Sale Prices Plateau as Listings Keep Tanking

Sale Prices Plateau as Listings Keep Tanking

It’s been a while since I posted an update of my charts based on the stats from Redfin’s King County region page, so let’s take a look at those.

First up the median list and sale prices per square foot. Note that the list price below includes all homes on the market, whether or not they eventually sell, so it tends to be biased toward higher numbers than the sale price chart.

King County Single-Family Home Prices

After ramping up steeply last spring and early summer, sale prices hit a bit of a peak in September, and have been basically plateaued since then. Listing prices dove at the close of the year and are shooting back up in early 2013 faster than we’ve seen in years, but so far this has not carried through to sale prices.

The total number of listings on the market continues to fall to ever-more-depressing levels:

King County Single-Family Home Listings

And the latest average sale-to-list ratio came in at 99.4%, the highest it’s been since sometime before 2010 and probably since 2005 or 2006.

King County Single-Family Home Sale-to-List Ratio

It’s interesting to me that despite record low inventory, and increasingly frequent multiple offers, the average sale-to-list ratio is still below 100% here in the Seattle area.

No doubt there are many homes that are selling above asking price, but an average below 100% coupled with prices that are basically flat since September suggests to me that the market is not quite to the point where I’d call it “overheated” just yet.

Full disclosure: The Tim is employed by Redfin.

  

About 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.

30 comments:

  1. 1
    mike says:

    My observation is people are bidding up the prices on move in ready houses, whereas a lot of the fixers are sitting and going for under asking. As far as I can tell in my own little slice of Seattle, it’s the unrealistically priced dumps that are driving down the sale to list.

    On the other hand, I’m a little shocked at what people are paying for turn-key – it feels like 2005 where “granite counters add $100K” except now it’s quartz and silestone.

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  2. 2

    RE: mike @ 1

    Why Are Some Buyers So Friggin’ Lazy

    Its just like Consumer Reports defect counts on cars, the best is .9 and the worst is like 1.7 in 6 month defects…..so close, all cars are about the same….the $10,000 question on cars isn’t is it squeaky clean, is the defect a minor seatbelt that latches funny or a serious stuck acceleration idle flaw?

    Paying an extra $10-20K for a car that rates high is a complete joke, if fixing the flaw on the lower rated one is only a few hunded dollars…

    Same logic applies to turn key houses…only the extra cash can be $50-100K for something you could fix for 1/10th the price…

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  3. 3
    Scotsman says:

    That drop off in inventory is really quite remarkable. While we happily speculate on the reasons, knowing the real thought process in the average potential seller’s brain would be valuable. I doubt that many are currently underwater. Is it unemployment fears, a bunker mentality, desire to focus on paying down debt, what?

    How about a survey on why people aren’t listing/selling/moving? Or did I miss that?

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  4. 4
    mike says:

    RE: Scotsman @ 3

    Some of it, I’m sure, is that many sellers didn’t see the market turning around so quickly and while they’d like to sell they aren’t ready.

    Another issue I’m seeing personally is someone who would like to downsize, is rightfully concerned that they won’t find a new house anytime soon.

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  5. 5
    Blurtman says:

    RE: Scotsman @ 3 – Why would you buy someone else’s overpriced home after selling your own overpriced home?

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  6. 6
    boater says:

    I’m in the position of trying to decide to sell my other home or continue renting it out. Right now if I get what looks to be a market rate for my house renting it out is slightly better. That to me suggests we are not in a bubble.

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  7. 7
    Scotsman says:

    RE: mike @ 4

    Hmmmm- maybe, but we’re looking at a pretty repetitive/consistent four year trend, plenty of time to make adjustments.

    My guess would be that there’s a hitch in the move-up market, but I have very few friends who would be participating, so very little personal knowledge. Most of the folks my age (late 50’s) are doing OK/well and are more focussed on retirement planning and/or college costs. Housing issues don’t seem to be on their radar. A very few looking for rentals but more typically out of Seattle proper. Maybe much of the past sales activity was more speculation driven and what we have now is the “normal” market.

    My money is on a pervasive uncertainty- too many future unknowns- the economy, banking system, healthcare, government stability, etc. But I really wish it was possible to get into the heads of a variety of other people.

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  8. 8
    Scotsman says:

    RE: Blurtman @ 5

    Net/net wouldn’t you just be making the change in size, location, etc. that you wanted? I’m a bit of a doomer, but looking just at current fundamentals it’s pretty easy to make the argument that prices aren’t that far out of line. Rates, affordability, wage trends (at least for Seattle) don’t look that bad by historical measures.

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  9. 9
    Saulac says:

    RE: softwarengineer @ 2
    Why Are Some Buyers So Friggin’ Lazy

    They are not lazy. They are just broke. Fact is, many buyers cannot afford a stick of gum after closing.

    Same reason why some buy new cars. They do not have any reserved fund for repair.

