Posted by: Timothy Ellis (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.

25 responses to “January Stats Preview: Inventory Inching Up Edition”

  1. Kary L. Krismer

    The “official” numbers should be very interesting. I’m showing the median being down significantly. Oddly I’m seeing short sales down significantly too, which is very odd given the fact that most of them are pending right now. When I saw the low median I was expecting the short sales to be much higher, and thus be an explanation of why the median dropped.

    References to data from NWMLS sources, but such data not compiled by or guaranteed by the NWMLS.

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  2. Cheryl

    Could you pull data on the sale price of SFHs/condos that were listed 400K to 700K and compare with their last sold price if they were in 2005-2007? We’ve been looking for a home on the market for a couple months now and felt that the price for homes in that price range has gone up so rapidly and it’s almost back in their 2007 peak price. Clearly, the economy hasn’t gone back to what it was in 2007

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  3. Kary L. Krismer

    RE: Cheryl @ 2 – What you would need to do is have an appraiser or real estate agent attempt to determine the value of a specific property back at a prior point in time. That can easily be done.

    Just looking at county-wide data for houses between certain price points wouldn’t tell you anything, and it would tell you even less if you grouped houses together with condos.

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  4. David Losh

    RE: Cheryl @ 2

    I agree with you that pricing is getting harder to get a handle on.

    Some of that is because pockets of the Seattle area are extremely hot compared to other areas which aren’t as dramatic.

    It’s difficult to get a feel for pricing by looking at County statistics.

    You can go to almost any Real Estate site like Zillow, or redfin and get a historical comparison by individual properties. It would take time, but you can get a pretty good feel for your particular neighborhood that way.

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  5. sniffy

    RE: Cheryl @ 2 – In many areas, prices are back up near their bubble highs. But keep in mind that interest rates are much lower. I think that explains most of it. Today on a 30yr $450k loan you’ll pay $2000/mo. On the same dollar value loan in 2007/8, you’d have been paying over $2800/mo. That means a lot more people can “afford” a $600k house. And the bizarrely low inventories amplify the effect.

    In theory, as interest rates rise, prices will get tamped down a bit. But if you’re planning to pay out over 30 years, realize that the nominal price doesn’t matter nearly as much as your monthly payment does. Today’s rates are a great deal. Unfortunately for me, I’m looking to buy this year and I’d like to put ~30% down and pay off the rest ASAP, so I get comparatively screwed.

    I guess the best case scenario would be to buy this year, and have interest rates rise significantly enough to compensate by putting the cash in CDs that would have otherwise gone toward paying down the principal early.

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  6. ARDELL

    RE: Cheryl @ 2

    A significant “buyer beware” factor at the moment is there has been a bidding war going on re interest rates in the jumbo loan arena. Major banks like wells Fargo and B of A are offering Jumbo loans at conforming rates. That is boosting home prices on the high end of your query range and will likely be a temporary boost.

    Also on the low end, credit unions like BECU are pushing 97% LTV product to pull some market share from FHA loans.

    If this jockeying for marketshare comes to an abrupt halt, which it likely will once they have restocked their portfolios to quota level, home prices will taper down, and quite suddenly.

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  7. TK

    Things are getting a bit crazy out there. A short sale came on the market at $425K (under price on purpose to create traffics) last week. We put in an offer of $440K and was rejected. We were told there were many offers above us.

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  8. Kary L. Krismer

    RE: TK @ 7 – Pricing a short sale like that is absurd.

    One possible exception: I did see one a few months ago that was priced very low, and when I called the listing agent he said he priced it that way because that was what the bank indicated they wanted. The first sale did flip, but I’m not sure why, and at that point the agent raised the price some, and it still attracted multiple offers. And the second time it did close.

    Other than having something from the bank in writing indicating that’s what they would accept, I would think a low price on a short sale would be very risking for an agent. But if you did have that, I don’t know of any reason not to price low, unless you don’t know whether that particular lender will waive the deficiency. If you generate multiple offers you could pick the one most likely to close.

