bucks assuming all properties declined equally. If I keep a large portion of my spare change in cash that survived the armageddon, then I’d be looking good. That would assume I needed the 100 bucks in order to make the deal close of course. It would also assume that I wanted to cut my losses and had no real hope of recovery in pricing for my current house. Obviously we’d have much bigger problems if that ACTUALLY happened (and as long as the printing presses work it never will)……

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  10. Yerbolat

    What I never understood is the use of median for home prices trends. What if all crappy houses had been sold before this year and now good houses are selling? Does it mean that the same crappy house that sold in 2009 for $100k will be selling for $105k or more now???

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  11. Jonness

    Even massive printing is not bringing back the market. So now we are in a race between Fed printing bringing back the market, and the government stimulus running out at the end of the year. But for now, we are seeing some signs of life, as sales are up a bit from the lowest lows.

    We are still stuck in a liquidity trap where the Fed has lowered rates to zero, and the market still didn’t resuscitate (people either can’t or chose not to borrow the money), so the Fed had to resort to buying 61% of the government’s debt in order to force treasuries lower so that people would choose to borrow the cheap money and spend it. This, of course, is likened to printing money from thin air, and is typically highly inflationary. However, when the economy is in the toilet, nobody has any money to spend anyways, so the flood of new money in the economy does not compete for houses and drive up their prices. However it has put a floor under prices. The question is, can the Fed and government keep up this rate of stimulus long enough to maintain this floor?

    The latest round of Fed stimulus ends in June, and a large amount of government stimulus is set to expire at the end of the year. So expect the economy to look bad enough in the future for more stimulus programs to be announced.

    Meanwhile, the banks continue to tighten their lending standards:

    http://www.myequitypro.com/2012/05/01/federal-reserve-loan-officer-survey-q1-2012/

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  12. softwarengineer

    A Lion Share of Seattle Home Owners

    Are locked in and can’t afford to sell and this is what happens.

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  13. David Losh

    RE: Yerbolat @ 10

    What I see is an increase in homes selling in the $500K range. People are talking about the sweet deal they got for $650K. I was in a listing yesterday that the people are selling for $100K less then they paid in 2009, that will sell.

    I think a lot of those places that looked way over priced a few years ago are coming into what Tim calls affordablity, and that is what skewes the median.

    Also the lower tier tanked first when investors dumped lower quality properties in favor of buying better properties for a little more.

    Flipping doesn’t always involve fixing, most of the time it’s just buying right, and selling well.

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  14. Scotsman

    RE: Jonness @ 11

    I’m sure you read this guy, either on his site or Zero Hedge:

    “What policy makers and pundits dare not admit is that the global economy is entering the “end of paid work” foreseen by Jeremy Rifkin. I have covered this topic in depth many times, starting with End of Work, End of Affluence (December 5, 2008).

    The industries that are rapidly increasing productivity and profits are doing so by eliminating jobs and the need for labor. The Web is chewing up industry after industry, wiping out entire sectors that once supported hundreds of thousands of jobs while creating a few thousand new jobs that require high-level skills and mobility.

    Robotics are replacing factory labor throughout the world–yes, even in “low-wage” China.

    http://www.oftwominds.com/blogmay12/labor-paid-work5-12.html

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  15. Kary L. Krismer

    RE: Scotsman @ 14 – I think that’s an argument which as been made for 100 years. What it really does is allow humans to do more productive things.

    I remember about 10 years ago down in Cabo while we ate dinner I was watching someone dealing with the day’s receipts. The were working on that for our entire dinner, and perhaps a lot longer. In the United States, no one would be doing that because it would all be computerized. Similarly, it wasn’t until maybe 5 years ago they they had a concrete pumper truck down there. People would carry buckets of concrete up to the level needed.

    Do those people displaced remain unemployed forever? No. They find other things to do, increasing the size of the community pie which can be split.