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  10. 10
    mike says:

    RE: Saulac @ 8 – Possibly, but watching what is going on the 98117 (Ballard and adjacent) areas it doesn’t seem to be attracting that kind of buyer. People are putting 20% or more down on $500K+ houses in order to have the winning bid. I’d expect many of the people ponying up $600K for a brand new/ fully remodeled place could also afford to renovate one the $400K crap boxes, but they want a place that is move in ready.

    Scotsman, I’m hesitant to call this a 4 year trend. I know a number of people that bought 4 years ago that are now underwater. 2009 was not a kind year for people that bought in certain areas. Even in the areas with an unusually strong market, people were not as optimistic about selling their homes just 18 months ago.

    Last year we were able to get a less than asking price offer accepted then come back and ask for another $10K in concessions on a home that had been on the market for over 3 weeks. I don’t see how that could happen now at last years prices.

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  11. 11
    Kelley Roberts says:

    Thanks for the data! If you took a report of only the listings which sell within 10 days on market (aka right after offer review day) the average is at or above 101% for most of the North Seattle neighborhoods south of 85th. Considering over half the listings are selling in this time in competitive neighborhoods – it’s worth noting this statistic separately.

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  12. 12
    Marc says:

    I am at a loss for what is happening in this market but one thing that’s for certain is that in the areas my clients are buying and selling prices have not plateaued. To the contrary they are accelerating like mad. People are bidding stuff up like crazy. I deal mostly in close in Seattle and Bellevue/Kirkland/Redmond and the bidding wars are getting ridiculous. Just watched a client bid more than 20% over list price and get beat out on price. Preinspections are becoming passe and regular folks are starting to waive financing and appraisal contingencies just to try and be competitive.

    It’s like watching dogs fighting over a bone. Perhaps a significant change in the mix of homes being sold is the reason why the county-wide numbers look so tame by comparison, i.e., perhaps there are relatively more homes selling in outlying areas where the bidding wars aren’t happening.

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  13. 13
    Howard says:

    By Marc @ 11:

    I am at a loss for what is happening in this market but one thing that’s for certain is that in the areas my clients are buying and selling prices have not plateaued. To the contrary they are accelerating like mad. People are bidding stuff up like crazy. I deal mostly in close in Seattle and Bellevue/Kirkland/Redmond and the bidding wars are getting ridiculous. Just watched a client bid more than 20% over list price and get beat out on price. Preinspections are becoming passe and regular folks are starting to waive financing and appraisal contingencies just to try and be competitive.

    It’s like watching dogs fighting over a bone. Perhaps a significant change in the mix of homes being sold is the reason why the county-wide numbers look so tame by comparison, i.e., perhaps there are relatively more homes selling in outlying areas where the bidding wars aren’t happening.

    What are you recommending your clients who are buying? 20% over listing (if the listing price wasn’t set artificially low) is ridiculous. Is this insanity sustainable?

    There are lots and lots of rentals on craigslist.

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  14. 14
    drshort says:

    I seem to recall the Redfin data being a 90 day moving average, so the increasing prices many are noticing this year will likely show up in this data starting in April (like last year and the year prior).

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  15. 15
    Scotsman says:

    RE: mike @ 10

    Regarding my four year trend comment I’m only talking about the declining inventory. The price variations I can understand as responses to the news of the day, ongoing “stimulus,” etc. But why inventory continues to dry up has me baffled, especially in light of currently rising prices and bidding wars. Do people really expect prices to keep rising at a steady rate?

    Should “sell now or own it forever” be back in style?

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  16. 16
    Dev says:

    Thank you, Tim. This is much needed information for any buyer or seller.

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  17. 17
    ricklind says:

    By Blurtman @ 5:

    RE: Scotsman @ 3 – Why would you buy someone else’s overpriced home after selling your own overpriced home?

    ?Because it’s a less expensive overpriced home leading to less monthly expense? Just my guess.

    Fel Temp Reparatio

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  18. 18
    SG says:

    RE: Scotsman @ 7 – I can tell you about my thought process. We bought our home in 2010 in Bellevue and definitely not underwater – in fact we may gain about 20% if we choose to sell today. But we are in one of two mindsets at any time
    1. 90% of the time we are just ‘content’ being in our current home and I feel many of my neighbors feel the same way. The silver lining from the recent financial crisis is that most Americans have learnt to be content with what they have and perhaps a little scared too knowing that greed can sometimes be punishing.
    2. 10% of the time we are scared to enter the market as a buyer. We don’t have the means to keep this home and buy a second home. Given the crazy bidding wars, no way are we going to step into one.

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  19. 19
    Marc says:

    RE: Howard @ 12 – I have literally pleaded with some clients to not even look at new listings. If you’re shopping for a $400k to $500k single family home in Greenlake/Phinney/Fremont/Ballard it’s pure insanity. I’ve seen a home that needs a top to bottom remodel with an abandoned oil tank get 22 offers. DON’T DO IT!

    You’ve got a better chance of bagging a Yeti.

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  20. 20

    By Marc @ 18:

    RE: Howard @ 12 – I have literally pleaded with some clients to not even look at new listings. If you’re shopping for a $400k to $500k single family home in Greenlake/Phinney/Fremont/Ballard it’s pure insanity. I’ve seen a home that needs a top to bottom remodel with an abandoned oil tank get 22 offers. DON’T DO IT!

