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.

36 responses to “Reader Comment: Offers Appear to be Slowing Down”

  1. Peter

    I’m seeing the same thing on the Eastside. I was interested in a house that I was assured would go pending in days, but it took three weeks. I’ve noticed it with the active properties that I keep an eye on as well – the good ones below $400k seem to go in a week, but the good ones over $400k seem to be taking 2-3 weeks to go pending.

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  2. David

    No actual data in my hands, but, anecdotal from someone watching the market pretty closely, homes in the NE Seattle neighborhoods of Laurelhurst, Viewridge and Bryant that are not way-overpriced (there’s a few and they’re easy to spot because they’ve stayed on the market), perhaps just merely overpriced, seem to be selling rather quickly. Many times a home is listed and then is “pending” come Tuesday. I do not know if there are bidding wars occurring or even if the bubble practice of getting inspections done before making an offer – often the weekend it’s listed and has an open house – are making a comeback in these clearly desirable areas.

    A heat map by neighborhood would be interesting to see the hot vs. not difference location makes of the same % SFH under contract in 14 days or less.

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  3. David Losh

    I just came back from my Broker’s Open tour of North Seattle, and kept thinking that prices have stabalized, activity seems to be about the same, but there was more to choose from than a few weks ago.

    I still think prices are ridiculously high, and we would need massive inflation to get these property prices to reflect a true value, or figure that we will see a set of price declines of about 20% to 25%.

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  4. Mike

    I’ve been seeing the same thing as well looking both in NE Seattle (Bryant, View Ridge) and in the Kirkland/Kenmore area. Not that a lot of things still don’t sell stupid fast, but that there seems to be enough stuff coming on that it isn’t almost all going in the first weekend.

    My hope all this spring has been that there was just a relatively large group of buyers (relative to inventory) with itchy trigger fingers running around but that once they burned themselves out chasing the limitted inventory the market would cool off a bit again. Unlike the bubble maybe the majority of non-itchy buyers this time around aren’t going to say “OMG, priced out forever!” but instead “OMG, did these people learn nothing?”. If that is the case and most buyers did learn to run the other way from bidding wars then the proto-bubble and bidding wars of the spring hopefully won’t be self-sustaining.

    Hard to tell if that is what’s finally happening but we can keep our fingers crossed. Will be interesting to see if there continues to be an uptick in listings as sellers come on looking to catch the rebound only to find out that they’ve missed the spring bounce.

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  5. Pegasus

    RE: Mike @ 4 – Real estate professionals more optimistic than homeowners

    A report by HomeGain, indicates real estate professionals are much more optimistic about the future of the housing market than homeowners.

    The results of the survey, conducted between May 21 and June 1, indicate that 48% of real estate professionals expect home values to increase, while only 25% of homeowners expect the same. At 22%, real estate professionals are less likely to believe that prices will fall in the next six months than homeowners, 29% of which believe prices will decrease.

    All of these numbers are more optimistic than last quarter, where 15% of real estate professionals and homeowners expected a positive direction in home values, and 42% of real estate professionals and 37% of homeowners expected values to go down.

    http://www.housingwire.com/content/real-estate-professionals-more-optimistic-homeowners-market

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  6. sarah

    I think Mike, that you are right. I think more buyers are turning to the “OMG, did I learn nothing?” rather than “OMG, I’ll be priced out forever” mentality. I think that if home values themselves just went down on their own, homeowners (and maybe real estate agents) would attribute that to a cyclical, natural part of the housing market (I was told by an agent friend of mine years ago that Seattle typically follows five year cycles of up and down).

    But in light of the current economic conditions where we still have high unemployment (SeattleTimes.com just reported that unemployment in the state went up to 8.3%), uncertainty to both the US and global economy, gridlock over the fiscal cliff, and other negative news about personal wealth falling, I think that is causing the buyer to proceed with more caution and not rush into making an expensive decision or to buy into this hype that is trying to increase house prices unfairly quickly.

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  7. corncob

    to add to these anecdotal data points, we have been beaten in three multi-offer situations this spring. after a recent beat where the “winner” went 10% above asking (and asking was about value based on comps), we fall into the “OMG, did these people learn nothing?” camp.

    we haven’t toured the last few weekends, figuring it to be pointless unless the absolute perfect home shows up and we are willing to go way above list on it (very highly unlikely). we’ll see how it goes this summer, we haven’t resigned our lease just yet.

