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.

31 responses to “Listing Quantity Improving at 2013 Year’s End”

  1. mike

    Seems we’re still at least a year or two away from an inventory situation that could lead to price declines, in King County anyway.

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  2. Roy Batty

    An increase of a few percentage points on mortgage rates may likely cause a price decline in all areas before inventory is the cause in any particular area. Would impact sellers more than buyers I imagine

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  3. sam

    We are one week away from putting Jan 2014 in the books. The inventory growth for SFH in king county in 23 days is literally 26, TWENTY SIX. i.e. less than 1%. Not really hopeful that inventory situation is going to change. Staying out of the market.

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  4. Erik

    RE: Roy Batty @ 2
    Uhhhh….. good one. I think we all accept that if affordability went way up, house prices would got down. No way will rates suddenly jump up by 3%. The fed has been saying they won’t increase rates this year. If interest rates suddenly went up, I would be extremely happy. I would go out and buy a really nice place all cash. This is an extremely unlikely scenario.

    A more likely scenario is that the global economy slumps and blackstone starts dumping rental houses on the market and I score a cash sale that way.

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  5. Erik

    RE: sam @ 3
    Our economy is still very fragile. It won’t take much for another recession to happen. Wait on the sidelines with cash in hand until inventory goes up and prices go back down.

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  6. SaffyThePook

    By Erik @ 4:

    RE: Roy Batty @ 2
    A more likely scenario is that the global economy slumps and blackstone starts dumping rental houses on the market and I score a cash sale that way.

    I disagree. I think the most likely scenario is that the current trend of slow improvement in the US continues. This is an agonizingly slow recovery but is exactly what you want to re-establish a stable equilibrium in a housing market that was very broken for a long time.

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  7. Erik

    RE: SaffyThePook @ 6
    That is what would happen if there was nothing that would shake things. At this point, I feel like the probability is that something will happen. I don’t know what will happen, but something will happen. I think that when something happens things will tumble back down. Could be an earthquake, could be another terrorist attack, I have no idea what will happen. It just seems like the probability is that something will happen. Watch out when it does.

    My financial adviser thinks the same thing that you think. He says in the next 30 years, he doesn’t see another big downturn in the stock market. To me that’s like saying “I won’t wear my seat belt because I don’t forsee myself getting in a car accident for the next 30 years”. It is called an accident because it is completely unplanned. The next recession and housing bust will be completely unplanned. We won’t be planning for it. Something will just happen like we have seen in recent history. What if there in another terrorist attack? What if we go to war? What if there is a natural disaster? I don’t mean to be a negative Nancy, but it just seems like probability would indicate something will happen.

    By the way… Do you call housing market price increases of 15-20% a stable increase? That is what we have seen the last couple years.

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  8. Kary L. Krismer

    By Erik @ 7:

    By the way… Do you call housing market price increases of 15-20% a stable increase? That is what we have seen the last couple years.

    Not really. The non-distressed median has not increased that much. In December 2009 it was $413,000. In December 2013 it was $445,000. That’s less than 8% over four years.

    For a long time it hovered between $380,000 and $420,000, although in December 2011 it did hit $378,000, but it was at $430,000 only about six months later.

    A lot of the movement you see in the published figures is just mix, although no doubt some areas have increase at the rate you indicated. The the example of your condo is an example of what can happen when you have a weak market and lot of REOs and short sales in the mix.

    Numbers from NWMLS and other sources, but not compiled by or guaranteed by the NWMLS.

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  9. Erik

    RE: Kary L. Krismer @ 8
    The last couple years means 2012 and 2013. Not from 2009 on.

    Real estate doesn’t seem like a good deal right now. Super low inventory plus a recent steep price increase. Something needs to happen.

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  10. Kary L. Krismer

    On the topic of rising prices, I can’t believe Garry Shandling was complaining about a view property in L.A. costing $350,000 back in 1986:

    I’ve been looking for a house in L.A., . . .I said to the realtor who showed me the house. Now, I’ve never bought a house before. She shows me a house, $350,000 on a hill, two bedrooms, she tells me it has a great view. For $350,000, I’d better pen up the curtains and see breasts against the window.

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  11. ARDELL

    RE: Kary L. Krismer @ 8

    A lot of the changes in inventory since 2001 have other causes as well.

