NWMLS: “May was a Grand Slam” …For Home Salespeople

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May market stats have been published by the NWMLS this morning. Here’s their press release.

Brokers suggest improving inventory may mean”season of opportunity” for weary house hunters

Would-be buyers who have been shut out of the real estate market should test the “real estate waters” during the summer months suggests one industry leader.

“Summer might provide some competitive relief for weary buyers,” said Gary O’Leyar, owner of Berkshire Hathaway HomeServices Signature Properties, pointing to some of the newly-released statistics from Northwest Multiple Listing Service as indicators.

Despite murmurs of the possibility of relief for disenchanted house hunters, May was a hotbed of activity. Brokers notched 9,188 pending sales (mutually accepted offers) in the four-county region, the highest ever reported for the region. Overall, members reported 12,607 pending sales, up 2.7 percent from a year ago.

“May was a Grand Slam month for housing activity,” exclaimed J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.

A more lengthy quote from J. Lennox Scott was distributed by email:

“May was the best month for sales activity of any month in history in the four-county area of King, Snohomish, Pierce, and Kitsap Counties. As Dave Niehaus, the voice of the Mariner’s, used to say: “My, oh my! Get out the rye bread and the mustard Grandma, it’s grand salami time”. We finally saw new inventory come on the market in May, and although we had a slight delay in the timing, the spring Puget Sound housing market is in full swing and just as intense and frenzy as it has ever been.

Based on J. Lennox Scott’s quotes in recent NWMLS releases, Seattle Bubble commissioned this exclusive artist’s depiction:

artist's depiction of J. Lennox Scott
artist’s depiction of J. Lennox Scott

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):

May 2017 Number MOM YOY Buyers Sellers
Active Listings 2,149 +13.8% -20.3%
Closed Sales 2,576 +26.8% +2.7%
SAAS (?) 1.31 -0.9% +2.0%
Pending Sales 3,455 +23.6% -1.3%
Months of Supply 0.83 -10.2% -22.4%
Median Price* $632,250 +1.2% +12.9%

Pending sales have now been down year-over-year for four months in a row, but for three of those four months, closed sales have increased, which is certainly a bit odd. Perhaps this is indicative of a shift from last year toward fewer pending sales falling through. I’ll see if I can find anything else interesting in the data about that.

Here’s your closed sales yearly comparison chart:

King County SFH Closed Sales

Closed sales increased 27 percent from April to May. Last year over the same period closed sales rose 17 percent. Year-over-year closed sales were up three percent.

King County SFH Pending Sales

Pending sales shot up 24 percent from April to May, and were down one percent year-over-year.

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

King County SFH Inventory

Listings rose 14 percent from April to May, which is much better than the meager four percent gain we saw last year. Year-over-year listings were still down 20 percent.

Here’s the chart of new listings:

King County SFH New Listings

New listings shot up month-over-month as they tend to most years in May, gaining 26 percent from April. They were also up 5 percent from last year. New listings slightly outpaced pending sales for the month.

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

We’re still in the midst of a very strong seller’s market, but at least the supply and demand balance isn’t getting appreciably worse for buyers.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

Year-over-year price growth fell off slightly from April to May but is still well into double-digit territory.

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

Another new all-time high, although the pace of growth is not as strong as last year at this time, so there’s that I guess.

May 2017: $632,250
July 2007: $481,000 (previous cycle high)

Here’s the article from the Seattle Times: No escape for priced-out Seattleites: Home prices set record for an hour’s drive in every direction


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.

322 comments:

  1. 251
    David Cohen says:

    RE: Erik @ 247
    125% increase in 5 years. Yeah buddy it’s Tech.

    Making So Much Money ?
    Seattle area companies are Amazon.com at No. 14 with an average software engineer salary of $110,907 per year; Microsoft at No. 18 with an average salary of $106,611; and Expedia, ranked No. 21 with an average salary of $105,126.

    Meanwhile every exploding market is on this list of chinese buyers.

  2. 252
    jon says:

    Yes, the MJ article had some interesting insights. The one that struck me is that China has 1.6M millionaires out of a population of 1.02B, or 0.15 percent. The US has 13.5M out of 246M, or 5.5%. We are just seeing the tip of the iceberg of millionaires coming from China. The average wealth in China is $4,885. The US $45,000 average wealth, which is low compared to other developed countries. (http://www.businessinsider.com/countries-with-most-millionaires-2017-4/#1-united-states-18)

    I think the unoccupied houses here are a result of the message “do whatever you have to do to buy something.” When China reaches the economic level the US is now, the number of millionaires in China will rises to 50,000,000. And then there is India, which is 3 times the population of the US on 1/3 the land.

  3. 253
    kl says:

    RE: ess @ 250 – US citizens and green card holders should have every freedom in the USA. If they want to buy a hundred homes, sure, why not, this is not the problem.

    On the other hand, it’s not obvious that non-resident aliens should have this freedom. They need special authorization to work here, and they can only work here if it benefits the USA, and work authorizations have time limits. They can only travel here if the government gives them a visa, and the time they can spend here is limited.