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  8. John

    Even though there is more inventory on the market right now, the quality isn’t very high. We’ve toured several homes recently and have not been impressed with what we have seen. I think the good inventory is still really low in areas like View Ridge, Laurelhurst, Bryant and Ravenna.

    Plus with mortgage rates creeping lower (well not sure about this week yet), I just don’t see this “bubble” ending soon – especially considering once they do start to tick up, I think the people that have been waiting are going to jump in quickly.

    I am by no means an experienced buyer or seller…just my two cents.

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  9. Sam

    RE: Pegasus @ 5

    Well, the HomeGain survey was conducted between May 21 and June 1. Few days of flurry of negative news can change the sentiment for homeowners dramatically. I feel normal people (not realtors) have short term memory for positive news and long term retention of negative news – once bitten twice shy. Survey results could be quite different if taken between now and June end with Euro crises, China and US slowdown figures out in the open for rest of the year.

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  10. krs

    I’ve noticed the same slow down in Magnolia. Houses that would have gone pending almost immediately a few weeks ago are now sitting. In addition, some of the houses that went pending during that time are starting to come back on the market.

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  11. Kary L. Krismer

    RE: corncob @ 7 – I will once again point out that you do not need to outbid someone to win a multiple offer situation, at least if the listing agent is a good agent. There are more terms to an offer than the price. And beyond the terms, there’s the lender. That can be a huge factor.

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  12. Hugh Dominic

    Yep, west of I-90 the slow down is on.

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  13. corncob

    By Kary L. Krismer @ 10:

    RE: corncob @ 7 – I will once again point out that you do not need to outbid someone to win a multiple offer situation, at least if the listing agent is a good agent. There are more terms to an offer than the price. And beyond the terms, there’s the lender. That can be a huge factor.

    That is true, however in the first two situations it was not price but a (claimed) cash buyer and a buyer willing to waive inspections. I am not a cash buyer (good downpayment, but nothing spectacular), nor do I wish to waive contingencies like inspection/financing, nor do I want to go way above list price with escalation clauses unless the property is way under listed. There seems to be a bottomless pit of people willing and able to outbid anyone on these homes, not just in price but in terms as well, so either way we can not really play this game.

    It is like when you play poker a lot with seasoned players then face someone who has never played before. There is often beginners luck because their choices are random or stupid, whereas their opponents are playing in their mind against a rational actor.

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  14. Kary L. Krismer

    RE: corncob @ 12 – On the topic of competing with cash: If you have solid financing, cash shouldn’t buy them a discount, but all other things being equal, you would need to outbid them.

    The exception would be where the property itself might be difficult to finance due to its condition. There cash can get you a significant discount, and it would be difficult to outbid them.

    On the topic of waiving inspections, that’s difficult to compete with, and a game I wouldn’t recommend playing for the average person planning to buy for their home.

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  15. Pegasus

    RE: Sam @ 8 – What I found interesting is the swing in the supposed “professionals” in the industry from just one quarter to another where in the previous quarter 15% of real estate professionals and homeowners expected a positive direction in home values, and 42% of real estate professionals and 37% of homeowners expected values to go down. Your interpretation based on negative news might be right except that the stock market was in a free-fall for most of May that was following the litany of bad news.

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  16. Jonness

    We’ve got some Spring support coupled with low supply due to so many homeowners being unable to sell at a profit. In addition, historically low rates are confusing market participants into believing house prices have bottomed and are back on the way up.

    Unfortunately, the most likely scenario is continued economic malaise for as far as the eye can see. The situation in Europe will probably keep bond yields down through the end of this year and perhaps even the next. U.S. GDP growth in the second half will probably be sub-2%. Coupled with the threat of the fiscal cliff and other known uncertainties, employers will remain cautious about hiring.

    On the bright side: if you recently pulled the trigger and bought a house instead of saving a bigger down payment, you made a lot better decision than those who bought in 2007.

    I recently put a new band together and will be playing at some outdoor festivals this summer. Thus, I’ve put my house hunting on hold so I can prepare for the upcoming gigs. Buying a house just doesn’t strike me as very appealing right now. That said, I’m looking forward to a more attractive market in the future.