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  16. Serafina

    There’s been a lot of discussion on the blog about the buyer’s side — how it might be good to wait until fall, how there are bidding wars, etc. What about the seller’s? We are getting ready to sell (Why? We bought in ’99; we’ve got lots of equity; we want to get rid of the expense and responsibility of homeownership and live in a condo, which we’ve already purchased.)

    So for those sellers who do have their houses on the market, what are the current challenges?

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  17. Scotsman

    RE: Kary L. Krismer @ 15

    “Do those people displaced remain unemployed forever”

    Starting to look like it. We have arrived at that point where jobs eliminated by technology are not being replaced by new jobs and growth, at least here in the U.S.. You can argue cliches or look at 23 years of data:

    http://market-ticker.org/cgi-ticker/akcs-www?get_gallerynr=3027

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  18. Kary L. Krismer

    RE: Serafina @ 16 – For sellers the main challenges are what they always are. Getting the property ready, not pricing too high, and messy neighbors.

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  19. David Losh

    RE: Serafina @ 16

    Excellent profile, and the one that I see all the time now. Those condos on South Lake Union look attractive to me. When our kids go to college we will sell, and never look back.

    My son, who I’ve tried to get interested in the Real Estate business, asks why, when I can have a stock portfolio without the head ache.

    Your challenge is to create the desire for your life style. You’ll see a lot of staging with kids in mind, even if yours are gone. You’re going to want to be distinctive without being gaudy.

    Calm all fears that you can, what you can’t calm be sure to disclose. We are again in a time when some sellers are trying to skate past the inspections because of low inventory. Buyer’s today are much more savvy.

    Buyers will look at everything so be objective when you look at your home.

    The biggest challenge today is to be the home every one wants to have, so look at your neighborhood, and get familiar with your competition, be the best house on the market.

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  20. David Losh

    RE: Kary L. Krismer @ 15

    This really made me laugh, because it is so untrue.

    Those people who are displaced stay displaced. In Cabo the investors take all of the pie. Workers are now more mobile to take advantage of other construction job opportunities which is another blow to the family culture.

    If you think things in Mexico are getting better economically you need to read the headlines, rather than the business section. Drug trade is up, with the number of people willing to kill to stay on top increasing.

    There is a very definite class struggle in Mexico where the rich are getting much richer, and the poor much more desperate.

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  21. Kary L. Krismer

    By David Losh @ 20:

    RE: Kary L. Krismer @ 15

    This really made me laugh, because it is so untrue.

    Those people who are displaced stay displaced. In Cabo the investors take all of the pie. Workers are now more mobile to take advantage of other construction job opportunities which is another blow to the family culture.

    If you think things in Mexico are getting better economically you need to read the headlines, rather than the business section. Drug trade is up, with the number of people willing to kill to stay on top increasing.

    I wasn’t addressing whether things were getting better or worse in Mexico. I was addressing how work was done down there compared to up here.

    We don’t have a lot of people out of work because they previously used to tally the day’s receipts. That type of work moved on a long time ago, and those workers adjusted into new work. We haven’t have people out of work because they previously carried buckets of concrete around construction projects. They moved on many decades ago.

    The same could be said of higher wages caused by union activity. That resulted in more automation and equipment, reducing the number of hours of employee time needed. Again those employees have now adjusted.

    Yes the transition is hard for those affected while they are transitioning. And some of them might not ever get as good of a job, while others will get better jobs. But the point is these types of transitions mean greater and greater GDP because machines take over the work of humans and humans move on to other things.

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  22. One Eyed Man

    RE: Scotsman @ 17

    If you’ve got a 23 yr (or preferably longer) chart, I’d like to see it cause, to paraphrase a cliche, Denninger’s chart appears to be about 10 yrs short of the 2nd decade. John Henry was a steel drive’n man 150 yrs ago until the steam hammer took his job. Agriculture used to employ something like 90 percent of all US citizens at the time of the revolution. Somehow, over time the magic of social darwinism (American capitalism) seemed to find ways to profitably employ most of the displaced population. I think its likely that some entrepreneurs can find ways to employ people currently being displaced. But its also probably true that new skills will be required and those without skills will be competing with low priced machines and low paid emerging market populations for low wage semi-skilled and un-skilled positions.