    Seems odd one would adjust prices for seasonal changes and cost of living changes, and yet not adjust “inventory” for massive changes in the way the data is compiled by the mls.

    Used to be a lot more common for agents to list a home twice in two different mls areas back in 2001 than it is today. It wasn’t until the public sites started pulling mls data that the mls had to put stricter guidelines on doing that. Maybe 2006?

    Also with the robust market came a lot more new construction. In new construction 5 active listings can represent many, many more homes for sale, since builders do not put all of their lots in the mls separately. Not sure if they did back in 2001. Seems to me they did as I remember the mls asking those big condo buildings and large new construction developments not to flood the mls with listings for each and every unit or lot for sale.

    100 resale homes for sale will appear as 100 active listings, or more with duplications.

    100 new constructions homes can show as 5 or so active listings.

    That is why many of the new constructions homes say 240 days even if they are selling well. The builder keeps one listing in there for each model and just changes the description as they sell them from “Lot 1″ to “Lot 20″ to Lot 48″ all for the same mls listing. One new construction listing can actually end up being 40 houses “for sale” depending on the development size. Clearly each is more than one home for sale almost always.

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  12. ARDELL

    I’m seeing a lot of duplications in townhomes right now. Two mls numbers. Listed as “residential” and also as “condo”. Same property…two listings. Talking outside of Seattle proper…as most townhomes in Seattle are classified as SFH unlike everywhere else. And Snohomish County does the opposite. They call a lot of their Single Family Homes condos…depending on lot size.

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  13. softwarengineer

    RE: Erik @ 5

    Its a Week or So Trend

    May not mean anything YOY….stocks are tanking bad recently.

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  14. softwarengineer

    RE: ARDELL @ 11

    I Hear Breath On a Mirror Doesn’t Qualify First Time Home Buyers Anymore

    You need a “VERIFIABLE” income history….I’m sure this really crimps the “self-employed” income fabrications too. Hades, who knows….5 homes more out there might be a lot using this hardened loan qualification requirement in Seattle now, thinning way down the “pre-approved” crowd.

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  15. mike

    RE: Erik @ 7RE: Erik @ 7 – The last earthquake and terrorist attacks were followed shortly by a period of rapid appreciation in house prices.

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  16. Erik

    RE: mike @ 15
    Good point. I didn’t really watch the economy back then or the housing market because I didn’t have any money.

    SWE- I think this is the 10% correction they have been talking about. People are selling off. I am going to buy some beat down stocks that are driven by the financial crisis in Europe in a couple weeks if we hit a 10% decline. See if I can strike it big. If I do, I will buy a super nice place with as little down as possible. Mike could be right, the time of the housing bust may be over. I want the stock market to tank then, so I can make money there.

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  17. Kary L. Krismer

    By ARDELL @ 12:

    I’m seeing a lot of duplications in townhomes right now. Two mls numbers. Listed as “residential” and also as “condo”. Same property…two listings. Talking outside of Seattle proper…as most townhomes in Seattle are classified as SFH unlike everywhere else. And Snohomish County does the opposite. They call a lot of their Single Family Homes condos…depending on lot size.

    In Seattle there isn’t typically a condo association formed on the small townhouse projects, so I doubt you’d see those double listed that much. If there’s no condo association there would be little need for a double listing.

    In contrast, down in Auburn there are some houses that are the condo form of ownership, so you would be very likely to see those listed both ways so that people wanting houses would see them. For those buyers should use the Form 28, condominium purchase and sale.

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  18. ARDELL

    RE: Kary L. Krismer @ 17

    I think that’s what I just said Kary. :) “Talking outside of Seattle proper…as most townhomes in Seattle are classified as SFH unlike everywhere else.”

    SWE 14…not sure what that has to do with decreasing inventory numbers…I would think that would be an argument for the opposite.

    My point is that in 2001 there were many, many more duplications of the same property and also more builders and condos listing all of their “available” condos than there are today. Agents got tired of scanning through 100 condos of some new building to find “the other” listings, and so they streamlined to listing only a few representative models.

    For these reasons 2001 could look like twice the inventory of 2014 and in actuality be the same. The data input methods are not nearly the same now as they were prior to 2006 or so.