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  17. Kary L. Krismer

    By Jonness @ 16:

    We’ve got some Spring support coupled with low supply due to so many homeowners being unable to sell at a profit. In addition, historically low rates are confusing market participants into believing house prices have bottomed and are back on the way up.

    I suspect that’s more due to the impact of fewer REOs and short sales causing rising median prices than interest rates. Not everyone reads Seattle Bubble. Not every real estate agent sends their contacts information on why the rising median is not all that it’s cracked up to be.

    But to some extent you’re right about interest rates. I often say that people have interest rate detectors built into their DNA. People somehow hear about interest rates. It’s the one thing in the real estate market that they are the most likely to actually have current information about.

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  18. ray pepper

    RE: David Losh @ 3

    Brokers Open Tour?? You actually attend those? What was served? Does the listing Broker still give 5.00 to each participant? Did you hop in a van with fellow Agents? What did you chat about? Anybody tell a joke or was there any form of comedy provided?

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  19. ray pepper

    RE: Jonness @ 16

    I disagree Jonness..Just got yet ANOTHER email from a Feb 2007 homebuyer who stayed current on his payments and just applied for a Loan Mod due to his current hardships and 40%+ drop in home value. RESULT…..: not only did his interest rate get dropped to 3% but his principle balance which was 270k+ was lowered to 184k…He told me ..”Ray, I didn’t even ask for that…ALL I wanted was a lower payment!!..”

    So we find the astute home owner are getting DEALS of a lifetime if they just know how to ask…2004-2008 homebuyers it doesn’t matter…Just a little DD will make you the real winner in this Era of giveback…Had to be in though or you are left scratching your head and crying day after day at how unfair it is…

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  20. David Losh

    RE: ray pepper @ 18

    Number one there were cookies, sandwichs, and bottled water. Yes, the free lunch is Back so you know things have changed.

    Second when you go to the Broker’s Open you don’t get the annoying e-mails from opening the key box.

    What agents are talking about is reviewing offers on Monday, but that is a little lack luster this week. Some agents aren’t too sure about that this week, as opposed to a few weeks ago.

    One place that was hastily put on the market is still sitting there from about a month ago.

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  21. Dirty Renter

    RE: Hugh Dominic @ 12
    almost spit out the coffee on that one.

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  22. Gracious Salmon

    Any notion of whether these sales are:

    1. First time home buyers
    2. Existing homeowners changing homes

    And whether:

    1. Buyers already live in Puget Sound
    2. Buyers moving from elsewhere

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  23. Pegasus

    RE: Gracious Salmon @ 22 – Good points. I am curious to know how many of these purchasers are foreign buyers who find the prices attractive that come from Canada, Asia, Europe, etc.

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  24. softwarengineer

    5% Down Offers Are a Joke in Seattle Area

    From a Redfin website blogger:

    “…Anyway, good luck. This low inventory is driving us NUTS, we’re done looking and we haven’t been able to find a rental situation that would allow us to build up more of a down payment. We’re eating up a little bit of it every month just for living expenses. Rents are ridiculously high right now, jobs still don’t pay squat, and there is Himalayan-sized mountains of investment cash sitting around that the 5% don’t want to risk in the stock market…..”

    http://forums.redfin.com/t5/Seattle/1st-time-buyer-w-5-down-losing-every-time-in-Seattle/td-p/327782/page/2

    The Answer? Lower your standard of living?

    http://shine.yahoo.com/work-money/9-ways-slash-expenses-youre-taking-pay-cut-152800019.html

    I throw my hands in the air; we can’t all be born with a silver spoon in our mouths and intelligent too….

    http://www.helium.com/items/1568489-rich-is-better-than-being-intelligent

    Perhaps this explains why cash out for homes isn’t at good/fair prices?

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  25. wreckingbull

    RE: ray pepper @ 18 A gaggle of agents packed in a short bus together? Sound like heaven to me.

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  26. kfhoz

    I just cannot make a big decision like which house to buy in a few days. Guess I am always going to lose out.

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  27. Kary L. Krismer

    By ray pepper @ 18:

    RE: David Losh @ 3

    Brokers Open Tour?? You actually attend those? What was served? Does the listing Broker still give 5.00 to each participant? Did you hop in a van with fellow Agents? What did you chat about? Anybody tell a joke or was there any form of comedy provided?

    Seriously? Just because you might not want to do something to stay familiar with a market area is no reason to pretend it cannot be a useful tool for some agents.