    According to Denningers chart the majority of the jump in lost employment was after the collapse of debt funded demand (as opposed to production or wage funded demand) in the economy. Some of the demand for construction, and other goods and services, will slowly come back as the excess inventory of debt funded overbuilding is slowly absorbed, and fear is replaced by investment. The level of employment likely won’t be at bubble levels because by definition a bubble is unsupported froth, but it will likely return more closely to the historic mean as we move back up the sine wave in the boom bust cycle (if not equilibrium).

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  23. David Losh

    RE: Scotsman @ 14

    I don’t pay attention to of two minds much, but this article is exactly on target.

    We won’t employ our way out of this recession either. Way too many things have become production systems that can be tweaked to cost less, construction is at the top of my list.

    I was looking at an apartment project a couple of days ago, and truck loads of preassembled wall units came along with the truss packages. The workers assembled the pieces with nail guns, and were done in a few hours.

    Just as another comment on that subject, I heard this weird, but familiar noise coming from a custom home being built. I couldn’t place the noise until I went next door and saw three guys building the place using hammers. You just don’t hear the sound of hammers any more.

    Construction is one of those labor jobs. I don’t know what it would be like for people sitting in offices. We must be losing jobs like crazy.

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  24. Kary L. Krismer

    RE: David Losh @ 23 – You’re completely ignoring the increase in efficiency which is occurring. That benefits society because there is more stuff and fewer shortages.

    If the goal is to have 100% employment without any regard to what the work is, the government could start handing out packets of gum and turn everyone into a gum salesperson. That is not the goal. The goal is to have as many people working as possible in a manner where they are the most productive.

    Look at farming. 100 years ago something like 90% of the population worked on farms to create our food supply. Now that’s probably something like 5%. We still have the food, but the other 85% of the population has moved on to making other things that we all use and benefit from. But you seem to want us to go back to horse drawn plows, so that there will be more people employed in farming.

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  25. David Losh

    RE: Kary L. Krismer @ 21

    The next time you are in Cabo, you should get out to the village, drive a little bit.

    The GDP is nothing to the people who work for a living. They’ll tell you the stories about being displaced decades ago, and never being able to recover. That’s why they are here in the United States, sending billions of dollars home, to families, in Mexico.

    They do the same work here, as they did there, but for more dollars. They still carry cement, because some times that’s the only way to do the job.

    Drive by any Home Depot.

    What has happened in Mexico is a microcosm of the world we live in today. Just because you are a rich American doesn’t mean the world can live by your standards.

    You don’t carry cement, great, good for you, millions of people still do.

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  26. David Losh

    RE: Kary L. Krismer @ 24

    What other work did they go onto?

    Ole’ one eye has already made the point.

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  27. wreckingbull

    RE: Serafina @ 16 – Price it right, and have it in presentable condition. I don’t think you need to worry about ‘creating a lifestyle’ or anything like that. Whenever I tour a home where that type of thing is going on, I just smell desperation. Today’s buyer knows what they want.

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  28. Kary L. Krismer

    By David Losh @ 25:

    RE: Kary L. Krismer @ 21

    The next time you are in Cabo, you should get out to the village, drive a little bit.

    The GDP is nothing to the people who work for a living. They’ll tell you the stories about being displaced decades ago, and never being able to recover. That’s why they are here in the United States, sending billions of dollars home, to families, in Mexico.

    They do the same work here, as they did there, but for more dollars. They still carry cement, because some times that’s the only way to do the job.

    You’re still failing to understand. The conditions you’re complaining about up here, if they did not exist up here, would leave us with an economy like in Mexico. If 10 years ago Cabo did not have a concrete pumper truck in a city doing a lot of construction, then rather obviously they don’t have a very vibrant economy!