    I believe there should be similar restrictions on residential home purchases because such purchases can directly and negatively affect the lives of US residents. Why should citizens of other countries have the right to create housing bubbles and force US residents to move or into financial hardship?

    By the way, US citizens cannot freely buy residential property in China, so just being reciprocal would suffice.

  4. 254

    By ess @ 250:

    RE: sfraz @ 249

    Good and interesting Mother Jones article Sfraz – thanks for posting..

    Except that it cites that same suspect NAR study, quotes an agent that we are somehow supposed to believe has a knowledge of a market broader than his/her own, and makes a very questionable claim about the ethnic makeup of one firms clientele (50% are whatever).

    The best thing about it is it describes the differences in the bribes non-residents can make to become residents (in Canada you make loans to the government while here you make loans to private businesses). And also it highlights the reasons Vancouver got into the situation it did, particularly the uncertainty years ago (and continuing?) over Hong Kong after the British left. If Washington state were to somehow be scheduled to be taken over by Communist China in 2019 I think I’d be looking for property elsewhere too! That was a huge incentive to buy property elsewhere.

  5. 255

    I don’t remember if I’ve posted this here before, but this is a really useful buyer tool. It shows aircraft and road noise in searchable areas.

    https://maps.bts.dot.gov/arcgis/apps/webappviewer/index.html?id=a303ff5924c9474790464cc0e9d5c9fb

    Interesting that it doesn’t pick up Joint Base Lewis-McCord. It picks up some small airports, like the one on the other side of the Tacoma Narrows, but not that.

  6. 256

    By kl @ 253:

    RE: ess @ 250 – US citizens and green card holders should have every freedom in the USA. If they want to buy a hundred homes, sure, why not, this is not the problem.

    On the other hand, it’s not obvious that non-resident aliens should have this freedom. They need special authorization to work here, and they can only work here if it benefits the USA, and work authorizations have time limits. They can only travel here if the government gives them a visa, and the time they can spend here is limited.

    That is a good observation, and I can only assume it’s just sloppy drafting. The Fair Housing Act defined “person” very broadly, and then it prevents discrimination of persons in the sale of property. The broad definition would make more sense in the area of hotel accommodations. A large part of the reason for the civil rights laws was that it was difficult for some people to travel around the United States. Hotels and even restaurants would refuse to serve some people. And we’ve seen some of that even today, where some obscure restaurant/bar/tavern will refuse to serve people who don’t speak English. The same concerns don’t apply though to the purchase of SFR housing and non-residents.

  7. 257
    Erik says:

    RE: Kary L. Krismer @ 248
    Do you know why there aren’t enough stem workers in the United States? It’s because they don’t get paid enough with the one exception of software engineers. Companies hire foreign workers to drive down the wages of US stem workers.
    Pretty soon software engineers will get paid squat like the rest of us. I have 9 years of rigorous schooling and I get paid way less than lawyers do. Then they blame students for not going into stem. If I had a kid, I’d tell them to be a lawyer because engineering is a lot of tough schooling for a lot less pay.

  8. 258
    sfraz says:

    RE: Erik @ 257 – Not a lawyer. They are a dime a dozen now. Many baby lawyers are working as paralegals, or legal assistants trying to get into a glutted field, that is dwindling due to technology.

  9. 259
    Jon says:

    RE: Erik @ 257 – What’s your source for falling salary for software devs? What I see is predictions of fewer CS graduates than new jobs for the foreseeable future. More automation means software devs are more valuable.

  10. 260
    Matt Hahn says:

    RE: Erik @ 257

    This licensed Mechanical Engineer with 13 yrs experience and degree from US Naval Academy w/3.8 GPA and blah blah blah blah all the goodies…says YES, I agree 100% with your assessment. Not sure how I will advise my own children. They are pretty young now, and so I have some time to think about it. However, when the time comes I will certainly not relay the obnoxious fairy tales about how wonderful it is to have an engineering degree. It ain’t bad, but it’s not that great either…at least it’s fun sometimes.

  11. 261
    Anonymous Coward says:

    RE: Erik @ 257 – Nope. Your “average engineer” makes more than your “average attorney”. You’re probably comparing “average engineer” to “big law attorney”. Which on its face shows a pretty big discrepancy. Something like $70k for the young engineer and $130k for the young attorney. But you didn’t control for hours worked. That engineer is pulling 40-45hrs/week while the attorney is doing a lot closer to 90. If the engineer finds a position where overtime is an option, and chooses to do the 90hrs/week thing just like the attorney, they’ll be making pretty much the same money.

  12. 262
    ess says:

    By sfraz @ 258:

    RE: Erik @ 257 – Not a lawyer. They are a dime a dozen now. Many baby lawyers are working as paralegals, or legal assistants trying to get into a glutted field, that is dwindling due to technology.