    I don’t tend to concentrate in a particular area, so I don’t do a lot of that activity. But I can see how it would be useful for some agents.

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  28. Blurtman

    I am not trying to hype this market, but in my area, 98074, along my dog walking route, 4 homes have sold recently in the span of about 6 months, on average. Estimated price range: $400-600k.

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  29. ray pepper

    RE: Kary L. Krismer @ 27

    Oh yes its useful for “some” agents..it breeds comradery..team work…a sense of self worth…It does NOTHING to faciliate the sale of the listing..

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  30. Low Ball Jones

    So here it is…behavior of a monopoly is that it tries to sell its goods at whatever the market will bear.

    Thus they starve the buyers with crap housing, then trickle out the good stuff and let those who can spend top dollar.

    Then prices will ratchet down as they go after the less well heeled.

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  31. Kary L. Krismer

    By ray pepper @ 29:

    RE: Kary L. Krismer @ 27

    Oh yes its useful for “some” agents..it breeds comradery..team work…a sense of self worth…It does NOTHING to faciliate the sale of the listing..

    You’re bringing up the other side there. Before you were addressing buyer’s agents. Now you’re bringing up listing agents.

    If you’re dealing with an occupied house, it can be a nice advantage for the occupant, assuming you’re in one of the areas where agents actually come out for broker’s opens. You can get multiple agents through the house with only one disruption of the person occupying the house.

    And it is possible that some agent might see it during the open that might not see it otherwise. I would agree that’s somewhat unlikely. Doing a broker’s open is mainly customer service.

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  32. ray pepper

    “And it is possible ” anything is possible Kary…

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  33. Kary L. Krismer

    RE: ray pepper @ 32 – Did you miss the fact that I said I agreed it was somewhat unlikely?

    The main point of that post is about customer service provided by listing agents.

    You’re a reduced fee agent, but one thing I’ve liked about you in the past is you don’t seem to cut back where others do. For example, I believe you provide lock boxes. Spending 3 hours of your time to hold a broker’s open seemingly should be such a service if you’re dealing with a client living in the listed house.

    One other situation where it can be useful is if you’re dealing with a tenant situation which otherwise would require 24 hours notice. You can get several agents through with one 24 hour notice. There it’s much more likely they wouldn’t otherwise see the property.

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  34. David Losh

    Today was the Capitol Hill Broker’s Open and it’s a whole different story when you get over $500K to over a Million.

    Yes, there were sandwiches, but I brought my own lunch, so I wasn’t tempted.

    There was no review of offers any time soon, just grateful agents to see people coming in.

    The most important thing was that the pricing seemed to be right to me. Every number I thought of as I walked up to the house was pretty darn close to the listing price.

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  35. Jonness

    RE: ray pepper @ 19 – I’m not in, and I’m not scratching my head wondering what’s going on. I learned the truth about business and politics many years ago. Anyone that believes we live in a fair and just system really needs to shed the diapers and start wearing pants for a change.

    I’m not crying about it either. My life is good, and, unlike your friend, I’ve managed to save a boatload of cash. He can get bailed out until his ears are blue, but it doesn’t change the fact he has $0 in the bank, and, despite an enormous give-back from the bank, he still doesn’t have enough equity to be able to sell his house and break even on the deal.

    Yes, a lot of dumb asses took advantage of the ATM, and now they think they are getting away with a second lottery hit. But the truth is, these people will live their entire lives getting supposed freebies and end up dying never really having anything but massive debt.

    True wealth is measured as a surplus, not a debt. Those who live their entire lives in diapers will never see a surplus. Instead they will work forever trying to pay the bank back for all they’ve borrowed. And just when they finally get smart enough to put on pants and walk away from their debt obligations, the banks will “forgive” some of the debt. So back to the diapers the fools go, and they end up spending their entire lives as mindless debt slaves to the banks.

    Eventually, into the coffins they go, after having spent their entire lives working as slaves for the rich and privileged bankers. Yet, when you see these mindless serbs at the supermarket or the party down the street, they brag and brag about all that they got at the banks’ expense.

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  36. Seattle Bubble • Follow-Up: Offers 2012 Are Finally Slowing, Just a Bit

    [...] month I posted a comment from a reader who observed that offers appeared to be slowing down from their torrid spring pace. At the time I pointed out that there was “no slowdown as of the end of May” in the [...]

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