NWMLS: Record Low Inventory As Home Prices Flatten

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December market stats were published by the NWMLS yesterday afternoon. Here’s their press release:

Home buyer frustration continues
Limited selection, ongoing increases in prices and interest rates

Like many other months of 2016, December was frustrating for buyers across Washington state as they encountered depleted inventory and rising prices. Post-election hikes in interest rates – with more on the horizon — added to would-be homeowners’ worries.

“The housing market remains frenzy hot on a seasonal basis,” exclaimed J. Lennox Scott. Noting sales activity was substantially higher than the number of new listings, he said such conditions “continue to foster a competitive market where homebuyers are just waiting for the next new listing to come on the market.”

It must get tiring to be so pumped up all the time about overpriced homes.

CAUTION

NWMLS monthly reports include an undisclosed and varying number of
sales from previous months in their pending and closed sales statistics.

Here’s your King County SFH summary, with the arrows to show whether the year-over-year direction of each indicator is favorable or unfavorable news for buyers and sellers (green = favorable, red = unfavorable):

December 2016 Number MOM YOY Buyers Sellers
Active Listings 1,639 -29.0% -7.1%
Closed Sales 2,155 -4.2% +4.7%
SAAS (?) 0.96 +18.1% -4.8%
Pending Sales 1,641 -26.2% +11.3%%
Months of Supply 0.76 -25.9% -11.3%
Median Price* $550,000 0.0% +8.3%

Basically another terrible month for home buyers. Inventory hit an all-time low, but despite that, sales were actually up from a year ago. The one good note is that prices have been flat for the last three months. Small comfort.

Here’s your closed sales yearly comparison chart:

King County SFH Closed Sales

Closed sales fell slightly from November to December, but were up a bit from a year ago.

King County SFH Pending Sales

Pending sales fell twenty-six percent in December, but were also still up year-over-year, by eleven percent.

Here’s the graph of inventory with each year overlaid on the same chart.

King County SFH Inventory

Listings fell 29 percent from November to December, which is a fairly standard drop for this time of year. However, what is not standard is the absolute level of listings, which is now at an all-time low.

Here’s the supply/demand YOY graph. “Demand” in this chart is represented by closed sales, which have had a consistent definition throughout the decade (unlike pending sales from NWMLS).

King County Supply vs Demand % Change YOY

At least the demand line in this chart moved closer to zero instead of powering even higher. Still strongly in seller’s market territory, but at least not getting worse.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

Year-over-year home price gains fell from nearly fifteen percent in October to ten percent in November, to eight percent in December.

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994 (not adjusted for inflation).

King County SFH Prices

Given the extreme lack of inventory, it is somewhat surprising that home prices have stayed flat the last few months.

December 2016: $550,000
July 2007: $481,000 (previous cycle high)

Here’s the article from the Seattle Times: Seattle-area home pickings slimmer than ever: high demand, limited supply


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.

100 comments:

  1. 1
    Dave0 says:

    Most of the images aren’t loading for me. Any idea why?

  2. 2

    RE: Dave0 @ 1 – Just a glitch–it happened on a couple of the graphs of the prior post early on too. Tim eventually fixed it.

  3. 3

    RE: Dave0 @ 1 – See, I told ya! ;-)

    Given the level of pendings and sales the low inventory is not that surprising. What is surprising is that the increased prices have not resulted in more new listings. There were 3 fewer new listings in December 2016 than December 2015!

    Number “3” from math calculation done in head from NWMLS data which is not guaranteed by the NWMLS.

  4. 4
    uwp says:

    By Kary L. Krismer @ 3:

    RE: Dave0 @ 1 – See, I told ya! ;-)

    Given the level of pendings and sales the low inventory is not that surprising. What is surprising is that the increased prices have not resulted in more new listings. There were 3 fewer new listings in December 2016 than December 2015!

    Number “3” from math calculation done in head from NWMLS data which is not guaranteed by the NWMLS.

    Do you think this is mainly because people who would like to sell are dreading the thought of trying to buy?
    Some other factor?
    What are you hearing “on the ground?”

  5. 5
    Deerhawke says:

    Something is not quite adding up.

    Tim’s first chart above shows active listings in Dec. 2016 at 1639 — down 7.1% from 2015. That would put 2015 at about 1755 new listings. In essence, we lost 116 listings from 2015 to 2016. That is a significant drop in supply.

    But Kary you are saying that we are only down 3 new listings from 2015 to 2016. That is really just a rounding error.

    Which is it? Have listings really dried up YOY or is this just a rounding error?

  6. 6
    js says:

    The Eastside still seems to be skyrocketing. Just Seattle is leveling off.

    Eastside SFR: Prices up %19.06, Inventory down %19.74
    Seattle SFR: Prices up %5.83, Inventory up %12.3

  7. 7

    RE: uwp @ 4 – I’m not hearing anything about not selling–I mainly hear about wanting to sell! And even if I were hearing about not selling my sample size would be much too small. People tend to think agents know a lot more than they really do about whats going on and why because most agents’ sample sizes are way too small. Even most/all designate broker sample sizes would be way too small.

    One thing I hope it is not would be people converting their old house into a rental–at least if that means not taking advantage of a significant portion of the 250/500k gain exclusion from sale of residence. With our low interest rate/high appreciation environment I can see why going rental might seem attractive. IMHO though, being able to take gain tax free is not something most people should pass up if the gain is significant (or especially if tax basis would be difficult to compute). But there are exceptions to that (e.g. an elderly couple with one not in good health).

  8. 8

    RE: Deerhawke @ 5 – The number of active listings for the month is down mainly due to more listings going pending/sold. Earlier in the year there were more new actives than the prior year, but not for the month of December.

  9. 9
    Deerhawke says:

    By js @ 6:

    The Eastside still seems to be skyrocketing. Just Seattle is leveling off.

    Eastside SFR: Prices up %19.06, Inventory down %19.74
    Seattle SFR: Prices up %5.83, Inventory up %12.3

    So…. where do these numbers come from? Are you sure you are not confusing sales and inventory?

  10. 10
    jon says:

    RE: Deerhawke @ 9 – His numbers are not the same, but as close to what is on http://www.northwestmls.com/library/content/statistics/KCBreakouts.pdf

    I wonder if the overall slowdown is pricing in the ST3, upcoming education tax hikes, and the impact of a jump in interest rates would have on resale values even before the rates themselves took effect. I’m surprised by the big increase on the Eastside. I would expect some migration to the lower cost per square foot out there when rail becomes available, but we have many years of construction shutdowns ahead of us before that happens.

  11. 11
    Ace says:

    So I am a buyer on the eastside, mostly eastern bellevue/crossroads area. I’ve been aggressively bidding on houses though Nov/Dec, between 50-110k over. I’ve seen houses sell for over 20% asking.

    Is this a localized issue to Bellevue? I am surprised that the King County is flat for MoM house prices.

  12. 12
    Screenname345 says:

    I look forward to seeing price bump in Seattle come March. At least that is what I am hoping when I list my house. Last year the appreciation took off in March/April and then that was the bulk of the move up for the entire year. Just seemed to flatten out. That is also when the biggest flurry of listings seem to hit that are comps to ours which really was just a handful of houses. I think older people have to move on if there is going to be a significant bump in inventory in Seattle. Everyone I know still loves it here and looks at me weird when I tell them we are moving out of dodge. Lol.

