Home Prices and Sales Slip in South King

Home Prices and Sales Slip in South King

It’s time once again to take an updated look at how King County’s sales are shifting between the different regions around the county, since geographic shifts can and do affect the median price.

In order to explore this concept, we break King County down into three regions, based on the NWMLS-defined “areas”:

  • low end: South County (areas 100-130 & 300-360)
  • mid range: Seattle / North County (areas 140, 380-390, & 700-800)
  • high end: Eastside (areas 500-600)

Here’s where each region’s median prices came in as of May data:

  • low end: $238,500-$370,000
  • mid range: $353,000-$650,000
  • high end: $481,500-$1,540,000

First up, let’s have a look at each region’s (approximate) median price (actually the median of the medians for each area within the region).

Median Price of Single Family Homes Sold

The low end region actually slipped a bit between June and July, losing 4.8% month-over-month. However, the low end was still up 17.4% year-over-year. The middle tier was up 4.4% MOM and 12.9% YOY, while the high tier gained 0.3% MOM and 7.4% YOY.

Next up, the percentage of each month’s closed sales that took place in each of the three regions. The dotted line is a four-month rolling average.

% of Total King Co. SFH Sales by NWMLS Area

The share of sales that are taking place in the cheapest parts of the county continues to drop, down from 34.7% in April to 30.2% in July. Over the same four-month period, the share of sales in the high end regions has risen from 32.6% to 34.2%. This explains how the median price can be falling in 14 of the 29 neighborhoods but rising county-wide.

As of July 2013, 30.2% of sales were in the low end regions, 35.6% in the mid range, and 34.2% in the high end. A year ago the low end regions had more of the share and the mid range more: In July 2012 the low end made up 33.3% of the sales, the mid range was 31.8%, and the high end was 34.9%.

Here’s that information in a visual format:

Bank-Owned: Share of Total Sales - King County Single-Family

Finally, here’s an updated look at the percentage of sales data all the way back through 2000:

% of Total King Co. SFH Sales by NWMLS Area since 2000

July marks three months in a row that the middle tier has had the most sales while the low tier has the least, which is quite unusual historically.

  

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.

24 comments:

  1. 1
    Erik says:

    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.

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  2. 2
    Dave0 says:

    “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?

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  3. 3
    Macro Investor says:

    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

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  4. 4
    The Tim says:

    RE: Dave0 @ 2 – Sorry, as I was working on the post, originally I had a data error that made it appear that the middle tier median fell as well. After I corrected the error I forgot to update that bit of prose. I’ve updated it to a correct statement now. Thanks!

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  5. 5
    JWS says:

    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 0

  6. 6
    Blurtman says:

    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….”

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  7. 7
    McGrath says:

    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.”

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  8. 8
    Erik says:

    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.

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  9. 9
    Jonness says:

    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 0

  10. 10
    mike says:

    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.

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  11. 11
    mike says:

    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.

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  12. 12

    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.

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  13. 13
    Erik says:

    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.

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  14. 14

    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.

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  15. 15
    mike says:

    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.

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  16. 16
    corndogs says:

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

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  17. 17
  18. 18
    Macro Investor says:

    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.

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  19. 19

    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.

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  20. 20
    sam says:

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

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  21. 21
    mike says:

    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.

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  22. 22
    sam says:

    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?

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  23. 23
    Lo Ball Jones says:

    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.

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  24. 24
    JWS says:

    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/

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