    I’m not advocating what they do in Mexico as being a guide for what we should do. I’m showing how our economy is more advanced than theirs, and has been for over 100 years.

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  29. Kary L. Krismer

    By wreckingbull @ 27:

    RE: Serafina @ 16 – Price it right, and have it in presentable condition. I don’t think you need to worry about ‘creating a lifestyle’ or anything like that. Whenever I tour a home where that type of thing is going on, I just smell desperation. Today’s buyer knows what they want.

    Of course, some houses might be very interesting if they did something to “create a lifestyle!”

    http://bottomline.msnbc.msn.com/_news/2012/05/09/11618546-for-sale-infamous-home-where-deep-throat-was-filmed?lite

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  30. Kary L. Krismer

    By David Losh @ 26:

    RE: Kary L. Krismer @ 24

    What other work did they go onto?

    Ole’ one eye has already made the point.

    What other work did the farmers go into? Are you kidding me? Have you not heard of factories? How about office buildings? The work that the 85% went into are almost all of the jobs that exist today that are not farm jobs.

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  31. Julie Lyda, RE/MAX Northwest Realtors

    I’ve prepared a graph that shows new listings vs. new pendings along side with total active inventory for King County.

    Currently new pendings have been outpacing new listings for the last 7 months in a row, while inventory continues to go down. I don’t think I’ve seen this before. I’ll have to check this out. (I can only go back 13 years in the records)

    http://1.bp.blogspot.com/-lR3xw91W-7E/T6q7iWqqFzI/AAAAAAAABCU/LgfBv4kjziE/s1600/King+County+New+Listings+vs+New+Pendings+2009+-+April+2012.png

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  32. Scotsman

    RE: One Eyed Man @ 22

    OK, I didn’t have my glasses on and grabbed the wrong chart. Here ya go, all the way back to 1960 or so, three charts that tell the whole story:

    http://www.calculatedriskblog.com/2009/09/employment-population-ratio-part-time.html

    Looks like we’re back to about 1980 in terms of the percentage of population employed while the average number of hours worked is at an all time low and the percentage of part time workers is at an all time high. That makes it more difficult to collect the taxes we need to support the runaway great society. Hence, pffffft is nervous.

    Like you, I’m positive these changes have happened because EVERYBODY has soooo much money they don’t need to work like they used to. Or want to. Probably an unintended consequence of the ever rising real wages they are getting. (Didn’t someone get a curve named after them for this effect?) /sarc off

    Sure, the rising participation rate was women entering the work force, yes, that also killed wages, blah, blah, blah, but the reality of the last couple decades is that technology hasn’t really led to a surge in new higher paying jobs for the majority- just a special few. Thank gawd many of them live in Seattle and support pink pony home prices.

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  33. Kary L. Krismer

    RE: Scotsman @ 32 – That chart is much better, but shows that recession is what kills off the ratio. Note that the chart you just posted ends in 2010.

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  34. Scotsman

    RE: Kary L. Krismer @ 33

    ” Note that the chart you just posted ends in 2010″

    A good trick, considering the post was written in Sept. 2009. Thank gawd we have KD’s chart in my original post to bring us up to speed on the continuing decay.

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  35. ChrisM

    RE: Scotsman @ 32 – That chart displays one of my major math/statistics pet peeves: starting the y-axis at something other than zero.

    His graph looks dramatic, until you realize the y-axis is grossly distorting changes.

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  36. Scotsman

    RE: ChrisM @ 35

    ” the y-axis is grossly distorting changes”

    Really? I suppose you have a point if you want to stress the 55% that are always in the market, but for most the important data is the decades long trtend from 55% to 65% and then back down. Sometimes seemingly small changes are as or more important than the large denominator/base they occur over. At other times you may have a point.

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  37. Sweet Pea

    When Facebook is the biggest new deal we have going in the U.S., I fear we are in trouble.

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  38. One Eyed Man

    RE: Scotsman @ 32

    As always, good comment regardless of whether I agree or disagree with the conclusions. It provided statistical information and analysis that both peaked my curiosity and required me to think about the issues from a variety of perspectives. Thanks for taking the time to expand my intellectual horizons (and I assume most everyone else’s too).