  13. 13

    Kary #7 “People tend to think agents know a lot more than they really do about whats going on and why because most agents’ sample sizes are way too small.” (reply button not showing)

    This is one of the reasons the public clamors for more access to the data that we can access. We clearly have the ability to “know a lot more” than just our own transactions.

    For instance in response to Ace #11, I can reply anecdotally to the area he is referencing in Bellevue, as I have been in a few bidding wars there over the last 6 months. But to fully answer the question that it is not only Bellevue, I would answer using broader data than my personal anecdotal info.

    A specific example in Redmond tells me:
    – the owner bought the recently sold house near peak in 2006
    – left it and rented it after unsuccessfully trying to sell it in 2008 and continuously rented it until now.
    – recently sold it for 10% over asking in a few days all cash no inspection
    – the buyer listed it for rent the day after it sold
    – the sold price is 38% more than the seller unsuccesfully tried to sell it for in 2008-2009 without remodeling other than some paint and carpet changes

    Whether or not we do in fact “know a lot more” just depends on what we do with the data at our disposal.

    I do think that last year we saw many people who left for personal reasons some time ago, but rented until the market improved even if they weren’t underwater. Much like the example above, I expect to see more of the same this year given the odds are starting to tip even more so than last year.

    To Ace #11 the “oddity” as to that specific market in Bellevue is the high number of offers and bid outs in the areas where the elementary school ranking is below the normally popular rank score. So no, it is not “localized to Bellevue” but in nearby areas this happens more when the elementary school rank is 8+, but in Bellevue the schools with 7 and below rank get more price bid outs than nearby areas. This may change as inventory improves in April or so, but I don’t think it will improve enough to make a difference. We may see 3 or 4 offers vs 6 to 10 or more. But net consequence not likely different through July 2017.

  14. 14

    By Ardell DellaLoggia @ 13:

    This is one of the reasons the public clamors for more access to the data that we can access. We clearly have the ability to “know a lot more” than just our own transactions.

    For instance in response to Ace #11, I can reply anecdotally to the area he is referencing in Bellevue, as I have been in a few bidding wars there over the last 6 months. But to fully answer the question that it is not only Bellevue, I would answer using broader data than my personal anecdotal info.

    Yes the public may want more information, and we as agents may have more information, but not necessarily.

    Using Ace as an example, even though we are both agents we have no idea why he has had the results he has had. It may be just the market. It may be his lender (certain bank, inexperienced, non-responsive, etc.). It may be his agent (improperly completed contract, bad reputation, etc.) . It may be something else entirely.

    Or using an entirely different issue, multiple offers. Individual agents would know how many offers their listings get, and if they work a broad enough area may have some idea which areas are more likely to get multiple offers. But they won’t know how many offers other listings get. So their knowledge will be rather limited. And in this area a designated broker would likely have even less information than their agents.

  15. 15
    uwp says:

    By Ardell DellaLoggia @ 13:

    A specific example in Redmond tells me:
    – the owner bought the recently sold house near peak in 2006
    – left it and rented it after unsuccessfully trying to sell it in 2008 and continuously rented it until now.
    – recently sold it for 10% over asking in a few days all cash no inspection
    – the buyer listed it for rent the day after it sold
    – the sold price is 38% more than the seller unsuccesfully tried to sell it for in 2008-2009 without remodeling other than some paint and carpet changes

    Can you say what the cap rate on something like that is? It might have made sense a couple years ago to do something like that, but with those details, I can’t imagine that this particular property is even coming close to an appealing investment as a rental.

  16. 16

    RE: uwp @ 15

    The expectation looks like 4.5% based on asking, but I think the asking is a bit aggressive and not doable.

    I don’t like to use cap rate only. My “acid test” is what if it burned down? In other words the lot size and zoning have to be on the plus side in addition to the cap rate. There have been too many good cap rate properties on a lot and with zoning that would not allow the rebuild of what is there if it burned down. Especially true in Seattle where the prices are high for the structure and the lot and pushed up too high based on cap rate alone.

  17. 17

    RE: Kary L. Krismer @ 14

    On the specific area he mentioned I have first hand knowledge on most all in the last 6 months, depending on price range, even if my client didn’t offer on it. But clearly one can guess with a high degree of success that something that goes in a few days for 10% or more over asking without passing through an inspection phase is highly likely to have been multiple offers. “Straight to Pending” at over asking in short order is probably 90% or more a result of multiple offers. The exceptions are likely in the 1% to 2% range.

    I know you don’t like to make assumptions, but a large part of our job is making educated and data driven assumptions IMO.

  18. 18
    justme says:

    What are the legal/statutory limitations on Seattle or Bellevue or King County enacting a foreign buyer (or even better, foreign seller :)) transfer tax of 15%, just like Vancouver BC did? Impose a seller tax and say people have 6 months to sell before the tax goes into effect. That could get very interesting.

    Kshama Sawant, everyone’s favorite Seattle socialist could get involved, perhaps?

    But seriously, does anyone (Kary?) have some ideas about what limitations there are on Seattle/Bellevue/cities/King/counties imposing such taxes?

  19. 19
    justme says:

    Here is what I found on the web

    http://www.ncsl.org/research/fiscal-policy/real-estate-transfer-taxes.aspx

    Washington State:

    Real property sale excise tax 1.28% of sales price plus local option tax, currently ranging from 0.25%-0.75%. (The total is) 1.53% to 2.03% combined with local option.

    So why not differentiate the local option portion of the tax based on Citizenship?

  20. 20
    jon says:

    RE: justme @ 18

    Amendment XIV of the US Constitution

    “nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

  21. 21

    RE: justme @ 18 – As I’ve said before I think it violates US Fair Housing Laws (and maybe state), which make national origin a protected class.

    I’m also not sure what the limitations are on local governments passing random taxes. I’m watching Seattle’s ammunition (or whatever) tax to see if that generates any information. That was upheld at the Superior Court level, but that doesn’t mean much. Anyway, what I’m thinking is the local governments are limited in what they can collect in real estate excise tax, and such a tax would probably have problems getting around that limitation.

  22. 22
    justme says:

    RE: jon @ 20

    Hah. First of all, there seems to be no restraint recently about treating non-citizens differently than citizens in terms of their legal rights (think Guantanamo).

  23. 23

    By justme @ 22:

    RE: jon @ 20

    Hah. First of all, there seems to be no restraint recently about treating non-citizens differently than citizens in terms of their legal rights (think Guantanamo).

    There is a difference because they aren’t on US soil. That was one of the issues with Obama’s plan of closing it.

    That said, I don’t think the 14th Amendment has application.

  24. 24

    By justme @ 19:

    Here is what I found on the web

    http://www.ncsl.org/research/fiscal-policy/real-estate-transfer-taxes.aspx

    Washington State:

    Real property sale excise tax 1.28% of sales price plus local option tax, currently ranging from 0.25%-0.75%. (The total is) 1.53% to 2.03% combined with local option.