    Some of the lawyers I knew when I was in that area of employment were making less money than their support staff. Not to mention that not only do many lawyers have little job satisfaction, but the incidence of abuse by various substance is an ongoing problem. In addition, lawyer wanna bes are racking up all sorts of student loans, and some of them are having difficulty getting jobs in their chosen profession, not to mention the hardships of going out on one’s own.

    I was on a cruise in the Caribbean some years ago, and I saw and said hello to a fellow wearing a UW Husky (not to be confused with UW Madison) t-shirt. Turned out he had attended the UW law school, and he informed me that of his graduating class from the mid 90s, about half of the class was not practicing law.

    Luckily some lawyers had real estate investments to fall back on when it was time to call it a legal career.

    Life is tough for most folks all over. If not real estate investments or some other financial mechanism to get ahead, I suggest either becoming a trust fund kid, or marrying one.

  13. 263
    ess says:

    By kl @ 253:

    RE: ess @ 250 – US citizens and green card holders should have every freedom in the USA. If they want to buy a hundred homes, sure, why not, this is not the problem.

    On the other hand, it’s not obvious that non-resident aliens should have this freedom. They need special authorization to work here, and they can only work here if it benefits the USA, and work authorizations have time limits. They can only travel here if the government gives them a visa, and the time they can spend here is limited.

    I believe there should be similar restrictions on residential home purchases because such purchases can directly and negatively affect the lives of US residents. Why should citizens of other countries have the right to create housing bubbles and force US residents to move or into financial hardship?

    By the way, US citizens cannot freely buy residential property in China, so just being reciprocal would suffice.

    I understand the sentiments that you express, kl. I am not familiar with this area of law, but I rather suspect that not only what you suggest would be in violation of some federal law, but there are enough legal avenues to get around any limitations within the law(with eager attorneys willing to design the mechanisms).

    If I am not mistaken, some of my Canadian in laws back east owned winter places in Florida, and they had no special legal standing to own property in the US

  14. 264

    It’s funny to listen to you guys talk about lawyers. There were too many lawyers back when I went to law school. That is nothing new. But technology isn’t reducing the need for lawyers. If anything it’s increasing the need because the technology creates more legal issues, and those issues over numerous jurisdictions.

    The thing about practicing law is it’s very stressful. You not only have someone on the other side who will do their best to tear apart your work, but then you get to have a judge actually come down on the issue one way or another. That can be fine if you expected to lose, and even more acceptable if your client expected to lose, but the judges are far from perfect. I was lucky to practice in bankruptcy court where the judges are much better than the average elected judge in state court. I purposefully avoided state court after a time because I could afford to do so.

    I think the reason so many attorneys drop out of the profession is due to the stress, and due to the fact that after a period of time it no longer has the same appeal. Practicing law is basically constantly learning new things, but after a time there are fewer and fewer things to learn. It becomes routine.

    Also funny are the mention of the hours. Yes sometimes lawyers have to work long hours, and of course there are some lawyers who are just workaholics. But it wouldn’t surprise me that the average real estate agent who actually makes a living at real estate (as opposed to just doing a couple of deals a year) puts in more hours than the average full time lawyer. Most lawyers though don’t really put in all that many hours over 40 per week (although some may bill a lot more!).

    Anyway, the thing lawyers have going for them over engineer/science types is better control over the marketplace, except maybe in California where you don’t need to have graduated from an accredited school. That might be changing slightly as some stats allow lawyers admission based on admission to practice in other states or allow more and more limited practice type positions. But overall the supply is much more controlled.

  15. 265
    sfraz says:

    RE: Kary L. Krismer @ 264 – Funny thing Kary. Many articles out there, including the NYT are predicting that lawyers will become obsolete. I had two friends that recently graduated. Looked in all 50 states as they were young and hungry. NO bar needed attorneys. Not one state. All were facing a glut. They ended up doing gig work and one went to work with a sports magazine (not as a lawyer). “In the US, young lawyers already don’t get jobs. Because of IBM Watson, you can get legal advice (so far for more or less basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans.” http://www.jdjournal.com/2016/12/02/why-lawyers-and-other-industries-will-become-obsolete-you-should-stop-practicing-law-now-and-find-another-profession/

  16. 266
    Cap''n says:

    Some rather underwhelming coverage of the Canadian housing bubble(s) and a mention of Seattle in the Economist (noting that Seattle is also a booming market outside of Canada). But that was the leader and then the article just focused on the banking sector instead of getting in depth on the SFH assest appreciation aspects. Not really any useful insights except that if chocolate hits the fan in Canada, the banks are better positioned to take the hit then US in 08 and an encouragement to keep up and expand policies that soften the inevitable blow (as opposed to avoiding it altogether) e.g., vacant property tax.