    When I read your comment, I wasn’t sure if your reference to a “curve” was to the Laugher Curve or the Phillips Curve (relationship of employment ot inflation) as both seemed to have some relevance and I had to look up the Phillips Curve to be sure I remembered it correctly. I tend to believe in both curves as general rules which like all general rules are subject to exceptions. My disagreement with most people in discussions involving the Laugher Curve is about whether anyone can know the shape of the curve and where the apex is, not whether the existence of such a Curve is a reasonable theory.

    My thoughts on the Phillips Curve are too long, too boring and too far off topic to explain in detail in this forum. But I tend to believe that in an economy based upon capital formation, specialization and exchange which uses debt as currency to facilitate the exchange of goods and services, at least a minimum level of inflation is necessary to motivate capital investment, promote high levels of production and employment, and keep the shark moving forward.

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  39. corndogs

    RE: Scotsman @ 17

    Go learn calculus. I’m a design engineer, been working 65 hours a week for the last 5.5 years…

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  40. David Losh

    RE: wreckingbull @ 27

    No one needs to buy today. No one needs to buy a big old family home, if it is a big old home. You need to create that desire, while you calm fears, more so today than I have ever seen before.

    There are a lot of properties sitting, not just because of price, but buyers can afford to be choosy.

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  41. David Losh

    RE: Kary L. Krismer @ 28

    I do understand completely that those same people cross the border to find work, because Americans, are you ready for it? claimed a huge piece of Real Estate, paid nothing for it, and began exploiting the natural resources for huge profits, for doing absolutely nothing.

    Once they had the profits, they began lending money, and created an industry that is unstoppable.

    In the mean time, those who work for a living are still working.

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  42. One Eyed Man

    A couple of years ago, some people differentiated the distressed sale market from the non-distressed sale market for a couple of primary reasons related to home condition, time to complete the transaction, and other transaction risks. I theoretically agreed with that analysis and also think another theoretical factor is at play to generally differentiate the distressed sale market from the non-distressed market. Distressed sale supply is inelastic whereas non-distressed supply is elastic. This is part of the theoretical reason why price has decreased with decreasing supply. I believe Kary has been alluding to this (if not stating it directly) for months based upon the stats that he tracks.

    Some people think that banks put more or less distressed sales on the market depending upon price. I don’t (please note that I have no statistical or qualitative evidence for this and its purely my theoretical opinion on how banks work). I think that the inventory supplied by banks is currently controlled by other factors and is generally inelastic as long as the banks have the profits to absorb the losses. If one believes the financial filings, the banks are making money and can absorb the losses being incurred at the current rate of supply. If the above is correct, IMO the loss mitigation departments will continue to be in liquidation mode and the quantity they will supply will be generally inelastic with regard to price. That doesn’t mean that banks won’t try to negotiate price. It means their decision to market additional distressed inventory generally won’t be affected by price.

    The result has been that demand has in the last few years, and will for the indeterminant future, gobble up low priced distressed homes in a market where the inelastic supply of REO’s is influenced more other factors than by price. Yes, its true, I have a keen sense for the obvious. But then again a lot of people thought the emperors suit looked great too.

    I also believe that supply of non-distressed inventory is elastic (as price decreases, the supply decreases). Certainly some people are forced to sell regardless of price for various reasons, but most peoples decision whether or not to sell will be directly related to the level of price they receive in a non-distressed sale.

    Assuming the above assumptions are correct, demand will buy distressed inventory at lower prices while elastic non-distressed inventory stays off the market or fails to come down to the price necessary to sell. That appears to be exactly what has happened and what continues to happen. The result is that less and less non-distressed inventory is on the market while the amount of non-distressed inventory on the market is a function of factors generally unrelated to the sale price of houses in the current real estate market.