    So why not differentiate the local option portion of the tax based on Citizenship?

    I don’t think that information is correct. Most counties charge 1.78% on REET, and I’m pretty sure they do so because that’s the maximum. Not sure what’s going on up in San Juan county–I’ve never seen or heard of their 2.78% rate before.

    http://dor.wa.gov/Docs/forms/RealEstExcsTx/RealEstExTxRates.pdf

    Anyway, assuming 1.78% is the max, they’re capped out.

    But the same type issue would exist with Seattle’s ammunition tax. Not sure why it wasn’t held to be limited by the limitation on sales tax.

  25. 25
    justme says:

    RE: Kary L. Krismer @ 21

    From HUD website:

    “Title VIII of the Civil Rights Act of 1968 (Fair Housing Act) prohibits discrimination in the sale, rental and financing of dwellings based on race, color, religion, gender or national origin. Title VIII was amended in 1988 (effective March 12, 1989) by the Fair Housing Amendments Act,”

    The thrust of the legislation is to protect buyers and renters against discrimination by sellers, landlords and lenders.

    But that being said, let’s back up for a minute: We are talking about buyers or maybe owners/sellers that are NOT permanent resident aliens of the US. The US already discriminates against all such OWNERS, because they are subject to FIRPTA tax withholding and gain taxation. Apparently, FIRPTA does not run afoul the Fair Housing Act, so then why would other taxes that apply to non-residents be a violation? I think that is the question.

  26. 26
    justme says:

    RE: Kary L. Krismer @ 24

    >>I’ve never seen or heard of their 2.78% rate before.

    The was no mention in my link or post 19 of a 2.78% rate, perhaps you misread? You may have meant 2.03%, and there is indeed a city in your own linked document that has 2.03% transfer tax (namely Asotin City). Conclusion: there is nothing incorrect error in the numbers I quoted in post 19.

    That being said, there MAY be a statutory upper limit of 2.03% on RE transfer taxes in effect. To be determined!

  27. 27
  28. 28
    Hugh Dominic says:

    By Kary L. Krismer @ 23:

    By justme @ 22:

    RE: jon @ 20

    Hah. First of all, there seems to be no restraint recently about treating non-citizens differently than citizens in terms of their legal rights (think Guantanamo).

    There is a difference because they aren’t on US soil. That was one of the issues with Obama’s plan of closing it.

    That said, I don’t think the 14th Amendment has application.

    Are Chinese buyers on foreign soil? Or do they buy from afar?

  29. 29
    Brian says:

    By AJT @ 27:

    New capital controls coming out of the PBOC

    https://betterdwelling.com/china-just-shut-off-its-capital-outflow-real-estate-markets-should-be-worried/

    There are still ways of getting money out of China, i.e. bitcoin and currency exchange with Hong Kong. As long as there’s a will, there’s a way. But China is making it harder for ordinary folks. My gut feeling is that Chinese investors aren’t going away unless something actually changes their desire to invest in foreign real estate. And it would have to be something big, because right now keeping their money in the Yuan and Chinese assets are way too scary of alternatives.

  30. 30
    jon says:

    The Civil Rights Act extends the 14th amendment to additional areas beyond simply creation or application of the law, specifically to for example sale, rental and financing by private parties.It seems to to me that it is only the Constitution or a treaty that could prevent the US from levying a specific tax. The following commentary says that while the 14th was not originally intended to apply to taxes, it was subsequently extended to discrimination against foreign corporations. http://constitution.findlaw.com/amendment14/annotation21.html Another source referred to the Dormant Commerce Clause, which is a doctrine rather than an actual clause, but I didn’t see a specific reference to property tax there. But it was indicated that would prevent a state from discriminatory taxing.

    FIRPTA seems to be restricted to simply extending the ordinary taxes to foreign entities and how that is collected.

  31. 31
    Ross says:

    By Brian @ 29:

    By AJT @ 27:

    New capital controls coming out of the PBOC

    https://betterdwelling.com/china-just-shut-off-its-capital-outflow-real-estate-markets-should-be-worried/

    There are still ways of getting money out of China, i.e. bitcoin and currency exchange with Hong Kong. As long as there’s a will, there’s a way.

    Indeed: http://blogs.wsj.com/chinarealtime/2016/02/16/china-capital-flight-2-0-lose-a-lawsuit-on-purpose/

  32. 32

    By justme @ 26:

    RE: Kary L. Krismer @ 24

    >>I’ve never seen or heard of their 2.78% rate before.

    The was no mention in my link or post 19 of a 2.78% rate, perhaps you misread? You may have meant 2.03%, and there is indeed a city in your own linked document that has 2.03% transfer tax (namely Asotin City). Conclusion: there is nothing incorrect error in the numbers I quoted in post 19.

    That being said, there MAY be a statutory upper limit of 2.03% on RE transfer taxes in effect. To be determined!

    The 2.78% rate came from my link, and I think my link is much more accurate than yours because it’s from DOR. Except for San Juan county that shows the rate topping out at 1.78%, which is the number I am very familiar with and know by heart, because it’s the rate applicable just about everywhere locally.

  33. 33
    GoHawks says:

    RE: Brian @ 29 – Well said. Where there is a will, there is a way. There have been numerous articles about China putting controls on money leaving over the past 2 years and demand has only increased.

  34. 34
    Brian says:

    Interesting that just after I say that, China says they’re going to start keeping a lot closer of an eye on bitcoin transactions to “rectify misbehavior”.

    Man, I would be scared of getting caught if I was Chinese and trying to get my money out. The gov really is trying to watch everything.

    http://www.chinadaily.com.cn/bizchina/2017-01/07/content_27887369.htm

  35. 35
    Eastsider says:

    RE: justme @ 18

    I’m sure Kshama Sawant can propose a yearly tax on non-owner occupied SFH properties in the city. Vancouver already imposes such a tax to discourage nonresident investors. LOL.

  36. 36
    Screenname345 says:

    The Chinese have been buying up Vancouver for over 20 years. The whole time it was illegal for them to move money out of the country. Get real if you think the flow of money is going to stop here any time soon. Better odds of an Earthquake probably!

  37. 37
    AJT says:

    RE: Screenname345 @ 36

    In the prior 20 years the Chinese economy wasn’t growing at 3-4% (realistically) per year and SLOWING while at the same time spending $1,000,000,000,000 per yer supporting their currency. That’s trillion with a T. So you think this time it may kinda sorta be different? Just saying.
    Almost forgot. China has their 19th congress this fall. You think ol Xi is gonna allow instability in the economy by letting the RMB tank any further??? What’s going to be the easiest way to maintain yuan strength? You guessed it. Capital controls

  38. 38
    GoHawks says:

    RE: AJT @ 37 – money is always one step ahead of government. If it wants out, it will get out. Besides all this talk of controls becomes self fulfilling. If people think the government is going to crackdown more, they are just going to speed up their time-frame to try and get it out. Maybe this has something to do with the Eastside’s out-performance.

  39. 39
    Screenname345 says:

    AJT I don’t think China is slowing, their economy is accelerating again. Their economic reports have been positive every month since last February’s bottom in their stock market. Anyway China is one huge corrupt country, their citizens will always have an outlet for funneling funds out of the country legal or not.