  17. 267

    By sfraz @ 265:

    RE: Kary L. Krismer @ 264 – Funny thing Kary. Many articles out there, including the NYT are predicting that lawyers will become obsolete. I had two friends that recently graduated. Looked in all 50 states as they were young and hungry. NO bar needed attorneys. Not one state. All were facing a glut. They ended up doing gig work and one went to work with a sports magazine (not as a lawyer). “In the US, young lawyers already don’t get jobs. Because of IBM Watson, you can get legal advice (so far for more or less basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans.” http://www.jdjournal.com/2016/12/02/why-lawyers-and-other-industries-will-become-obsolete-you-should-stop-practicing-law-now-and-find-another-profession/

    That’s a complete fantasy. Only a reporter could come up with such nonsense. The law is far too subtle and nuanced, often turning on the slightest fact pattern difference. I’m sure there are areas where it might work–basic taxes and basic wills come to mind. But none of the things that computers would be capable of in the near future (20 years) would be the stuff that makes attorneys much money–they would be the simple tasks like the two I just mentioned.

    If this were to work the first place it should be applied would be judges. You could have a computer read the briefing, declarations and exhibits and come up with a decision. If one of the parties didn’t like it they could appeal to a human, who would then have the computer’s analysis to review.

    That said, I will agree humans are not that accurate giving legal advice (or rendering judicial decisions). There are a lot of really bad attorneys out there. But that doesn’t mean computers are up to the task yet.

  18. 268

    By sfraz @ 265:

    I had two friends that recently graduated. Looked in all 50 states as they were young and hungry. NO bar needed attorneys. Not one state. All were facing a glut. They ended up doing gig work and one went to work with a sports magazine (not as a lawyer).

    I don’t even know what this means other than the fact you had two friends who could not get a job. Bar Associations don’t say “we don’t need more attorneys.” Attorneys take a bar exam and find someone to employ them, not necessarily in that order.

    In the past I’ve said the main difference between being a RE agent and attorney is that there is no judge. But this is another difference. Typically agents pick the firms they associate with–there is little or no hiring process (although I assume there’s a review to make sure the person can be insured). Although agents do get recruited by firms, so there is poaching. Where in the attorney area you have to find an employer or hang your own shingle (an option which I don’t believe is available for new agents).

  19. 269

    I stand corrected on the ability of computers to replace lawyers. Per this article (written by an attorney no less), all you need is a phone line and a few subscriptions to start a law practice right out of lawschool! /sarc

    http://abovethelaw.com/2017/06/can-you-open-a-law-firm-right-out-of-law-school/?rf=1

  20. 270
    Erik says:

    RE: Jon @ 259
    Us aerospace engineers use to be a big deal. Now we are becoming less valuable as more engineering is being outsourced to 3rd world countries. Same thing will happen to software developers once they figure out an easy way to do it.

  21. 271
    wreckingbull says:

    By Erik @ 270:

    RE: Jon @ 259
    Now we are becoming less valuable as more engineering is being outsourced to 3rd world countries. Same thing will happen to software developers once they figure out an easy way to do it.

    This comment is spot on – (if written in 1998)

  22. 272
    sfraz says:

    RE: Kary L. Krismer @ 269 – DayUm Kary! I’ll tell Chris to call you , as his father, a judge, is unable to assist. I’ll tell him to hop on the page to get some advice. /sarc

  23. 273
    justme says:

    Wow, look at the inventory snapshot from the front page. That’s a 10% increase in KC in just a few days.

    As of 06.23.2017 @ 07:00 AM

    King County
    SFH: 2,619
    Condo: 437

    Snohomish County
    SFH: 1,315
    Condo: 143

    Pierce County
    SFH: 2,020
    Condo: 108

  24. 274

    By sfraz @ 272:

    RE: Kary L. Krismer @ 269 – DayUm Kary! I’ll tell Chris to call you , as his father, a judge, is unable to assist. I’ll tell him to hop on the page to get some advice. /sarc

    Um, I didn’t offer any help. I just explained to you how the world works. It was extremely obvious that was necessary since you didn’t understand.

    But hey, if you want to pass this along, go ahead. If your friends want jobs as an attorney they should try applying for jobs rather than contacting bar associations (unless they want a job with a bar association).

  25. 275
    Brian says:

    RE: justme @ 273

    Yeah, King Co SFH seems to be closing the gap on last year’s inventory numbers after being down all year.

    Well I just reached a major down payment savings goal but feel less inclined than ever to buy. Last fall seemed like such a better time to buy. I’d have to see a really sweet listing to pull the trigger now.

  26. 276
    N says:

    By justme @ 273:

    Wow, look at the inventory snapshot from the front page. That’s a 10% increase in KC in just a few days.

    As of 06.23.2017 @ 07:00 AM

    King County
    SFH: 2,619
    Condo: 437

    Snohomish County
    SFH: 1,315
    Condo: 143

    Pierce County
    SFH: 2,020
    Condo: 108

    I’ve been watching it the last several weeks and every week has seen the high point for the week go up sustantially and the low point for the week also rise a lot from the previous week low. On the surface it would appear listings are not all selling immediately anymore like they were during the spring rush, BUT the same exact thing happened last year so its not out of trend once the spring market ends. Also have noticed a few big price decreases recently, as always over pricing your house doesn’t help.

