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.

28 responses to “Over a Third of New Listings Pending in Two Weeks”

  1. Ira Sacharoff

    The real estate industry is touting the extremely low interest rates and prices that have fallen significantly from their peaks as great reasons to be buying a house right now. And maybe it is, but I’d suggest that in the sought after areas of the Seattle area( Queen Anne, Wallingford, Ballard, Bellevue, Kirkland, Sammamish, you know the drill) the percent of homes going pending within two weeks is significantly higher than 34.2%. In fact a lot of those go pending within days. It just isn’t any fun. And even though you can buy a tastefully renovated 1930’s home with garden space overlooking Mt. Rainier in Renton for under 300k, that’s just not what most people are looking for.

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  2. HappyRenter

    By Ira Sacharoff @ 1:

    And even though you can buy a tastefully renovated 1930’s home with garden space overlooking Mt. Rainier in Renton for under 300k, that’s just not what most people are looking for.

    Try commuting from Renton to North Seattle by public transport: 90 minutes! No thanks!

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  3. Julie Lyda RE/MAX Northwest Realtors

    I’ve wrote a blog post today that dicusses the current inventory shortage. In tracking my statistics I have found that pending sales have out paced new listings for 12 months in a row, something that hasn’t happened before.

    The Seattle area may be setting itself up for another bubble. Unless we get some more inventory or interest rates go up, 2013 could be a 2006-2007 Deja Vu.

    Critical Housing Shortage On the Horizon in Seattle Could Cause Another Real Estate Bubble.

    http://www.snohomishcountymarketstatistics.com/

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  4. Julie Lyda RE/MAX Northwest Realtors

    I’ve wrote a blog today that discusses the inventory shortage. New pendings vs. new listings.

    In tracking the statistics over the years, I have found that new pendings have out paced new listings to come on the market for the last 12 months in a row, something that has never happened before.

    If we don’t see some more inventory soon or if interest rates don’t rise significantly we could be setting up another Bubble. 2013 could be a 2006-2007 Déjà vu.

    Inventory levels have are now below 2006-2007.
    Interest rates are at historic lows that are bringing out the home buyers.
    Foreclosures are at 3 years lows with no signs of any significant increase, at least not enough to put a dent in the inventory.

    Critical Housing Shortage On the Horizon in Seattle Could Cause Another Real Estate Bubble.

    http://www.snohomishcountymarketstatistics.com/

    I don’t write this to scream “run out and buy today or be priced out forever”. I write this to share these new dynamics that are setting up in the local housing market that have never presented before.

    I’m not making any predictions, and I don’t see house prices rising back to bubble days in 2013, but we may see some significant price increases next year.

    Of course, unless the dynamics change, i.e., global influences, political influences, etc.

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  5. Pegasus

    RE: Julie Lyda RE/MAX Northwest Realtors @ 3 – Washington State still has roughly one in ten mortgage holders either delinquent or in foreclosure and foreclosure filings are rising. What could possibly go wrong in the Land of Pink Ponies?

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  6. patient

    You would think this is the perfect scenario for home builders. What can hold them back I wonder? Motivated buyers with access to “cheap money” and no competition from existing homes. Will we soon see a boom of new construction? Another Issaquah highlands or three, that could make things interesting when the existing home ice melts of one reason or the other. It’s still a very sick unusual and artificial housing market. I’m happy at the sideline.

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  7. Howard

    The market sucks in Kirkland right now for buyers…. just saying.

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  8. Howard
  9. Carl

    RE: patient @ 5 – I would suggest that many people don’t want to live 20 (or even 10) miles from employment centers. In just about any vibrant city in the developed world, put a pin in the tallest building and draw concentric circles around that point. You will find that housing costs decrease dramatically on each ring you go out.