    I was just in Paris and all I saw were Chinese people celebrating the holidays living it up wearing what I assume was ridiculously expensive clothing from the fancy shops by our hotel. The locals were disgruntled by their tourists taking over the city. They are going to take overrun Seattle eventually no doubt.

  40. 40
    Lars says:

    Yup, this is why I’m no listing because I can’t find anything to by that is reasonably priced. RE: uwp @ 4

  41. 41
    Drone says:

    By Kary L. Krismer @ 7:

    One thing I hope it is not would be people converting their old house into a rental–at least if that means not taking advantage of a significant portion of the 250/500k gain exclusion from sale of residence. With our low interest rate/high appreciation environment I can see why going rental might seem attractive. IMHO though, being able to take gain tax free is not something most people should pass up if the gain is significant (or especially if tax basis would be difficult to compute). But there are exceptions to that (e.g. an elderly couple with one not in good health).

    Anecdote #1: A friend of mine recently purchased a second house in Greenlake as an eventual home for her aging mother. She’s looking ~5 years down the line, and thinks that housing in this area will be unaffordable by then. So she’s renting her first home while living in the second.

    Anecdote #2: Another set of close friends are planning to move from the Westside (~Greenwood) over to the Eastside this coming year to gain a better commute. They’re not yet “sold” on the Eastside lifestyle, so they plan to keep their Greenwood house indefinitely as a rental even as they ultimately buy a second home.

    Anecdote #3: A couple with 2 kids now owns THREE homes (as of ~1 month ago)… one North Seattle, one South Seattle, and now a new one East. Each time they’ve had a reason to move they’ve kept the old property as an investment.

    So in my circle of friends, here are 4 unsold housing units that will likely remain unsold in perpetuity. (6, including a two more friends not listed here). At least one of these friends are business-minded, but the others are investors only because of prevailing market conditions. I’m betting there’s a lot more of this activity than most people realize.

  42. 42
    AJT says:

    RE: Screenname345 @ 39
    If it is not slowing why would money be leaving?

  43. 43
    justme says:

    RE: Screenname345 @ 36

    >>The whole time it was illegal for them to move money out of the country.

    That is plain wrong. In the Reuter’s report I posted recently there was reference to an existing 50k USD dollar allowance for each year. I guess I need to post it again:

    On a related note, Reuters reports that the general public of China is for once NOT queuing up to buy their yearly quota of USD with RMB (yuan). The article linked below is worth reading.

    http://www.reuters.com/article/uk-china-banks-forex-idUSKBN14N0VZ

    QUOTES:

    “You can’t buy real estate. You can’t purchase anything. Basically you can only park that FX in your deposit account onshore with interest rates that are very low,” he said.

    Yang Zhao, chief China economist at Nomura in Hong Kong, said there wasn’t any widespread panic about the falling yuan, so he had not expected a surge in demand.

    In recent months, analysts have noted that the yuan was not alone in falling against the dollar, with most other emerging market currencies also suffering, which has helped keep sentiment around the yuan from souring too much.

    Zhao said restrictions on use of foreign exchange limited anyone’s options and so acted as a disincentive anyhow.

    Note to ZeroHedge haters: The Reuters article was brought to my attention by ZeroHedge. While ZH has its faults, it is a lot easier to weed out useless articles from ZH than it is to find useful articles among the storm of news at Reuters.

  44. 44
    justme says:

    http://www.seattletimes.com/business/real-estate/seattles-record-apartment-boom-is-ready-to-explode/

    The Seattle Times in Washington. “Seattle is set to see almost 10,000 new market-rate apartments open in 2017, nearly twice as many as in any other year in the city’s history. The magnitude of the construction is remarkable. The city is on pace to see more apartments built this decade than in the previous 50 years combined — and the vast majority of the new units haven’t opened yet, according to the Dupre + Scott research firm.”

    “The suburbs aren’t far behind in the building spree: The entire Puget Sound region, from Tacoma to Snohomish County, is slated in 2017 to have its second-busiest year in history for apartment construction, just shy of a suburban building boom in the late 1980s. Those who build and bankroll apartments remain concerned about a possible oversupply bubble, especially for luxury units.”

    “Tom Parsons, executive managing director of apartment developer Holland Partner Group, notes that costs for building apartments have surged 35 percent in the last half-decade, lowering profits and making Seattle less attractive for big investors. ‘Given the increase in the overall cost of housing over the past five years, we believe that capital has reached the tipping point and many of the projects being planned will be unable to be financed,’ Parsons said. That last happened when the market tanked during the recession and barely anything got built.”

  45. 45
    justme says:

    RE: justme @ 43

    With reference to the above Seattle Times article, and especially the bolded quote about previous 50 years worth of apartments being built in 10 years: We all had a bit of a discussion here on the blog about demographics and dwelling completion rates back in the summer of 2016, I think it was. The usual petit rentiers were prattling on about how hordes of people were moving to Seattle because Amazon! Jobs! Technology! Tableau! Seattle is Prime!

    I dug up some numbers that showed that housing units completions were quite enough to absorb recent inflows. And the aforementioned Seattle Times story certainly does not seem to point in the other direction.

    I later (Nov) coined the acronym B-DAMES = Boeing – DATA(=Tableau) Amazon Microsoft Expedia Starbucks to poke fun at the employment cheerleaders. Ah, 2016 was quite a year. And 2017 is going to be INTERESTING, in the Chinese sense. I still predict condo conversions will be starting to happen.

  46. 46

    RE: Drone @ 40 – I have no doubt that’s going on–I just don’t think it makes a lot of sense if there is significant gain, absent unusual circumstances such as one spouse being in poor health (resulting in a step up in basis on death).

    I could add a 4th story where the people ignored my advice to sell back in 2007 (or so) and then lost the house converted to rental to foreclosure later.

    But let’s go through a hypothetical. You have a Seattle house worth $750,000 that you paid $200,000 for, and let’s just assume you’ve been responsible and don’t owe more than $100,000 on it, so you can reinvest the proceeds. If you really want a rental, why not sell the house you’ve lived in and buy a new rental house, or better yet, maybe two rental houses outside of Seattle (and their regulations)? After costs of sale your gain would be tax free (assuming married), and going forward your depreciation on the new house would be higher because it would be based on the new purchase price, not the old $200,000 basis. And when you do eventually sell, you’re not going to be paying taxes on $500,000 of gain! Yes the downside is the costs of sale, but that’s not out of pocket, and you’re set up tax-wise for the future in a much better position.

    Or if you really want to get into rentals, leverage your gain into a multi-family apartment house.

    But my point is, if you can take a huge gain tax free, take that option unless you have a good reason not to (e.g. elderly couple).

  47. 47

    RE: Kary L. Krismer @ 45 – BTW, you could make the hypothetical even worse. Assume the same facts but the house is now worth $850,000 because you put $125,000 into various upgrades and remodel projects over the years. If you sell now you can throw out all those records once the audit period has passed for the year of sale. If you rent the house you’re going to have to continue holding onto those records. And just a guess, but I would guess that the audit risk is greater the year you sell a rental house than the year you sell a residence.

