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.

24 responses to “Home Prices and Sales Slip in South King”

  1. Erik

    I don’t think that Vashon should be included in the same group as downtown Seattle. Is Vashon similar to Eastlake, Ballard, Wallingford, or Capital Hill? No. Aren’t we trying to group similar areas to get a trend? Vashon is a lot of old retired people and the other areas have a lot of young hipsters and working folk. The demographics are completely different I would think.

    Rate this comment: Thumb up 2

  2. Dave0

    “This explains how the median price can be falling in two of the three regions but rising county-wide.”

    Huh? It looks to me like median price only fell (MoM at least) in the south-end. Where else is it falling?

    Rate this comment: Thumb up 2

  3. Macro Investor

    Mortgage applications down 50% in last 3 months. Wake up, Tim. Any significant increase in rates and it all happens again. And no, it hasn’t happened since the early 80s — so kindly spare us your short term charts.

    http://www.zerohedge.com/news/2013-08-14/mortgage-activity-plunges-50-april-2011-levels

    Rate this comment: Thumb up 5

  4. JWS

    RE: Macro Investor @ 3

    The 50% decline in mortgage applications is mainly from a drop in refinancing, not home purchases. The applications for purchases have started to slip too, but nowhere near 50%

    Rate this comment: Thumb up 5

  5. Blurtman

    Kirk: “More stimulus, Scotty!” “We are heading toward the vortex.”

    Scotty: “I’m doing all I can, Captain, the warp drives are blown, and the gravitational force is just too strong.”

    Spock: “Captain, it is quite illogical to solve a crisis caused by debt saturation with even more debt.”

    Bones: “Dammit Jim, I am just a poor country doctor, but it looks my my golly Federation pension has been vaporized.”

    Sulu: “Captain, about last night….”

    Rate this comment: Thumb up 5

  6. McGrath

    RE: Erik @ 1

    Hey brainiac, here are some Vashon Island stats from the US Census:

    “The population was spread out with 23.2% under the age of 18, 4.6% from 18 to 24, 25.1% from 25 to 44, 34.0% from 45 to 64, and 13.1% who were 65 years of age or older. The median age was 44 years.”

    Rate this comment: Thumb up 3

  7. Erik

    RE: McGrath @ 7
    I saw that after I posted my comment. I tried to delete it, but I was unable to. It seems like the editing function and deleting function are not working properly anymore.

    Rate this comment: Thumb up 3

  8. Jonness

    By Erik @ 8:

    RE: McGrath @ 7
    I saw that after I posted my comment. I tried to delete it, but I was unable to. It seems like the editing function and deleting function are not working properly anymore.

    I haven’t been able to edit a thing for days. The edit screen just hangs there forever.

    Rate this comment: Thumb up 2

  9. mike

    Perhaps South King is lagging because it has more “pent up” (underwater, unlisted, not able to sell) and distressed inventory, whereas the other areas are back to price levels that allow for more regular sales.

    Rate this comment: Thumb up 0

  10. mike

    RE: Macro Investor @ 3 – It’s probably worth noting that refinance applications are still higher than they were during 2006, when equity extraction was running at ~5% of GDP.

    http://www.calculatedriskblog.com/2013/08/mba-mortgage-applications-decrease-in.html

    (See refinance index)

    It might be necessary to look at equity lines/loans as well to really see what’s going on in comparison to the late bubble years.

    Rate this comment: Thumb up 0

  11. Ira Sacharoff

    RE: mike @ 10
    South King isn’t really lagging. The year over year stats show the highest percentage increase in prices in the low tier, higher than the middle and high tiers.
    It does have more distressed inventory, but as the other tiers have become unaffordable for many and very competitive, more people have been willing to gamble on the south. Because of the higher amount of distressed inventory, any change in the number of foreclosed and short sale homes sold will have a larger impact on the median price. So if in this most recent month where the median price dropped, it’s likely that there were more short sales/bank owned homes sold.