    I think Kary has been describing at least the statistical reflection of this market bifurcation for months and many have dismissed him as some sort of non-distressed price promoter. But the market bifurcation he descibed now seems to bre recognized in most analytical market commentary, as opposed to brokerage industry promotional fluff.

    In addition to the new listing vs new pending data that she mentions in her comment above, I think Julie Lyda also has stats and charts related to the absorption rate for distressed properties which I haven’t looked at but which I find theoretically intriguing.

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  43. David Losh

    RE: Scotsman @ 32

    What happened to Mister Green Shoots today?

    You were so positive for so long that I thought it would never end, now this.

    You’ve made an excellent point, but look at the chart again. We will bounce back.

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  44. S-crow

    RE: One Eyed Man @ 41 – FWIW with both personal transactions and in the escrow business side, banks/lenders are making some of the most stupid financial decisions I’ve ever seen. REO’s selling for, in some cases, jaw dropping sums less than what was initially offered–sometimes months and years later. Bank of America takes the cake. Bank of America is, IMHO, the most dysfunctional banking organization on the planet for lots of different reasons.

    Edit/Add on: people have no idea why their loans (both purchase money or refinance) originating with their beloved banks take so long to close…come play in my escrow sandbox and you’ll find out real quickly why.

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  45. Kary L. Krismer

    By S-crow @ 44:

    Bank of America is, IMHO, the most dysfunctional banking organization on the planet for lots of different reasons.

    Yes they are. And they have been going back to their SeaFirst days, so maybe it’s just a local thing.

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  46. deejayoh

    By Sweet Pea @ 37:

    When Facebook is the biggest new deal we have going in the U.S., I fear we are in trouble.

    900M users in the space of a few years and >20% of time spent on the internet. I think you can relax

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  47. Macro Investor

    By Kary L. Krismer @ 45:

    By S-crow @ 44:
    Bank of America is, IMHO, the most dysfunctional banking organization on the planet for lots of different reasons.

    Yes they are. And they have been going back to their SeaFirst days, so maybe it’s just a local thing.

    I’ve worked at banks in Seattle and in other states. Thanks goodness I no longer do. Dysfunctional is an understatement. More like non functional. Quite a few of the employees had mental issues… an inability to communicate with others, uncontrolled anger and even some obvious fetishes displayed in public. No unions, yet they never did any work and were not fired.

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  48. David Losh

    RE: Macro Investor @ 47RE: Kary L. Krismer @ 45RE: S-crow @ 44RE: One Eyed Man @ 42

    Banks are writing off paper losses against profits they are declaring this year.

    It amazes me that every one forgets that banks made the loans, and sold the loans to the secondary market. The sales they make on the property are like free money to them.

    Banks are the largest service sector for jobs. Banks provide jobs, and have huge political clout because of that. Profit, and loss decisions are made by the guys at the top with computer generated data.

    The problem with distinguishing distressed property sales from non distressed is that the market is the market. There are good deals in both segments. Every one was selling off crap last year, it just so happened that short sales, and REOs were 25% to 30% of the market.

    You can not be myoptic when you look at the Real Estate market place. You have to look at a lot more than sales charts, and graphs. That’s why Case Schiller is just sales hype, and nothing more. I think even Schiller would admit that.

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  49. Sweet Pea

    By deejayoh @ 46:

    By Sweet Pea @ 37:
    When Facebook is the biggest new deal we have going in the U.S., I fear we are in trouble.

    900M users in the space of a few years and >20% of time spent on the internet. I think you can relax

    Yes, humans have found yet another way to waste time and beg for attention.

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  50. deejayoh

    By Sweet Pea @ 49:

    By deejayoh @ 46:
    By Sweet Pea @ 37:
    When Facebook is the biggest new deal we have going in the U.S., I fear we are in trouble.

    900M users in the space of a few years and >20% of time spent on the internet. I think you can relax

    Yes, humans have found yet another way to waste time and beg for attention.

    Posted on a blog. I guess this is some ironic sense of humor?