  48. 48
    Kit says:

    RE: uwp @ 4

    I have a few anecdotes where people are saying just that. For example, my lead at work lives in Maple Leaf. He wants to move into a bigger house closeby so his two kids can have separate rooms and more space. However, he was watching the market all of 2016, saw the bidding wars, and thought it was too nuts. Like he would show me houses he really liked all year but they would be gone and over asking. It wasn’t a matter of affording a new house (he bought his in 2002 and it worth 3x), but he is worried they will get screwed at an important time for their kids.

  49. 49

    Investment Advice On Seattle Real Estate

    Needs a caveat: “This advice is only a wild guess, act on your own risks”…..LOL

  50. 50
    ess says:

    By Drone @ 40:

    By Kary L. Krismer @ 7:

    One thing I hope it is not would be people converting their old house into a rental–at least if that means not taking advantage of a significant portion of the 250/500k gain exclusion from sale of residence. With our low interest rate/high appreciation environment I can see why going rental might seem attractive. IMHO though, being able to take gain tax free is not something most people should pass up if the gain is significant (or especially if tax basis would be difficult to compute). But there are exceptions to that (e.g. an elderly couple with one not in good health).

    Anecdote #1: A friend of mine recently purchased a second house in Greenlake as an eventual home for her aging mother. She’s looking ~5 years down the line, and thinks that housing in this area will be unaffordable by then. So she’s renting her first home while living in the second.

    Anecdote #2: Another set of close friends are planning to move from the Westside (~Greenwood) over to the Eastside this coming year to gain a better commute. They’re not yet “sold” on the Eastside lifestyle, so they plan to keep their Greenwood house indefinitely as a rental even as they ultimately buy a second home.

    Anecdote #3: A couple with 2 kids now owns THREE homes (as of ~1 month ago)… one North Seattle, one South Seattle, and now a new one East. Each time they’ve had a reason to move they’ve kept the old property as an investment.

    So in my circle of friends, here are 4 unsold housing units that will likely remain unsold in perpetuity. (6, including a two more friends not listed here). At least one of these friends are business-minded, but the others are investors only because of prevailing market conditions. I’m betting there’s a lot more of this activity than most people realize.

    It makes sense that homeowners are the ones in position in to buy second and third homes, especially in an expensive market such as Seattle and the Eastside. Apparently, the average net worth of an average renter is rather low according to the following research.

    http://www.forbes.com/sites/lawrenceyun/2015/10/14/how-do-homeowners-accumulate-wealth/#69724c0193af

  51. 51
    Brendan says:

    RE: ess @ 49

    My question is: how leveraged are these homeowners if they are buying second and third homes as rental units? What will happen to them if the rental market tanks?

    Maybe it turns out that opening 10k apartments a year every year starts to get ahead of Amazon’s hiring plans.

    Well, unless these homeowners bought these houses with all cash, some of them might have a hard time making mortgage payments on their second and third homes. If rents collapse, these same people will start to sell off their homes, which could drive down home prices.

    Maybe it seems far fetched since everyone is predicting that rents and home prices will go up forever… but the same thing happened not that long ago, and we are overdue for a recession. Just saying.

  52. 52

    RE: ess @ 49 – One other factor is the “responsible” homeowner, who doesn’t use their home as an ATM, locks in their cost of housing (or even gets it reduced during periods of declining interest rates).

  53. 53
    David B. says:

    RE: ess @ 49 – Be careful about getting the causal relationship correct. It is much more likely that wealth facilitates homeownership rather than the converse. Buying something you cannot afford is seldom a wise decision. Witness all the people who got into trouble when lending standards were dangerously loose in the last real estate bubble.

  54. 54
    Ross says:

    By Kary L. Krismer @ 45:

    RE: Drone @ 40
    […]
    Or if you really want to get into rentals, leverage your gain into a multi-family apartment house.

    But my point is, if you can take a huge gain tax free, take that option unless you have a good reason not to (e.g. elderly couple).

    There are some other ways to leverage up an existing rental property, i.e. a 1031 exchange: https://apiexchange.com/what-is-a-1031-exchange/

    I believe a landlord can also restore the capital gain benefit if they live in the property for 2 years before selling it. I guess if there’s tax_rate*500K at stake, some landlords would be willing to move into a rental. It might also be good to get the home in selling condition.

    Of course, transaction costs on real estate are ridiculously high. If you’ve got a productive rental, you’ll be most efficient by never selling.

  55. 55
    ess says:

    By David B. @ 51:

    RE: ess @ 49 – Be careful about getting the causal relationship correct. It is much more likely that wealth facilitates homeownership rather than the converse. Buying something you cannot afford is seldom a wise decision. Witness all the people who got into trouble when lending standards were dangerously loose in the last real estate bubble.

    Yes – wealth may facilitate home ownership, but it still remains that buying a residence can be a form of forced savings for many Americans who don’t have the wherewithal to save on their own. This is evident in statistics that indicate that for many, their primary residence is their primary non retirement financial asset.

    As of the last crash of the last bubble, it has been my personal observation that loan requirements have become stricter as of that time. There will continue to be foreclosures – as there are always foreclosures regardless of the health of any real estate market. But between full cash offers, substantial down payments and improved lending requirements, hopefully the past will not be repeated – at least to the extent of the last great real estate meltdown.

  56. 56

    RE: ess @ 52 – I wouldn’t be so sure that the next time will be different because the one thing that will be the same is the herd mentality. Depending on what causes the next downturn it might not be as extreme, but it will still happen.

    Something that hopefully won’t be the same is we won’t likely have the legislature pass legislation which harms the ability of people in financial distress to get competent ethical people to represent them and even limits the desire of informed buyers to buy their property from them in straightforward publicly listed sales. The timing and scope of the original version of the Distressed Property law probably messed up a lot of people and their ability to get out of a bad situation. And it may have even lead to that industry later on having more questionable people working in the area (e.g. the Hellicksons).

  57. 57
    Blurtman says:

    RE: ess @ 52 – Yess. And you can live in your savings account.

  58. 58

    By Ross @ 54:

    By Kary L. Krismer @ 45:

    RE: Drone @ 40
    […]
    Or if you really want to get into rentals, leverage your gain into a multi-family apartment house.

    But my point is, if you can take a huge gain tax free, take that option unless you have a good reason not to (e.g. elderly couple).

    There are some other ways to leverage up an existing rental property, i.e. a 1031 exchange: https://apiexchange.com/what-is-a-1031-exchange/

    I believe a landlord can also restore the capital gain benefit if they live in the property for 2 years before selling it. I guess if there’s tax_rate*500K at stake, some landlords would be willing to move into a rental. It might also be good to get the home in selling condition.

    Of course, transaction costs on real estate are ridiculously high. If you’ve got a productive rental, you’ll be most efficient by never selling.

    The 1031 exchange merely delays the gain recognition. but it’s sort of the flip side. You still need to consider whether the 1031 exchange makes sense before doing it, because it doesn’t always make sense. That was the point of a blog piece I did several years ago comparing a continuing education class taught to real estate agents to one taught to lawyers. In the latter the speaker went over situations where it didn’t make sense, where in the former the speaker didn’t even know that doing a 1031 affected basis going forward. The elderly couple situation is one where doing a 1031 could make a lot of sense almost regardless of other facts. Where you expect higher tax rates in the future or had relatively little other income in the year of sale and expected more in later years would be situations where it might not make as much sense.