    You’ve got a better chance of bagging a Yeti.

    Yetis are starting to see multiple offers too.

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  21. 21
    ray pepper says:

    RE: Howard @ 12 – there is a perfectly good explanation as to why people get into bidding wars on homes……….I think its summed up in this video I seem to post alot here: http://www.youtube.com/watch?v=0iqFO-Udq6s

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  22. 22
    ARDELL says:

    There are a lot of people who would have their homes listed for sale if they weren’t afraid of having no where to go. Some mls rules allow sellers to list their homes “subject to seller finding suitable replacement housing”, but our mls does not. It may be an idea whose time has come, and I’m pretty sure all of the other mls systems I have belonged to over the last 23 years have allowed that type of listing.

    If all of the would be sellers could list their homes with that caveat the inventory would look quite different, and there would be lots of match ups of sellers looking for each other’s homes.

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  23. 23
  24. 24
    Blurtman says:

    RE: ricklind @ 17 – Buy low, sell high. And everyone’s home is overpriced except mine.

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  25. 25

    RE: mike @ 10

    Become Your Own Contractor

    And you can up the quality on the remodel for like 1/4th the cost….and hire your own lead carpenters and such…rent a truck to haul material yourself and shop for sales.

    Its not that hard [even SWE did it]….ohhhh, I know, you lose the contractor’s guarentee for poor failed work….kind of a moot point if that contractor disappears after a year or two [they do too].

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  26. 26
    Eastsider says:

    By Howard @ 13:

    What are you recommending your clients who are buying? 20% over listing (if the listing price wasn’t set artificially low) is ridiculous. Is this insanity sustainable?

    There are lots and lots of rentals on craigslist.

    The number of rental listings on craigslist have declined measurably over the past year on the Eastside. Also, apartment rents have gone up 10% YoY (my estimate) near job centers. If you are looking for a decent affordable rental house for your family, good luck!

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  27. 27
    Howard says:

    I am in a SFR rental on Ed Hill, I pay $1650 a month for a 4 bed 2 bath. My landlord has agreed not to raise the rent till August 2014

    Howard

    By Eastsider @ 26:

    By Howard @ 13:
    What are you recommending your clients who are buying? 20% over listing (if the listing price wasn’t set artificially low) is ridiculous. Is this insanity sustainable?

    There are lots and lots of rentals on craigslist.

    The number of rental listings on craigslist have declined measurably over the past year on the Eastside. Also, apartment rents have gone up 10% YoY (my estimate) near job centers. If you are looking for a decent affordable rental house for your family, good luck!

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  28. 28
    masaba says:

    Inventory is low because, since the housing bust, new construction has been abysmal. You can see it in apartment rentals as well, the inventory is low and the prices are high. It’s probably even worse in cities like Seattle due to the continuing exodus from rural America to the job centers.

    Construction is set to boom in the next several years, which will perhaps bring some balance back to the market.

    http://www.fool.com/investing/general/2013/02/28/housing-starts-partying-like-its.aspx

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  29. 29
    Jonness says:

    IMO, this is not the start of a new bubble. That being said, it’s shaping up to be a hot Spring selling season. If it sustains long enough to actually start pushing up the boonies, then we can start talking about a bubble.

    Median price to median income is back to 2002/2003 levels. It would fall much further if it weren’t for all the funny money holding rates down. But given the low rate environment along with the low housing supply (from all the underwater would-be sellers and economic fear), it’s not surprising to see a floor having formed. Whether this is a temporary blip or something more long-term depends on what happens to the economy from here on out. Bernanke will attempt to error on the side of inflation; thus, he’ll print until he can print no more. This could keep rates low for the next couple of years. The eventual outcome could be inflation, which will push people back into hard assets.

    I started back into RE accumulation mode last October. I wasn’t attempting to pick the bottom. I decided it was time to move, so I bought a house and decided to buy the property next door as well. Thus, whether I like it or not, I’m in the game and holding 3 properties.

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  30. 30
    Macro Investor says:

    By Scotsman @ 3:

    That drop off in inventory is really quite remarkable. While we happily speculate on the reasons, knowing the real thought process in the average potential seller’s brain would be valuable. I doubt that many are currently underwater. Is it unemployment fears, a bunker mentality, desire to focus on paying down debt, what?

    How about a survey on why people aren’t listing/selling/moving? Or did I miss that?

    Sheesh. Stop making it so complicated. Nobody is selling because they’d have to discount their house 10% to get rid of it in any reasonable amount of time — then be stuck… unable to find a decent place to move into. Or be forced to bid up the only 2 decent properties listed.

    You have to be willing to lose a lot of money to either move up or sideways. 10% to sell quickly, and another 10% to buy quickly. The move up market is gridlocked.

    Of course, this never applied to a Ballard and a few in-city neighborhoods that yuppies are dying to be seen in. These areas never really had a decline.

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