  27. 277
    uwp says:

    By justme @ 273:

    Wow, look at the inventory snapshot from the front page. That’s a 10% increase in KC in just a few days.

    As of 06.23.2017 @ 07:00 AM

    King County
    SFH: 2,619
    Condo: 437

    The jump from this week’s low SFH inventory (Wednesday morning) to this morning was 2,411->2,619, or about 8.5%.

    The jump from the same week in June last year (same 4th Friday in June) 2,975->3,174, or just under 7%.

    It looks like this is pretty normal for late June. Also, still ~20% less standing inventory than last year.

  28. 278
    Doug says:

    RE: Brian @ 275 – if you’re going to live in the house for 20+ years, just buy and forget all this noise. if you can’t guarantee that you’ll be there for at least 7 years, then there might be room for concern (even though I’m still bullish in the short term as well).

    in general, your primary residence should NEVER be viewed as an investment. it is in fact a great tool for slowly creating and storing wealth, but it’s never going to be an income generating asset like the rest of your portfolio is.

    if you’re in the business of picking tops and bottoms don’t waste your time with real estate. do it with bitcoin, stocks, or literally any other investment that doesn’t carry a 6%+ transaction cost or liquidity risks.

  29. 279
    ess says:

    RE: uwp @ 277

    “It looks like this is pretty normal for late June. Also, still ~20% less standing inventory than last year”.

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

    Ah, but for those who wish to purchase a residence, but are anticipating a significant drop in prices, hope is eternal. Even with a temporary ten percent or higher correction which I fully expect will happen sometime in the future, housing will still be expensive.

    Even with the slight increase of inventory, it is still much lower than the 6 months supply that experts indicate is a balanced market between buyers and sellers. And as you indicate, the inventory increased last year at the same clip, but yet prices really escalated in spite of the inventory increase.

    Here is an interesting perspective on the dynamics between a recovered housing market and subsequent shortages of housing. I wonder if and to what degree that is happening in Puget Sound.

    https://chicagoagentmagazine.com/2017/04/12/real-story-behind-nationwide-housing-shortage/

  30. 280
    Brian says:

    RE: Doug @ 278
    Sound advice, I agree.

    RE: ess @ 279
    It’s definitely still low supply, but we’re just talking about starting to notice a potential trend of reversal.
    Inventory last year pretty much stopped rising in June/July. If it keeps rising as it is through this June/July, I could see it catching back up to last year.

  31. 281

    RE: David Cohen @ 251
    LOL Dave

    All Amazon hires is like $12/hr warehouse workers…engineers at Amazon? Maybe 1 in 100 warehouse employees??? Way too conservative estimate IMO.

    Pickup a spatula and flip burger wages IOWs…..at least they have healthcare….LOL

  32. 282

    RE: Erik @ 270
    Foreigners Hate American [Mostly White Males] Engineers

    We innovate and invent new processes faster than they can outsource old manufacturing stolen from American engineers…

    Software Development Erik? We can get MASSES of legal citizen great workers from our Seattle area community colleges and high schools….at least they already know the culture and know fluent English. Its far cheaper with them and the quality goes way up. Colleges don’t teach S/W development anyway.

  33. 283
    Erik says:

    RE: wreckingbull @ 271
    It’s still happening. The Boeing 787 was greatly outsourced. Jim Albaugh, the CEO of commercial aerospace said Boeing learned their lesson on outsourcing engineering, it doesn’t work. It cost Boeing billions of dollars and years of delays.
    Jim Albaugh is gone now and Boeing wants to outsource again. Lesson was not learned.

  34. 284

    By Doug @ 278:

    RE: Brian @ 275 – if you’re going to live in the house for 20+ years, just buy and forget all this noise. if you can’t guarantee that you’ll be there for at least 7 years, then there might be room for concern (even though I’m still bullish in the short term as well).

    in general, your primary residence should NEVER be viewed as an investment. it is in fact a great tool for slowly creating and storing wealth, but it’s never going to be an income generating asset like the rest of your portfolio is.

    if you’re in the business of picking tops and bottoms don’t waste your time with real estate. do it with bitcoin, stocks, or literally any other investment that doesn’t carry a 6%+ transaction cost or liquidity risks.

    I would generally agree with all of that, unless you pay cash. Then your asset is giving you income in the form of the right to live there. And that income is not taxed.

    If you spend $400,000 to buy a house that would cost $2,000 a month to rent, that’s basically a 6% return. Of course besides not being taxed you need to factor in the RE taxes and maintenance, so your individual return will likely be above or below 6%.

  35. 285
    Blurtman says:

    RE: Kary L. Krismer @ 284 – You are ignoring the opportunity cost of that cash. Perhaps you could have gotten a 3-4% return on that cash elsewhere. You’d also have to factor in the gain or loss on the sale of that asset, maintenance and RE tax costs.

  36. 286
    Blurtman says:

    RE: Kary L. Krismer @ 284 – But a friend of mine sold her house for $925,000. She had $280,000 left on her mortgage. She gets a fat check for .92x(925,000-280,000)=$593,000 back. Had she rented, she would have received the gratitude of her landlord for paying his/her mortgage.