    Yes I think you can restore the benefit by moving back in for two years–except maybe the recapture of the depreciation. Not certain. But that would be a huge hassle. Who would want to do that, particularly if they moved up when they bought a new place?

    As to the costs of sale, yes they are high on real estate, but the biggest cost is income taxes on gain if you’ve had a lot of gain. In my hypothetical they could easily be over 50% of the costs of sale if a sale of the residence is delayed.

  59. 59
    ess says:

    RE: Brendan @ 51

    Well, unless these homeowners bought these houses with all cash, some of them might have a hard time making mortgage payments on their second and third homes. If rents collapse, these same people will start to sell off their homes, which could drive down home prices.

    —————————————————————————————————–

    I don’t think rents collapse as much as they just go down. At least that has been my impression dealing with some serious real estate downturns over the years. Of course those unlucky enough to have bought rental property at the height of the market will face more serious issues than those who have some cushion.

  60. 60
    ess says:

    RE: Kary L. Krismer @ 56
    RE: ess @ 52 – I wouldn’t be so sure that the next time will be different because the one thing that will be the same is the herd mentality. Depending on what causes the next downturn it might not be as extreme, but it will still happen.
    _____________________________________________________________

    Or in other words – never underestimate the ability of people to keep on making the same mistakes over and over again. Same thing happens in the stock market. Even with people who invest an index -many don’t match the index they are invested in because they are buying and selling at the wrong time within that very index fund.

    Real estate and the investment market often operate in the same ways with the same periodic retrenchments.

  61. 61
    justme says:

    RE: Kary L. Krismer @ 23

    >>There is a difference because they aren’t on US soil. That was one of the issues with Obama’s plan of closing it [Guantanamo Bay prison camp].

    To which I would say that non-resident aliens who own houses in the US also are not “on US soil” in much the same sense. I guess one might ask whether the US affords full constitutional protections to tourists (since such non-resident owners could at times be visitors or tourists). I do not know the answer to that.

  62. 62
    justme says:

    RE: Kary L. Krismer @ 32

    >>The 2.78% rate came from my link, and I think my link is much more accurate than yours because it’s from DOR. Except for San Juan county that shows the rate topping out at 1.78%, which is the number I am very familiar with and know by heart, because it’s the rate applicable just about everywhere locally.

    Note to myself and readers: What Kary is meaning to say here is, and I paraphrase (in CAPITALS) to clarify, is:

    Except for San Juan county AT 2.78% COMMA, that LINKED DOCUMENT shows the rate topping out at 1.78%.

    With that bit of ambiguity aside, and the added minor exception of Asotin City at 2.03%, I think we are in agreement.

    Stepping back for a moment, we can summarize: The Washington state portion of the real estate transfer/excise tax (REET for short) is 1.28%. The local (county or city/municipality) portion has been observed to be frequently 0.5% or even 0.25%, but in some locations as high as 0.75% and 1.5%.

    Given the existence proof of a 1.5% local REET rate, it seems not imprudent to speculate that 0.5% local REET is not a statutory statewide upper limit. Hence the question arises, what is to prevent the City of Seattle, or any other municipality, from enacting as a high a local-REET as they wish?

    ADDENDUM: The acronym REET is being used on Washington State official web pages. DO not confuse with REIT, Real Estate Investment Trusts, which really ought to be pronounced similar to “right”, if I had my druthers,

  63. 63

    By justme @ 62:

    Given the existence proof of a 1.5% local REET rate, it seems not imprudent to speculate that 0.5% local REET is not a statutory statewide upper limit. Hence the question arises, what is to prevent the City of Seattle, or any other municipality, from enacting as a high a local-REET as they wish?

    You got me curious on that. I’d missed the Asotin City rate, and just assumed that San Juan had some special legislation. It seems to be RCW 82.46.070, which allows an additional 1% to use for purchasing conservation property.

    http://app.leg.wa.gov/RCW/default.aspx?cite=82.46.070

    Note this tax is the obligation of the purchaser, and has to be approved by the voters. I could see San Juan voters voting for that.

    The next section allows an additional .5% for low income housing, and I was wondering why King County didn’t have that, but to have that the county had to have had the 82.46.070 tax in place at the full 1% prior to 2003. Maybe it’s possible Asotin City qualified for that back then, or maybe it’s something else like only part of the conservation tax. I’ve never even known where Asotin City is prior to today.

    Anyway, the state wide maximum is .5% per 82.46.010(3), which is sort of an odd statute. Basically 82.46.010(2) imposes a .25% limit, subject to some rules as to size/type of city/county, but 82.46.010(3) allows an alternative of .5% applicable to any county/city. I’d link it but fear it would trip Tim’s moderation rules, but you can find it from the link above.

    Anyway, not something I’ve looked at before because all the areas I’ve ever dealt with as an agent have been 1.78%. I did deal with several San Juan county matters as an attorney, but I don’t recall the excise tax issue ever having come up.

  64. 64

    And in other news, the FHA is dropping it’s mortgage insurance rates by 25 basis points, apparently due to declining claims. Note though the overall money paid is still much higher than what it used to be.

    http://realtormag.realtor.org/daily-news/2017/01/09/hud-lowers-fha-mip-quarter-point

  65. 65
    justme says:

    RE: Kary L. Krismer @ 63

    I have also been perusing state web sites today, and I discovered much of the same info as you did. I would like to add though, that here is a statute by which an additional local REET tax of 0.5% can be added as a substitute for collecting sales taxes. This is noted in

    http://app.leg.wa.gov/RCW/default.aspx?cite=82.46.010 item (3)

    There are also allowed REET rate add-ons for municipal capital improvements, and even municipal capital maintenance. But, OVERALL, there are indeed state-imposed statutory limits on REET rates for municipalities.

    I wonder how much support a 15% REET on foreign investors would get in a statewide poll?

  66. 66
    justme says:

    For reference, here is the main web page about REET, and this page includes links to some relevant laws

    http://dor.wa.gov/content/findtaxesandrates/OtherTaxes/tax_realestate.aspx

  67. 67
    sleepless says:

    Can someone explain me this. The house sits on the market longer and with the increased mortgage rates “gains” price. Should i drop the price instead as it sits longer? Or as completion approaches (Jan 2017) it “turns” out to be more expensive?

    https://www.redfin.com/WA/Renton/4014-NE-20th-St-98059/home/109751174

    Nov 11, 2016 – $679K
    Jan 9, 2017 – $684K

  68. 68
    Screenname345 says:

    @AJT. Not sure what your point is. The Chinese have been investing in Vancouver forever, whether they had double digit economic growth or 6.5% growth which is projected for 2017. They want to be in the west, they want their kids to be educated here. Their influence is a freight train that shows no signs of stopping. Not only will their interest in Seattle not slow any time soon but you will soon set them set up businesses here and take over entire neighborhoods. This is the next logical step. The big picture is not just their influence in real estate but in their every day to day effect on living in Seattle. Here is tonight’s headline after China’s CPI release “China Factory Prices Rising Fastest in 5 Years Adds to Reflation”.