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  51. Scotsman

    RE: One Eyed Man @ 38

    “a minimum level of inflation is necessary”

    Agreed. Inflation and the expectations that go with it don’t get enough credit/attention in most analysis. Inflation encourages us to spend now, not wait, and creates a bit of a cushion for investment(s) that didn’t work out or fell short of expectations. An economy that ran year after year at true zero inflation would look very different from what we’ve seen over the last several decades.

    And while it’s easy to throw a curve up on the whiteboard to illustrate a point, it’s very difficult to translate the concept into a consistent predictive tool. Just when you think you’ve got some relationship figured out something changes and a few more variables get tossed in. (Heh- for a moment I forgot if I was talking about economics or women- same deal, eh?)

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  52. Scotsman

    RE: Birddog @ 39

    Those who really understand calculus are blessed. Both my wife and eldest daughter are engineers- civil and mechanical. I was one class short of being able to claim math as a double major. While I’m good at visualizing/conceiving spatial relationships and rates of change I could never easily connect what I saw in my head with the equations on the paper. Wife and daughter have the same issue. If you are one who can just know how the subject reality translates to paper you’re blessed, and indeed will always be in demand. I at best could be taught, but never really knew, if that makes sense. As I tell my daughter, sure there may be a computer program to calculate what you want- but someone has to write the program. That guy (gal) will always be in demand and well paid.

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  53. Scotsman

    RE: deejayoh @ 46

    But to what end? Billions watch porn too.

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  54. David Losh

    RE: Scotsman @ 53

    Just to tie it all together, I am working on our schedule for tomorrow at 11PM, inputting my search data to Google, Bing, and Yahoo, so my businesses can be found better, contacting my clients by e-mail, and commenting on a Bubble blog.

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  55. Kary L. Krismer

    By deejayoh @ 46:

    By Sweet Pea @ 37:
    When Facebook is the biggest new deal we have going in the U.S., I fear we are in trouble.

    900M users in the space of a few years and >20% of time spent on the internet. I think you can relax

    I think the reference might have been more to the effect on society of FB. On that topic:

    http://www.techweb.com/news/232901507/who-would-we-miss-microsoft-yes-apple-sort-of-rim-definitely.html

    (That’s actually an interesting piece–companies we’d miss the most if they were gone. For Twitter the response was: HAHAHAHAHA!

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  56. Kary L. Krismer

    By David Losh @ 48:

    RE: Macro Investor @ 47RE: Kary L. Krismer @ 45RE: S-crow @ 44RE: One Eyed Man @ 42
    It amazes me that every one forgets that banks made the loans, and sold the loans to the secondary market. The sales they make on the property are like free money to them.

    If they sold off the loan they are not involved in the sale of the property, except perhaps as a servicer.

    Sometimes, however, when the loan goes bad the buyer of the loan can force the bank to buy it back.

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  57. Bingo

    RE: David Losh @ 48

    “That’s why Case Schiller is just sales hype, and nothing more.”

    I don’t get it. A widely followed index that has attempted to improve (even with its obvious flaws, eg. the lag is atrocious) upon previous indices that track housing prices is just “sales hype and nothing more.” What does that mean? The index has been dropping for years.
    What sales has the index been trying to hype?

    “I think even Schiller would admit that”

    I don’t get it. “Schiller would admit that” his index is sales hype? I don’t believe he would say that any more than a Baker would say his loaf of bread is nothing more than sales hype.

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  58. Kary L. Krismer

    By Bingo @ 57:

    RE: David Losh @ 48

    “Thatâ��s why Case Schiller is just sales hype, and nothing more.”

    I don’t get it. A widely followed index that has attempted to improve (even with its obvious flaws, eg. the lag is atrocious) upon previous indices that track housing prices is just “sales hype and nothing more.” What does that mean? The index has been dropping for years.
    What sales has the index been trying to hype?

    Perhaps buying and selling of futures in the index?

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  59. David Losh

    RE: Bingo @ 56

    It’s very simple. This index is sales data that has nothing to do with the reasons the index goes up or down. It’s lagging number one, but is only reporting sales.