  37. 287
    Jon says:

    Owning a house is also inflation proof, other than taxes and other costs. That allows you to better plan your retirement. Even if the initial rent equivalent is less, it won’t stay that way long term.

  38. 288

    By Blurtman @ 285:

    RE: Kary L. Krismer @ 284 – You are ignoring the opportunity cost of that cash. Perhaps you could have gotten a 3-4% return on that cash elsewhere. You’d also have to factor in the gain or loss on the sale of that asset, maintenance and RE tax costs.

    I mentioned two of those last factors, and I didn’t mention the gain or loss on sale because that is a real wildcard. Also, that would raise the topic of leverage where if holding for a shorter time the rate of return would be better if you borrowed money.

    But I’m not sure you need to factor in opportunity cost when you are calculating the rate of return. It’s not like that’s a deduction–but if you have something better you can do with your money you should probably do it. The expected rate of return on that would be better.

  39. 289
    justme says:

    RE: Brian @ 275

    Brian or anyone, I remember seeing some discussion about the difference between the the Tim/Estately inventory numbers and the Altos Research inventory number graph, as displayed on the front page of this very blog. Can someone please recap the difference and/or link to the previous discussion? I did a site-specific search but had no luck.

    Hold, on I found a mention that Altos has SFH only, no TH and no condo of any sort. Is that it?

  40. 290

    RE: justme @ 289 – It does have something to do with townhouses, but I don’t remember exactly.

  41. 291

    From Case-Shiller Thread:

    By Kary L. Krismer @ 33:

    The thing is though, there will also likely be some amount of seller remorse as they end up getting sued by their buyers. I’ve linked to the WR videos on bad market practices which have come up in this market. The “monkey see, monkey do” practices of agents are now getting so bad that I’m seeing ignorant listing agents indicate that offers should strike boilerplate language which benefits their seller clients! They don’t have a clue what they are doing, but see some other agent do that so they do it too! At least those requests are relatively easy for a buyer’s agent to deal with, since there’s seemingly little/no downside to the buyer.

    Washington Realtors created a video on this exact topic, and included the monkeys! The part about listing agents wanting language crossed off that benefits their own client starts at about 2:20.

    https://www.youtube.com/watch?v=esd0eLwkBRo&list=PLsU-Dcv-PIXZ1SxR0yfh1mwOIoNN3V9ah&index=11

  42. 292
    wreckingbull says:

    RE: Jon @ 287 – In recent years, owning a home has sort of just turned into another form of renting. My monthly taxes and insurance are almost double my principal + interest. Factoring in maintenance makes it even worse.

    I advocate home ownership for some, but people rarely calculate the costs and rate of return correctly.

  43. 293

    By wreckingbull @ 292:

    RE: Jon @ 287 – In recent years, owning a home has sort of just turned into another form of renting. My monthly taxes and insurance are almost double my principal + interest. Factoring in maintenance makes it even worse.

    I advocate home ownership for some, but people rarely calculate the costs and rate of return correctly.

    You must not owe much on your mortgage, or you don’t live locally. A $400,000 house would typically have taxes at around $500 a month. Insurance would add less than another $100, unless you have earthquake.

    If you borrowed the entire $400000 at only 3% interest the P&I would be over $1,600. For your P&I to be in the $300 range it would have to be about $70,000 at 3%.

  44. 294
    Anonymous Coward says:

    By softwarengineer @ 281:

    All Amazon hires is like $12/hr warehouse workers…engineers at Amazon?

    Wait, I’m confused. Why is Amazon making room for additional $12/hr warehouse workers by building office towers in SLU?

  45. 295
    QA Resident says:

    By Erik @ 270:

    RE: Jon @ 259
    Us aerospace engineers use to be a big deal. Now we are becoming less valuable as more engineering is being outsourced to 3rd world countries. Same thing will happen to software developers once they figure out an easy way to do it.

    Agreed. Software engineers,coders and CS majors will be a diminishing function with a career outlook mimicking more like a negative horizontal asymptote. AI in the next 6 -10 years will develop their own programming, coding, and hardware designs thereby rendering those academia useless. We have hit a sort of ‘GEEK PEAK’, IMO.

    Not to mention other mindless jobs will be automated by AI by 2029.

  46. 296
    Anonymous Coward says:

    RE: QA Resident @ 295 – Sure the AI will do detailed design work or write the code… But who’s going to define the use cases, write the requirements, verify that the requirements have been met, etc? You know, the actual engineering required to go from “I need a program/widget that does X” to having a product that actually does do X… We’re an awfully long way from AI causing a drop in demand for engineers.

  47. 297

    By QA Resident @ 295:

    Not to mention other mindless jobs will be automated by AI by 2029.

    Given the tech advances of today, I’ve been wondering if the move to promote communism and socialism wasn’t about 100 years too early.