  69. 69
    Andrew says:

    RE: sleepless @ 67 – that’s what we get from seller’s market. to start with, seller might be convinced the list price is fair and there are future buyers out there to whom interest rate means nothing. furthermore, the price is believed to keep climbing and i’m guessing 5k increase is to tease future buyer to act now before it’s too late. it’s certainly been good to be on the selling side these days whereas from buyers’ perspective many things don’t seem to make sense because reality is against us at this moment.

  70. 70
    sleepless says:

    By Andrew @ 69:

    RE: sleepless @ 67 i’m guessing 5k increase is to tease future buyer to act now before it’s too late.

    Why not increase it by $10K,$15K,$20K?

  71. 71
    Eastsider says:

    RE: sleepless @ 67 – That’s a .74% price increase in 2 months (or annualized to 4.4%), which is not out of the ordinary in this market. That said, it is the market that ultimately dictates prices.

  72. 72
    Andrew says:

    By sleepless @ 70:

    Why not increase it by $10K,$15K,$20K?

    It could be to allow room for growth before getting too close to 700k too soon (which may ultimately be the target price point in peak season 2017), or buffer for negotiation at this point, or just enough to offset holding cost thus far.

  73. 73

    RE: ess @ 60
    I Sold My Stock at DOW 18,000 on May 2015

    Made a bundle and its safely tucked away in about 2% long-term CDs…would have made more if I hadn’t sold before Trump’s inauguration [the fake news had stocks collapsing if Trump elected, the real news, exactly the opposite occurred]….who’d know???

    Dec 0.20% 0.16% 1.98%
    YTD 1.82% 2.91% 12.01%
    Last 12 mo 1.82% 2.91% 12.01%

    In order: long term CDs ending 2017, long-term treasury bonds and American stocks…

    Did any investment advisor [village idiot] get this right and had you invest 100% in American stocks??? What good are they? We may as well use fortune tellers…

  74. 74

    By Andrew @ 72:

    It could be to allow room for growth before getting too close to 700k too soon (which may ultimately be the target price point in peak season 2017), or buffer for negotiation at this point, or just enough to offset holding cost thus far.

    I’m not being critical of Andrew in this response, because those very well may be the reasons–sellers control pricing decisions, not agents. And those are items that a seller might use. But those last two are items that make listing agents eyes want to roll back in their head–particularly the last one. In this market pricing high for any reason is likely to get you a lower price, but in any case you don’t have to price high to negotiate, you can just hold a hard line in negotiating. And if there ever was a market that was most true in, it’s this market. And as to “holding costs,” buyers don’t care at all what the seller’s costs are! The only possible exception to that might be paying a few extra thousand to avoid a short sale situation and the delay and uncertainty that would result. That would benefit the buyer.

    Note: I did not look at the listing that started this discussion, nor is my response in any way a comment about that listing. It is a response to Andrew’s comment.

  75. 75
    jon says:

    Another article about cutting back the H1-B visas that Microsoft uses.
    http://www.bizjournals.com/seattle/news/2017/01/09/trump-foreign-tech-h-1b-microsoft-jeff-sessions.html This time is it pretty much inescapable that this will happen.

    On one hand this will drive jobs offshore, but it may also just be that hiring managers have been taking the easy way out, when a little more work would result in hiring someone who is already an American. If so, then not all the jobs will be going offshore. Fortunately for homeowners, this is coming on a tight housing and job market and so it won’t be that big a hit, at least not right away, if Microsoft decides to grow elsewhere.

  76. 76
    justme says:

    RE: sleepless @ 67

    Just bullcrap realtor tactics to try and generate a sense of urgency, plus the benefit of popping up on price change searches, and getting people to talk about the property. Look, it worked. People are talking. Just not buying.

  77. 77
    justme says:

    But, but…Madison Park is PRIME! Perhaps they should try to increase the price by 5k? Or reduce it by 11k to 888k?

    http://www.madisonparktimes.com/Content/Default/Breaking-News/Article/Local-market-cools-after-election/-3/364/30738

    A report from the Madison Park Times in Washington. “All real estate is local, goes the saying. Then this last presidential election happens, and that rule goes out the window. However you feel about the election of Donald Trump, it’s immediately affected the Seattle real estate market. Sales fell off, fast. A lot more dramatically than November and December of the previous year. I’m working with a seller who has what, in any other time in the last few years, would be the perfect home for this market. Asking $899,000, it’s a trophy listing that has everything going for it. Property in the same price range in similar condition were under contract within a matter of days, with few or no contingencies, and achieving the asking price or above mere months ago.”

    “We had more than 50 showings in 70 days of market time without an offer, but also without a complaint about the price. In fact, several brokers told me the price was spot-on and they were shocked it was still an active listing. This same experience is playing out across the market — good houses that would have moved quickly in the previous months of the year aren’t getting offers. After talking with my sellers, the decision was made to pull that $899,000 sweet-spot property off the market and re-strategize in early spring of next year. Meanwhile we’ll see what market does, analyze the data, and be ready when buyers regain their confidence, take themselves off the bench, and get back in the game.”

  78. 78
    Brian says:

    RE: jon @ 75

    I’d be quite surprised if it went away fully, especially right away. I would like to think they wouldn’t do anything that would instantly hurt companies like Microsoft, but rather give them time to wane off the program and onto hiring Americans (though that hope may instead turn into more off-shoring).

    Apparently there is a bill being proposed that they could simply raise the minimum pay for h-1b immigrants to significant enough of a level that it would more incentivize them to hire Americans, but still give them the option to hire h-1bs if they absolutely need or want to.

  79. 79
    sleepless says:

    By Andrew @ 72:

    By sleepless @ 70:

    Why not increase it by $10K,$15K,$20K?

    It could be to allow room for growth before getting too close to 700k too soon (which may ultimately be the target price point in peak season 2017), or buffer for negotiation at this point, or just enough to offset holding cost thus far.

    Here is another one https://www.redfin.com/WA/Sammamish/1514-247th-Ave-NE-98074/unit-30/home/105201306

    The price history:
    Apr 20, 2016 – $871K
    Jul 8, 2016 – $881K
    Sep 29, 2016 – $889K

    The last change was a few months ago before the mortgage rates “increase”. I still don’t understand how the house sitting on the market for 9+ months and not selling with higher interest rates is going to sell at higher price. Just like Kary said, the “holding” costs is not the buyer’s concern. No one cares if it “costs” the builder to hold the house over time. Should the builder “cut the losses” and sell or they will have to keep increasing the price as the house sits or take bigger loss later?

    I see quite a few of those, especially new constructions.

  80. 80
    jon says:

    RE: justme @ 77 – I would want to see more data about the timing of the big difference in performance between the Eastside and Seattle before concluding this was a result of Trump. Also, it is not true that cash buyers are not affected by mortgage rates. Not only are they likely to sell to a mortgage buyers, they also know full well that they don’t need to offer as high a price if their competing buyers’ costs went up.

    What’s the motivation of a builder to actually sell the house before it is completed? Having a buyer nosing around and asking for changes sounds like an unneeded hassle.