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  9. Kary L. Krismer

    RE: ARDELL @ 6 – Ardell, what’s the LTV on those? The reason I ask is I’d rather loan $800,000 on a house worth $1,600,000 than loan $400,000 on a house worth $500,000.

    Conversely, if I were a portfolio lender, I would not even consider approving someone for a $1,500,000 loan on a $1,600,000 house, or even $1,000,000.

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  10. Saulac

    Some question/request for Tim, or anyone that can help.

    On the history stats…I wonder if having unit marking (year) on the horizontal axis would make the graphs easier to read. It’s 2013 now and I am math chanllenged…

    On the Trustee Deeds graphs: “…looking at Trustee Deeds, which is the type of document filed with the county when the bank actually repossesses a house through the trustee auction process.” Should I understand this number as the number of housing units that bank actually “take back” through the trustee auction process? Or this is the (total) number of housing units that have gone through the trustee auction process?

    On I am too lazy to figuring it out by myself…Is there such as thing as “mortgate rate adjusted housing price” graph? From 2000 maybe? As discussed above, rate makes big difference on monthly payment.

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  11. whatsmyname

    RE: Kary L. Krismer @ 1 – It probably means a proportional increase in sales “south of I-90″.

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  12. ARDELL

    RE: Kary L. Krismer @ 9

    20%. But “jumbo” is a loan over $506,000 since FHA is still at $567,500 but conventional is at $506,000 for “high balance conforming” with anything over $506,000 being a jumbo. I think maybe they are just setting their own “high balance conforming” limits so they don’t lose the business to FHA

    Not talking mega numbers up in the nose bleed section that you are quoting. More in the loan amount of $506,000 to $800,000 range. I haven’t done a sale over a million in a while. I like North of I-90…but not North of a million so much. :)

    Back to Cheryl at 2…$400 to $700 straddles so many different loan types that I would not put them in the same group when doing stats. I’m seeing a lot of overbidding in the $800k to a million range because the rates on the jumbo loans are so insanely low. For people who don’t stay in their house long enough, that is not going to work out well when it comes time to sell.

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  13. Erik

    RE: Cheryl @ 2
    Those prices are in the high tier. High tier housing hasn’t gone down nearly as much from the peak as low tier housing has. I think that is why you are seeing prices near the peak in that price range.

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  14. Erik

    By Saulac @ 10:

    Some question/request for Tim, or anyone that can help.

    “On the history stats…I wonder if having unit marking (year) on the horizontal axis would make the graphs easier to read.”

    I think this data is awesome. I think this everytime I read it. It’s difficult to tell where the spikes are without time on the x-axis.

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  15. Kary L. Krismer

    RE: Saulac @ 10 – Trustee deeds would be actual completed foreclosure sales. The buyer could be either the bank or a third party.

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  16. Kary L. Krismer

    By ARDELL @ 12:

    RE: Kary L. Krismer @ 9

    20%. But “jumbo” is a loan over $506,000 since FHA is still at $567,500 but conventional is at $506,000 for “high balance conforming” with anything over $506,000 being a jumbo. I think maybe they are just setting their own “high balance conforming” limits so they don’t lose the business to FHA

    Not talking mega numbers up in the nose bleed section that you are quoting. More in the loan amount of $506,000 to $800,000 range. I haven’t done a sale over a million in a while. I like North of I-90…but not North of a million so much. :) l.

    Thanks. The reason I went with a “mega” number and a number within the conventional limit was that if I were a portfolio lender I’d be more comfortable with the higher value property transaction. I think you’d be less likely to take a loss on that. And with the $800,000 loan you’re not competing with the conventional lenders.

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  17. Kary L. Krismer

    By whatsmyname @ 11:

    RE: Kary L. Krismer @ 1 – It probably means a proportional increase in sales “south of I-90″.