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  10. ARDELL

    RE: Howard @ 7

    It appears to come with some free Tidy Cat. :)

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  11. DanW

    RE: Carl @ 8
    Similar example, but not quite the same :-)
    I lived in Tokyo for 3 years, and when looking for property to rent (most of which is still agent/office based with printed books rather than on-line) the books are arranged by distance from the local rail stations :-)

    They’re arranged in a 0-5 minute walk, 5-10 minutes, 10-15, and “over” :-)

    Property prices there are very very obviously connected to how long the commute is – my station was a “local” station with only the slower trains stopping there, and was cheaper than the station two stops down the line which was – in theory – further from Tokyo center, but in practice took 5-8 minutes less to travel

    So – while I agree in principal with your concept, distance is not everything. Sometimes a place further away is more convenient than one closer…

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  12. patient

    Burbs like for example Woodinville and Sammamish aren’t exactly cheap or deserted. If builders thought the volume of buyers were deep and stable there are money to be made even if there is a 30 minute commute. The problem could be that the belief isn’t there and that the volume of buyers is viewed as both shallow and risky.

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  13. Kary L. Krismer

    By HappyRenter @ 2:

    By Ira Sacharoff @ 1:
    And even though you can buy a tastefully renovated 1930’s home with garden space overlooking Mt. Rainier in Renton for under 300k, that’s just not what most people are looking for.

    Try commuting from Renton to North Seattle by public transport: 90 minutes! No thanks!

    We used to have our house in Skyway and our office in North Seattle. That wasn’t too bad, but we weren’t usually going to the office during commute hours. When we moved to Renton it was too much, so we moved offices to a Renton location.

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  14. Kary L. Krismer

    I’ve never looked at a 2 week period, but 30% going pending in 30 days is not that unusual even in a relatively bad market.

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  15. softwarengineer

    Buy a Home If You Really Want to

    But savvy investors don’t buy like gold and stocks now, assuming they’re likely peaked in price, only to have the old rich elite investors, who bought in cheap, sell out the floor from beneath them…

    Seattle house buying is slightly different, but same disclaimer, savvy investors generally don’t buy into a low inventory cost model, like today. San Francisco is far worse than Seattle.

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  16. David S

    And then go back to active?

    I think I have mentioned this before as the “Catch and Release Program”.

    Do these 1/3 which go pending in less than two weeks close or go back to active?

    And then, there is the question, what are pending sales a useful metric of?

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  17. softwarengineer

    RE: David S @ 15

    Unqualified Buyers Decrease Pending Sales’ Hit Average?

    Or perhaps the poor record that Tim has documented for pending sales is too many “on the edge” of affordability buyers in the Seattle area?

    Speaking of poor cost model to buy into, imagine making offers on a Seattle house today against unqualified buyers [whose bogus offer would likely have became a failed pending sale later anyway]; theoretically pushing the eventual sales price artificially way up too high. Bidding on HUD homes against that anomalous unqualified crowd, same scenario; the high bids on bad condition stock are almost humorous…..saw this in Seattle in the 80-90s HUD bids too.

    I still think cash is king to avoid the anomalous mortgage cost model model we’re in today….the sellers like the better hitting averages too, especially if they can’t wait years to sell.

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  18. corndogs

    RE: softwarengineer @ 14 – “savvy investors generally don’t buy into a low inventory cost model, like today”.

    Every time there is a bottom there will be low inventory…. low inventory is a major contributor to price stabilization…. so you have that exactly backwards. With that thinking 2007 was a good time to buy because of the large inventory…..

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  19. No Name Guy

    RE: Howard @ 7

    What…..a…..rat…..hole.

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  20. ARDELL

    David S: “Do these 1/3 which go pending in less than two weeks close or go back to active?”

    Softwareengineer: “Speaking of poor cost model to buy into, imagine making offers on a Seattle house today against unqualified buyers [whose bogus offer would likely have became a failed pending sale later anyway]; theoretically pushing the eventual sales price artificially way up too high.”

    One of my clients recently put in a backup offer. Something I don’t encourage often, but did so in this case based on the signal from the Listing Agent that there was more than the average expectation that the very quick to Pending (5 days or less) might fail to close. This even though there was no Home Inspection contingency in the original offer and purely based on the Listing Agent’s fears regarding lender approval of a self employed buyer.

    To David S: Note that there are several backup statuses even though that does not seem to convey on the public sites. If something is Pending Feasibility or Pending Short Sale or Pending Backup or Pending Inspection…vs “full” Pending status, the likelihood that the sale will fail increases, given there are more reservations on the part of the buyer and or the seller. Those reservations are noted in the mls, but don’t seem to convey in the download to sites like Redfin. Not sure why that is. My guess is that the odds of falling out of “pending” would be different for the various pending statuses.