  81. 81
    Eastsider says:

    RE: sleepless @ 79 – Builders raise prices all the time. There are many reasons why they do it. For example, they may list the (new) house for sale before the project gets started. As time goes by, they adjust the price based on market conditions. So when the house is completed 9 months later, the final asking price may be higher, especially in a rising market.

  82. 82
    uwp says:

    Here is the listing from that Madison Park Times article (AKA the “Trophy Listing”):
    https://www.redfin.com/WA/Seattle/2343-42nd-Ave-E-98112/unit-3/home/35021

    900k townhome with $400/month HOA dues and $600/mo in property taxes.
    No thanks.
    Looks overpriced to me. (And obviously it was if it wasn’t selling).

  83. 83
    Blurtman says:

    RE: sleepless @ 79 – Dinky lot, nice home. Priced OK for new.

  84. 84
    sleepless says:

    By Blurtman @ 83:

    RE: sleepless @ 79 – Dinky lot, nice home. Priced OK for new.

    Price OK and still no buyers for 9 months…

  85. 85
    Eastsider says:

    RE: sleepless @ 84 – My 2 cents – This particular Sammamish home is one of 60+ new constructions by Toll Brothers. The Redfin listing clearly shows many recent sales in the development. So TB does not have a pricing problem. The construction permit was issued in May so I expect the home to be near completion at this stage. Most buyers prefer to buy a house that is (near-) complete. I bet it will go pending within 2 months of its first open house / completion. I’ll further wager that the sale price is at least $888,995. In fact, I won’t be surprised if TB raises the asking price again in next 2 months. Again, talk to your RE agent if you are a new homebuyer.

  86. 86
    justme says:

    More Boeing layoffs are being reported. Very sad both for Boeing engineers/workers, and also for all the rest if us that have to suffer high housing prices because of nasty speculators and petit rentiers always trying to front-run those who have legitimate housing needs.

    http://wolfstreet.com/2017/01/10/boeing-three-waves-of-layoffs-in-2017-as-orders-collapse-to-7-year-low/

    QUOTE:

    “We continue to operate in an environment characterized by fewer sales opportunities and tough competition.”

    These staff cuts come on top of the cuts in 2016, when Boeing slashed its workforce in Washington state down by 9.3%. That’s 7,357 jobs.

  87. 87
    ess says:

    Latest forecast from Zillow – housing prices are slowing down.
    Apparently Seattle’s prices will only increase about five percent in 2017.

    http://realtybiznews.com/zillow-names-nashville-tenn-hottest-housing-market-2017/98737246/

    Of course Zillow’s estimates are only estimates. Their estimates were off for 2016 when they estimated Seattle to increase less than 6% and Bellevue less than 10%.

    It will be interesting to observe the market this spring, especially with such low inventory in the area.

  88. 88
    justme says:

    RE: ess @ 87

    >>It will be interesting to observe the market this spring, especially with such low inventory in the area.

    And how exactly do you know what the inventory will be in the spring? Incessant harping about the “inventory” is the hallmark of housing-inflators on seattlebubble.

  89. 89

    RE: ess @ 87 – It’s just advertising in the form of a press release. I wonder which costs more. Having an advertising firm create an ad and then paying for it to be displayed, or hiring economists who create press releases which get reproduced for free?

  90. 90
    Brian says:

    RE: justme @ 88

    It is remarkable how fast inventory can recover.

    Single family residential:
    Feb 2009: 4,321
    July 2009: 10,957
    +6,636 homes, +154% in 5 months.

    All:
    Feb 2009: 6,334
    July 2009: 15,806
    +9,472 homes, +150% in 5 months.

    Source: Redfin data center, Seattle Metro Area inventory.

  91. 91

    By Brian @ 90:

    Source: Redfin data center, Seattle Metro Area inventory.

    If only someone would plot all the inventory data points since 2000 onto a graph and then post that graph somewhere on the Internet. It would be even better if they would update that graph every month! ;-)

  92. 92
    ess says:

    By Kary L. Krismer @ 89:

    RE: ess @ 87 – It’s just advertising in the form of a press release. I wonder which costs more. Having an advertising firm create an ad and then paying for it to be displayed, or hiring economists who create press releases which get reproduced for free?

    Except it was poor advertising as their predictions were way too low in terms of price increases for 2016.

  93. 93
    uwp says:

    RE: Kary L. Krismer @ 91

    Yeah, those numbers from Ryan don’t reflect the charts above. I realize Seattle Metro is different from King County, but TheTim’s charts show KC SFH inventory growing from about 9k to start 2009 to 10k in July.

  94. 94
    Umka says:

    Have you, folks, noticed the recent trend called “tiny houses”?
    It’s now very popular on HGTV channel and so on…
    This is a destiny for new generations (best case) – living in a small trailer, renting the parent’s land to park this trailer.
    I see the extinction of the middle class in USA.
    Soon (if not already) we are divided into the rich few who can afford mansions, and a lot of others, who can afford only trailers.

  95. 95

    RE: uwp @ 93

    When comparing early 2009 through July of 2009 with the same period in 2016, note that 83% more houses sold during that period in 2016 vs 2009. Most of that not reflected in the “standing inventory” numbers, especially as to 2016. From Jan 1 to July 31 of 2009 about 8,200 “SFH” sold compared with 15,000 in 2016. Focusing only on “inventory”, as represented by what did not sell during the period, may not be as telling as noting all of the homes available to buy and not merely those people chose not to purchase.

    Of note but not relevant to this point, the number of homes sold for $500,000 or less only changed by 12%. The majority of the increase of 83% more sold was over $500,000 and much of that over $700,000. This only for the period noted in the original comment by uwp.

    To people buying and selling homes, “inventory” consists of homes available to buy during the period and not only those not sold. In fact those not sold are likely the least significant data point for people in the market and studying the market.

    (Required Disclosure – Stats in this post are hand calculated in real-time by Ardell and not compiled, verified or published by The Northwest Multiple Listing Service.)

  96. 96
    Green-Horn says:

    RE: Umka @ 94
    Compared to apartment dwellers, tiny home owners have it good!

    No neighbors upstairs to hear stomping, yelling and making noise through the ceiling…

    The truly downwardly mobile are all my generational peers are those who are sharing apartments and homes with roommates… well into their 20s and 30s…

  97. 97

    RE: Green-Horn @ 96 – My main issue with tiny houses is you’d be too close to the walls. It would need to be very well insulated or maybe have radiant heat in the walls to be comfortable.

  98. 98

    RE: Kary L. Krismer @ 52
    Bubbleheads Brought This Up Years Ago

    Reverse Mortgaging Your House as a Retirement ATM

    Comes with a big catch [the small print on the TV advertisement]: The lender can foreclose if you don’t comply with their routine maintenance demands….$100K? $500K? LOL

  99. 99

    RE: David B. @ 53
    Ahhhh…C’mon Man

    You can learn to eat Top Robin and Trade Your Car for a Bicycle….warm coats inside reduces winter utility bills….there’s lot of tricks to make what’s left of your pay stretch.

  100. 100
    Macro Investor says:

    RE: softwarengineer @ 99

    Top Robin — is that the new chicken?

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