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  19. mike

    RE: softwarengineer @ 14 – Yep, that’s what we found. The underwriters used an averaging method that cut the SE income used for qualification down to about 30% of actual gross. Fortunately we didn’t need the SE income to qualify, but it was interesting how much it was discounted. It felt like we were agreeing to “well, if that’s how much you say we make, that’s what we make” – but unlike during the bubble days the “how much” was well below actual income.

    Compare that to 2006 when a buddy of mine needed to go stated income to buy a condo because his current house wasn’t sold yet. The stated loan probably overestimated his income by 25%. Fortunately for him, the previous sale closed as expected and his real DTI was in the healthy range. Had the market turned and he was stuck carrying 2 mortgages, his front end DTI would have been in the 40%+ range.

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  20. Azucar

    By Erik @ 4:

    RE: Roy Batty @ 2
    If interest rates suddenly went up, I would be extremely happy. I would go out and buy a really nice place all cash.

    You’ve been talking about having a recent (couple of years ago) short sale and also having netted something like $100K from the recent sale of a place you bought after that, and you’ve also been talking about being out of work.

    So I can’t imagine you having more that a couple of hundred thousand dollars lying around.

    Just how much are you expecting “really nice places” to drop from their current levels if interest rates suddenly go up? Or maybe we have different definitions of “really nice”. Or maybe you have a bunch of cash from laboratory operations or some other source… Breaking Bad is a pretty cool show.

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  21. Azucar

    By Erik @ 4:

    RE: Roy Batty @ 2
    If interest rates suddenly went up, I would be extremely happy. I would go out and buy a really nice place all cash.

    You’ve been talking about having a recent (couple of years ago) short sale and also having netted something like $100K from the recent sale of a place you bought after that, and you’ve also been talking about being out of work.

    So I can’t imagine you having more that a couple of hundred thousand dollars lying around.

    Just how much are you expecting “really nice places” to drop from their current levels if interest rates suddenly go up? Or maybe we have different definitions of “really nice”. Or maybe you have a bunch of cash from laboratory operations or some other source… Breaking Bad is a pretty cool show.

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  22. doug

    The mega massive economic crash has begun all downward trend lines should break very soon. This will be the crash that should have happened in 2007 except it will now be a whole lot worse. The dow will fall to 1994 prices where the bubble economy really started about 5000
    The drop will be fast and sharp but I do not believe it wil fully bottom until october. So there is still a little time to sell whatever you have including real estate. Real estate stocks and gold are very very bad investments and after this crash they will probably not come back to todays levels for 20 to 30 years. We are about to enter very dark times especially in big cities including seattle. The ponzi bubble economy is officially OVER…….

    THE GOOD NEWS SEAHAWKS ARE GOING TO WIN THE SUPERBOWL

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  23. doug

    The mega massive economic crash has begun all downward trend lines should break very soon. This will be the crash that should have happened in 2007 except it will now be a whole lot worse. The dow will fall to 1994 prices where the bubble economy really started about 5000
    The drop will be fast and sharp but I do not believe it wil fully bottom until october. So there is still a little time to sell whatever you have including real estate. Real estate stocks and gold are very very bad investments and after this crash they will probably not come back to todays levels for 20 to 30 years. We are about to enter very dark times especially in big cities including seattle. The ponzi bubble economy is officially OVER…….

    THE GOOD NEWS SEAHAWKS ARE GOING TO WIN THE SUPERBOWL

    Rate this comment: Thumb up 0

  24. doug

    The mega massive economic crash has begun all downward trend lines should break very soon. This will be the crash that should have happened in 2007 except it will now be a whole lot worse. The dow will fall to 1994 prices where the bubble economy really started about 5000
    The drop will be fast and sharp but I do not believe it wil fully bottom until october. So there is still a little time to sell whatever you have including real estate. Real estate stocks and gold are very very bad investments and after this crash they will probably not come back to todays levels for 20 to 30 years. We are about to enter very dark times especially in big cities including seattle. The ponzi bubble economy is officially OVER…….

    THE GOOD NEWS SEAHAWKS ARE GOING TO WIN THE SUPERBOWL

    Rate this comment: Thumb up 0

  25. doug

    The mega massive economic crash has begun all downward trend lines should break very soon. This will be the crash that should have happened in 2007 except it will now be a whole lot worse. The dow will fall to 1994 prices where the bubble economy really started about 5000
    The drop will be fast and sharp but I do not believe it wil fully bottom until october. So there is still a little time to sell whatever you have including real estate. Real estate, bonds, stocks and gold are very very bad investments and after this crash they will probably not come back to todays levels for 15 to 20 years. We are about to enter very dark times especially in big cities including seattle. The ponzi bubble economy is officially OVER…….