    Rate this comment: Thumb up 1

  12. Erik

    RE: mike @ 10
    One commenter called the lower tier areas “Dumb Money” meaning that those people are not on top of their finances so much. They are more likely to foreclose/shortsell. Also, I imagine it is their primary residence so they are trying to stay in the home as long as possible delaying the repossession by the bank. That is why I think South King is lagging…. dumb money.

    Rate this comment: Thumb up 1

  13. ira Sacharoff

    RE: Erik @ 13 – How is it lagging? Prices in the low tier are up 17% over the last year, as opposed to 12% in the middle tier, and 4% in the high tier.

    Rate this comment: Thumb up 2

  14. mike

    RE: ira Sacharoff @ 14 – Despite the greater increase, the low end prices are also still furthest from the peak. I see where you’re going with this, but it still means there are more low end houses underwater due to depreciation relative to the other tiers. Couple that with the number of low end houses underwater due to low down payments or equity extraction and the price increases aren’t having as much effect in ‘freeing up’ these homes for sale.

    Rate this comment: Thumb up 1

  15. corndogs

    RE: ira Sacharoff @ 14 – The people you are responding to are talking about lag in percentage of units sold not price.

    Rate this comment: Thumb up 0

  16. Erik
  17. Macro Investor

    By mike @ 11:

    http://www.calculatedriskblog.com/2013/08/mba-mortgage-applications-decrease-in.html

    Great comment, Mike.

    Everyone needs to look at these charts. Refinances are in the bottom quintile going back to 1990. Purchase applications are down to 1996-1998 levels.

    Something is very wrong in housing land. Prices have risen despite mortgage volumes being very low. There are invisible hands at work.

    Rate this comment: Thumb up 0

  18. Ira Sacharoff

    RE: mike @ 15
    You are right, of course. But the low tier consists of nine different MLS areas, and the market for waterfront property in Normandy Park is very different than the rundown dumps in Skyway or the East Hill of Kent or the farmland of Black Diamond and Maple Valley. Even a mile away from Skyway are very well kept up houses overlooking Lake Washington that behave entirely differently than what’s going on but a mile away.
    A year ago the low tier made up 40% of the total sales, and now makes up 31%
    Why had it risen to 40% in the first place? Wasn’t it full of distressed and underwater homeowners a year ago too? What is the present is not the future. Looking at the charts I’d venture a guess that the low tier is not likely to continue making up a smaller and smaller percentage of the total houses sold.

    Rate this comment: Thumb up 3

  19. sam

    Is this a sign that other areas (eastside) will follow price declines?

    Rate this comment: Thumb up 0

  20. mike

    By sam @ 20:

    Is this a sign that other areas (eastside) will follow price declines?

    It very well could happen, but no, this is not a sign of it being eminent. The lasting legacy of the bubble financiers was plunging certain neighborhoods into ghetto territory for the next several decades. They tried to get all of them, but the gubbmint stepped in once it was no longer only a subprime problem.

    Rate this comment: Thumb up 1

  21. sam

    RE: mike @ 21

    I have seen homes come back onto the market in the east side in the last 2 months. Homes in Issaquah are 100-125K above the price they sold for last year. New homes are being sold at $320 per square ft, which I think is outrageous and unsustainable. I feel that we will see another bust in Issaquah in about 4 years, when people need to move and interest rates are at 6%.

    In related news, Cisco is laying off 5% of its workforce, not much of an impact in seattle. But. I am guessing there are few other companies that will follow suit, given that Cisco is considered the bellwether.

    What is the expectation on the interest rates with Fed tapering impending? Does the 1% increase already has the impact of tapering baked in?

    Rate this comment: Thumb up 1

  22. Lo Ball Jones

    Give it up homeowners…the sooner you sell, the more money you get.

    The longer you wait the more there’s a chance of freefall.

    Rate this comment: Thumb up 0

  23. JWS

    RE: Macro Investor @ 18

    “Something is very wrong in housing land. Prices have risen despite mortgage volumes being very low. There are invisible hands at work.”

    Here are the invisible hands:
    http://stream.wsj.com/story/economy-stream/SS-2-17745/SS-2-302145/

    Rate this comment: Thumb up 0

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