    On the other hand, at the time they probably saw all the great advancements that occurred with the mechanical advances in the early 20th Century and thought the same things we think now about AI. So maybe what we’re thinking today is wrong too.

  48. 298
    jon says:

    By QA Resident @ 295:

    Agreed. Software engineers,coders and CS majors will be a diminishing function with a career outlook mimicking more like a negative horizontal asymptote. AI in the next 6 -10 years will develop their own programming, coding, and hardware designs thereby rendering those academia useless. We have hit a sort of ‘GEEK PEAK’, IMO.

    Not to mention other mindless jobs will be automated by AI by 2029.

    Anyone who thinks this level of automation is coming anytime soon has never tried to do it themselves.

  49. 299
    S-Crow says:

    Tax Assessments for 2017 paid in 2018 just came in the box today for many Sno Co residents. I forecast a lot of people getting their escrow/impound mortgage accounts adjusted up. A lot.

  50. 300

    By jon @ 298:

    By QA Resident @ 295:

    Agreed. Software engineers,coders and CS majors will be a diminishing function with a career outlook mimicking more like a negative horizontal asymptote. AI in the next 6 -10 years will develop their own programming, coding, and hardware designs thereby rendering those academia useless. We have hit a sort of ‘GEEK PEAK’, IMO.

    Not to mention other mindless jobs will be automated by AI by 2029.

    Anyone who thinks this level of automation is coming anytime soon has never tried to do it themselves.

    I would agree, although automation could probably take over a lot of the testing and other basic tasks.

  51. 301
    Eastsider says:

    RE: S-Crow @ 299 – Yes, a lot of people are going to be hit by higher car tab, property tax, ObamaCare premium, toll tax, and sales tax. For Seattleites, there is soda tax and a potential income tax.

  52. 302
    ess says:

    By Eastsider @ 301:

    RE: S-Crow @ 299 – Yes, a lot of people are going to be hit by higher car tab, property tax, ObamaCare premium, toll tax, and sales tax. For Seattleites, there is soda tax and a potential income tax.

    But they can take comfort that the increase in taxes will inevitably benefit children and kittens.

    While the assessed value is up in the double digits YOY, I assume that it won’t result in a double digit increase in property taxes. I would appreciate a discussion on how exactly it works – including factors such as mill rates, Eyman etc. Thanks

  53. 303

    RE: ess @ 302 – In simple terms, some parts of the RE tax are determined at a rate that is based on X amount of pennies per $1,000 of assessed value. So those will go up proportionately with the valuation. But most components of the RE tax go up relative to the other valuations in the particular area affected (either the entire county or the tax zone). So if the average increase in the area is 25% and your valuation goes up 25% your increase should be minimal (because they allow the taxing authorities to collect 3% more each year, or some such thing–but I believe new construction counts against that). If the average increase is 40% and yours only goes up 20% your taxes should be lower (absent maybe a school levy having not passed the prior year and passing this year.) The impact of ST3 was ignored in both examples. You’d need to add that on.

  54. 304
    ess says:

    RE: Kary L. Krismer @ 303

    Thanks, Kary

    While apparently there are built in controls as to the regular increase of real estate taxes, the voter approved initiatives have no limitations, as far as I understand it.

    Problem with all these taxes, especially these initiatives coming all at once will be a cynical public that will automatically vote against any taxing initiative, even those that are truly needed to continue with a functioning society. Lately I have been meeting more and more individuals are those type of voters – they have had enough. Wonder if this state will have a California prop 13 tax revolt – that would be interesting.

  55. 305

    RE: ess @ 304 – Yes, the voters can change things, but I think those are also subject to some limits.

    On the tax revolt thing, what I don’t get is the legislature getting into the game. ST3 passes, but not unanimously obviously, but the legislature reacts (or at least wastes time trying to react) because a lot of their constituents are unhappy with what the voters voted for. That just seems bizarre to me. And I say that not being a particular fan of ST3.

    BTW, one other thing that can change the game is whatever they do with school funding. Apparently King County might really get hit hard on the property tax portion of that.

  56. 306
    Erik says:

    I thought this heat map was pretty cool…
    http://www.thestranger.com/slog/2017/03/27/25043201/more-than-1000-people-are-moving-to-seattle-every-week-census-report-shows

    They say 1,000/week to Seattle, but I think it’s 1,000/week to the Puget Sound area.

  57. 307
    Anonymous Coward says:

    RE: Erik @ 306 – Thanks for the link. However, as Justme would be very quick to point out, the stranger’s 1000/week number is actually low. They got that number by taking change in population growth over one year and dividing by 52 weeks. The real number is 1000+weekly deaths+out_migration-births. The article contains a link to an Urbanist article which contains some more interesting numbers: a King County average of 1.8 people living in each apartment. Additionally, it repeats the numbers we’ve seen before: 10,000 apartment units planned to open in the Puget Sound region in 2017 with 12,000 more planned for 2018. All that means that we can get a rough approximation* or not we’re seeing a big oversupply of apartments on the horizon due to overbuilding. 22,000 units x 1.8 = supply for 39,600 new residents. So over 104 weeks, we’re going to complete enough apartments for the first 39.6 weeks worth of population growth. That’s not signaling a crash in rents; let alone one big enough to cause a drop in housing prices due to people deciding to substitute a cheaper apartment for more expensive house…

    *And a rough approximation is good enough because we’re looking for a heads up on a big price swing due to a large mismatch between supply and demand. Yes, yes, there are other things that could potential cause a pricing swing, but that’s not what’s in this data. So we’ll have to save those discussions for when additional relevant data comes in….