    I’ll have to check that out! ;-)

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  18. David Losh

    RE: Erik @ 13RE: ARDELL @ 12

    The real problem is that these higher priced homes didn’t get get price adjustments, they got a correction because banks are pretty comfortable asking for high down payments for high priced properties. Most properties over a million get hefty down payments, and may even be cash purchases.

    These loans do look good in a portfolio, and may be easier to sell in today’s market place.

    People with these higher down payments have more room to lower prices at the time of a sale, if it’s needed, but yes people with money can better afford to take a loss.

    I don’t really care, but it does give the illusion of a healthy banking system, and housing market. The upper tier is an isolated market segment that doesn’t reflect a broader economic viability.

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  19. Lo Ball Jones

    Here’s a topic I would like to see covered in SBB…property taxes.

    From my research WA State appears to be somewhere in the low to middle range of property taxes, which seems odd to me given its liberal bias and demand for premium government services. Texas for instance, has rates that are twice as high, 2% versus our 1%.

    Here’s the tool I’ve been using:
    http://interactive.taxfoundation.org/propertytax/

    Heat map (I know):
    http://interactive.taxfoundation.org/propertytax/09HV.gif

    How does this affect prices, perceptions, services?

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  20. Ira Sacharoff

    RE: Lo Ball Jones @ 19
    I think it “all comes out in the wash.”. We have low to middle property taxes, but we have one of the higher sales tax rates in the country, and gas taxes are also in the high range.
    And while the state overall does have a reputation for liberalism, I think I read somewhere that for public education, we are 42nd out of 50 on money spent per student.

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  21. Kary L. Krismer

    RE: Lo Ball Jones @ 19 – I’ve said before it’s part of the reason our prices are higher. When people buy they look at the total of P&I, taxes and insurance. It’s similar to how condos with higher dues will sell for less, all other things being equal.

    With respect to what Ira said about other taxes, that would pertain more to a decision as to whether to live in Washington, as opposed to how much to pay for a house if you do decide to buy.

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  22. corndogs

    RE: David Losh @ 18 – ‘The upper tier is an isolated market segment that doesn’t reflect a broader economic viability.’

    You got that backwards again soft skull. The upper and mid tier is all that matters, it’s the low tier that is a pittance in comparison to the overall economy. It’s the low tier that is in foreclosure and getting traded around like a pack of bubble gum. It’s this low tier that affected all the median charts that the Tim was feeding you over the last couple years, that led you to conclude, quite stupidly, that housing prices would continue tanking. Boy, were you wrong!

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  23. corndogs

    RE: Lo Ball Jones @ 19 – “From my research WA State appears to be somewhere in the low to middle range of property taxes, which seems odd to me given its liberal bias and demand for premium government services”

    We passed an amendment to our constitution in 1972 limiting property taxes to 1%. With 60% of local voter approval we can exceed that through special levies for school districts etc… this amounts to about another 30%. Luckily that amendment passed before our State government went south.

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  24. David Losh

    RE: corndogs @ 22

    Thge upper tier isn’t reflecting anything. Those people have money and go along as if nothing happened. Many are selling because that would be the smart move. Cash out now.

    As with the tax credit, and all of the government actions that have lowered interest rates quickly, the Real Estate market has hit another bubble. I’ve said that all along. As soon as the there is no longer a need for the housing market to recover it will be dropped like the bad habit it is.

    My concern has always been when the exuberance will end. If you had been through other down markets you would know that Real Estate can be volatile, which it is right now.

    What we have never seen is the high number of bank controlled properties in the market place, and now the number of big money investors entering the market to buy, and rent for returns.

    You have a false sense of security, while I know that this Real Estate market place is an illusion.

    We don’t need housing to have an economic recovery.

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  25. Foreclosures Start 2013 Elevated • Seattle Bubble

    [...] time once again to expand on our preview of foreclosure activity with a more detailed look at January’s stats in King, Snohomish, and Pierce counties. First [...]

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