    According to the Index property prices were going up during the bubble years. Should we use that as an indication of value? No.

    It’s the larger economic conditions that are determining Real Estate values rather than the charts and graphs. Schiller has said that he sees a long term decline in Real Estate prices, but that isn’t what is reflected in the Index.

    Imagine a sales meeting where all of these charts, and graphs are displayed, which they are, and the manager explaining what it all means. It’s only talking points.

    Buyers, and seller should be paying attention to the economy, and broader economic forces in any location.

    At the end of each month in the Sunday paper Business section there is a whole set of economic charts, Case/Schiller is now one of them. Which would you look at to give an indication of your Real Estate strategy?

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  60. David Losh

    RE: Kary L. Krismer @ 57

    I’m sure this was the original intent, but don’t know how it was supposed to work, maybe we never will.

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  61. Sweet Pea

    By deejayoh @ 50:

    By Sweet Pea @ 49:
    By deejayoh @ 46:
    By Sweet Pea @ 37:
    When Facebook is the biggest new deal we have going in the U.S., I fear we are in trouble.

    900M users in the space of a few years and >20% of time spent on the internet. I think you can relax

    Yes, humans have found yet another way to waste time and beg for attention.

    Posted on a blog. I guess this is some ironic sense of humor?

    Yes, on a blog about a specific topic. Which the internetz is full of, with or without Facebook. Care to make any other attempts to charm the pants off of everyone here?

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  62. Dirty Renter

    RE: One Eyed Man @ 38
    Laugher Curve

    good one, oem!

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  63. MichaelB

    Real estate prices are sticky downward. Sellers tend to want a price close to recent sales in their neighborhood, and buyers, sensing prices are declining, wait for even lower prices.

    Fools rush in…

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  64. deejayoh

    RE: Scotsman @ 53RE: Sweet Pea @ 61RE: Sweet Pea @ 61

    Let’s see…
    Measuring ‘The Facebook Effect’ in special report Friday

    A study completed by researchers at the University of Maryland looked at the impact of Facebook’s App ecosystem on the economy and determined a new phenomena is upon us, thanks to the 900 million users on the website.

    But anyone who has spawned a business out of Facebook already knows this — that Facebook has become an economic driver for jobs and companies.

    The study out of the Robert H. Smith School of Business at the University of Maryland focused on the way developers use Facebook’s platform to grow their business.

    And the numbers were telling.

    Facebook has helped create a whole new crop of startups, entrepreneurs and small businesses. Just like Apple did when it created an entire cottage industry around its apps.

    According to the study, more than 182,000 full-time jobs have been created through the Facebook app ecosystem. And the study’s economic models suggest that a “conservative” estimate of the company’s total contribution to the U.S. economy is $12.19 billion.

    When the study took a more aggressive approach the numbers bumped up to 235,644 jobs and an economic value of $15.71 billion in U.S.

    Now, compare this to a similar study about Apple (the most valuable and profitable corporation in the world…)

    Last week Apple released results of a study done by the Analysis Group of Boston — a firm commissioned by the tech giant — to measure its employment impact in the US. The results:

    47,000 current US jobs at Apple
    257,000 indirect (or support jobs) in manufacturing of components, transportation, professional services, etc.
    210,000 estimated iOS App Economy jobs, a figure derived using the same methodology as a study from Mike Mandel for TechNet.

    The total estimate — 514,000 jobs created or supported by Apple — has already been criticized by at least notable one economist. But the methodology appears to be fairly conservative, if only because the authors did not include an estimated 187,000 additional jobs from induced effects (i.e., those that come increased spending at grocery stores, restaurants, etc.).

    So an 8 year old company that you seem to view as some sort of scar on the American landscape, has merely created an entirely new employment ecosystem, with somewhere between a third to half as many jobs as the most admired company in the world – before even going public.

    No, I guess we don’t need any more companies like that
    /sarc

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