    THE GOOD NEWS SEAHAWKS ARE GOING TO WIN THE SUPERBOWL

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  26. Voight-kampff

    RE: Roy Batty @ 2
    No comment,
    *I just want Roy Batty to see the screen-name/moniker I have been using for years. and then give him an excuberant virtual high five!

    *im a dork

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  27. Kary L. Krismer

    RE: doug @ 22-25 – Fair trade. ;-)

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  28. SaffyThePook

    By Erik @ 7:

    RE: SaffyThePook @ 6
    That is what would happen if there was nothing that would shake things. At this point, I feel like the probability is that something will happen. I don’t know what will happen, but something will happen. I think that when something happens things will tumble back down. Could be an earthquake, could be another terrorist attack, I have no idea what will happen. It just seems like the probability is that something will happen. Watch out when it does.

    My financial adviser thinks the same thing that you think. He says in the next 30 years, he doesn’t see another big downturn in the stock market. To me that’s like saying “I won’t wear my seat belt because I don’t forsee myself getting in a car accident for the next 30 years”. It is called an accident because it is completely unplanned. The next recession and housing bust will be completely unplanned. We won’t be planning for it. Something will just happen like we have seen in recent history. What if there in another terrorist attack? What if we go to war? What if there is a natural disaster? I don’t mean to be a negative Nancy, but it just seems like probability would indicate something will happen.

    By the way… Do you call housing market price increases of 15-20% a stable increase? That is what we have seen the last couple years.

    I think your financial advisor is wise to consider a 30 year horizon given your stage in life but I’d be surprised if he asserts there won’t be any big downturn. Nobody can predict that. However, long term history is probably the best predictor of long term trends and in that sense, it’s probably a safe bet that the market will be up 30 years from now.

    If you look at the long term performance of the housing market, it’s been on roughly a 4% appreciation slope for decades. If you extrapolate that trend from the pre-boom years through today, the recent rapid appreciation of the market is only a partial rebound from the crash back towards the long term trend line. As we get closer to the trend line, I think the market will slow and we’ll asymptotically resume the trend, give or take some shorter term deviations. What we don’t want is to way overshoot the trend with another bubble due to too loose credit, perverse incentives, etc and then ring around the trendline with ongoing booms and busts. I think this is what the Fed is trying to avoid and I applaud Bernanke.

    Regarding unpredictable catastrophic events, I would argue that you shouldn’t make major life decisions based on the fear of them happening. Will there be wars, earthquakes, terrorist attacks, etc? Of course there will. Maybe even tomorrow. But the world won’t end and as long as your investments are diversified you’ll be able to tolerate a shock to one or more asset classes. If, in fact, the world does end then you’re screwed no matter what so you shouldn’t worry about it.

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  29. whatsmyname

    RE: doug @ 25 – Doug, I have tried to follow your advice. I even sold my shaving kit. I have an armor covered dune buggy, awesome leather jacket, and bandanas in every color. However; while your plan may work well in open country with desert landscapes, here one needs some real estate as a safe place to store the 100,000 cases of dinty moore stew and nalleys chili.

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  30. Scotsman

    ” If you extrapolate that trend from the pre-boom years through today, the recent rapid appreciation of the market is only a partial rebound from the crash back towards the long term trend line.” SaffyThePook

    Exactly- tracks long term inflation and historic wage growth in nominal dollars. In addition the Seattle market is stronger than the national scene because of local employment trends. While there may be a slowing I’m still not convinced the FED will create a situation where they effectively collapse markets. At least not yet. There is still the perception of room for QE continuation. After a small taper the IMF and others are already calling for a reversal. The political pressure to “do something” will be significant and more QE is the only answer at this point. Sure, it won’t work in the long run be we aren’t there yet. Remember to keep checking that affordability index, local unemployment, etc. Available cash flow drives housing prices. Higher rates don’t mean as much as many think, especially if there’s an expectation of coming inflation and solid employment prospects.

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  31. sam

    just 4 SF homes more than Dec numbers in King county. Interest rates are now at 4.25%. Looks like we may have an inventory decrease and the metrics will start favoring sellers again.

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