    To Softwareengineer: This issue did come up for me and my clients in this recent backup offer, given the counter on the backup was considerably higher than the asking price without invoking the Escalation Clause and the right to see other offers. The explanation given was that the seller would be putting it back on market at the higher price, which matched the existing offer in escrow, if the current sale failed. Then my clients and I considered whether this new price would cause the house to not sell to us or anyone else if the current sale failed, and the answer was no. But yes, you are correct, competing with a failed offer has not been my normal stance to date, but there are always exceptions. Number one exception was that the likelihood of a similar property coming on market in this location was near nil.

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  21. Sweet Pea

    By David S @ 16:

    And then go back to active?

    I think I have mentioned this before as the “Catch and Release Program”.

    Do these 1/3 which go pending in less than two weeks close or go back to active?

    And then, there is the question, what are pending sales a useful metric of?

    There are 2 condo properties on the main drag up the hill through Issaquah Highlands that have realtors signs out in front. The properties are across the street from the new condo/townhouse development. One sign has said “sold” for months and months. I’m wondering why they’ve left it out? The cynic in me wonders if it’s been done to make the properties across the street look more desirable? The other sign has said “pending” for months and months. Now there are one or two new for sale signs in the same development, on the same block. It’s kind of entertaining to watch what unfolds….

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  22. Kary L. Krismer

    RE: Sweet Pea @ 21 – When it comes to signs on the street, sold is the same as pending. So perhaps the one with the sold sign is a short sale waiting for approval.

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  23. corndogs

    RE: softwarengineer @ 17 – “I still think cash is king to avoid the anomalous mortgage cost model”

    You keep throwing out this term ‘cost model’ like you are an award winning economist. If you think paying all cash to avoid record low interest rates during a time of great uncertainty is the way to go, I think you should look into a CAT Scan brain model…

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  24. Chris

    There is not the same disparity in rents and mortgage costs that there was in 2007.This puts a floor under prices as the value of income property is basically the same (or better) in close-in areas than the value as a primary home. Almost every house in north seattle (where I’ve been looking) is being purchased for at least 10% down, but most commonly 20%+. That was not the case in 2007 (although, I did pull the mortgage data for 2006-2007 transaction and found that, surprisingly, 80%+ of buyers there had at least 10% down at purchase; didn’t track the heloc action thereafter).

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  25. Kary L. Krismer

    By softwarengineer @ 17:

    Bidding on HUD homes against that anomalous unqualified crowd, same scenario; the high bids on bad condition stock are almost humorous…..saw this in Seattle in the 80-90s HUD bids too.

    I still think cash is king to avoid the anomalous mortgage cost model model we’re in today….the sellers like the better hitting averages too, especially if they can’t wait years to sell.

    I’m not sure what you’re saying there either, but I’ll be nicer than Corndogs.

    Unless they’ve changed their policy, most cash buyers are not likely to be bidding against unqualified buyers on HUD homes. The initial listing period is for to be owner occupants only. I’m assuming there that most cash buyers of REOs are flippers or investors.

    As to cash vs. borrowing, that’s really more a matter of determining what liquidity you want to maintain. You could have $1M in cash, but decide you want to borrow to buy a $200,000 rental house. With interest rates under 4%, that only makes the decision to borrow more likely. For most properties you’re not going to get a significant discount, or even any discount, for cash. When it comes to houses, cash is mainly good if you want to buy a property that is in horrible condition, and then fix it up. That avoids the hassle and expense of going the rehab loan route. It’s also useful for buying a short sale where the timing of the sale would be uncertain.

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  26. Lo Ball Jones

    I have no reason to assume there is any significant immigration to this area (in fact, it’s my contention we’re losing population).

    If houses are selling quickly to real actual families then I would expect rents to fall precipitously as the fixed pool of people move into houses.

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  27. redmondjp

    By Lo Ball Jones @ 26:

    I have no reason to assume there is any significant immigration to this area (in fact, it’s my contention we’re losing population) . . .

    You obviously haven’t been to the Eastside lately. Try Grasslawn Park (in Redmond) on a sunny Saturday.

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