  58. 308

    RE: Kary L. Krismer @ 256
    Hey Kary

    The Supreme Court just voted FOR Trump’s travel ban.

    http://trumptrainnews.com/articles/trump-travel-ban-ruled-on

    Ya heard it from a real news source, SWE….not that fake Seattle Times news [that didn’t consider an assassination attempt on a group of GOP Congressmen FRONT Page news]. They put the Obama collusion with Russian hackers incorrectly as a Trump BLAME….CNN has already retracted the FAKE NEWS collusion story….blame the toxic Democrats no one votes for anymore.

    The Washington State 9th Circuit Court has been embarrassed and is WRONG. Constitutional Law is Constitutional Law.

    Christians 1
    Lions 0

  59. 309

    RE: Anonymous Coward @ 307
    Yes, the REAL NEWS

    Speaking of REAL NEWS, that $15/hr minimum wage the open border Progressive Elites like to push is actually hurting low income workers through layoffs and reduced hours….$125/mo avg loss to poor workers’ households has been calculated for the Seattle area….doesn’t sound like much to us, but its their rent/food/gas money…

    http://www.washingtonexaminer.com/study-seattles-minimum-wage-is-hurting-the-poor/article/2627072

  60. 310

    RE: softwarengineer @ 308 – Well that wouldn’t be my analysis, but at this point it does seem like an incredible waste of time and judicial resources. By the time the Supreme Court decides the 90 days will be up, so it will only apply to future actions.

    I don’t view the issue as simple. Clearly the President has great powers in this area, both under the Constitution and by statute. But those powers must be exercised in a way that is constitutional. So if Trump had issued an EO that expressly banned Muslims, that would clearly be unconstitutional.

    The biggest thing I find suspect though about the whole thing is analyzing the issue based on campaign statements rather than the text of the EO. It basically assumes that someone never adjusts their opinions and that they don’t get any advice from anyone once they do take office. Both are highly suspect propositions. It will be interesting to see what the SC says about that when they rule.

  61. 311

    RE: Kary L. Krismer @ 310 – BTW, the big loser today might be Sally Yates. She is probably subject to bar sanctions if someone actually files a complaint with the bar association. You have a duty to represent your client, and she not only violated that duty, but ordered others to violate the duty too. If she had just refused to participate personally, and allowed others not to participate, that would be another matter.

    https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_3_diligence.html

  62. 312
    justme says:

    RE: Erik @ 306

    That is old data from July 2016, Erik. And the number is NOT netmigration, just raw population increase We have already hashed this over multiple times. I refer you to

    http://seattlebubble.com/blog/2017/05/12/high-seattle-home-prices-now-subject-tasteless-bus-ads/comment-page-1/#comment-262893

  63. 313
    Erik says:

    Dear Tim,

    Please bring back the thumbs up/thumbs down function for people like me that comment. We won’t abuse it this time, I promise. We’ll be good. You don’t need the people on this site to rate your posts, I would like the opportunity to give others a thumbs up for a job well done, or perhaps a thumbs down to get them back on track. Likewise, I would like to receive feedback on my posts.

    Thank you for your consideration,

    Erik

  64. 314
    Doug says:

    RE: softwarengineer @ 309 – who could have possibly guessed that artificial price floors would have unintended consequences?

  65. 315
    kl says:

    RE: Kary L. Krismer @ 310 – Why do you think the US Constitution provides protections to non-resident, non-citizen aliens, who are not even on US soil?

  66. 316
    uwp says:

    Oh no…
    Are we going to re-litigate the facts of net-migration and household size again?

    Quick Tim, post a new article!!!

  67. 317
    justme says:

    Having to point out the mistakes being made in all the posts about population and rental supply/demand modelling is a lot of work. I hereby propose a framework that can be used for the modelling, so that we can all try to compare apples to apples from now on.

    popchange=migration(in)-migration(out)+births-deaths
    netmigration=migration(in)-migration(out)
    rentalDemandChange=potentialRenterPopulationChange=netmigration-netmigrationbuyers+maturationtotal-maturationbuyers-existingrentersthatbought-deadrenters
    apartmentSupplyChange=apartmentsbuilt-apartmentsdemolished
    aptoccupancyratio

    By maturationtotal I mean local kids that reach “renting age”. That constitutes demand. All rentalDemand is a function of price, of course, but we cannot estimate a full price-demand curve without involving the income of the potential renters, so we simplify and use potentialRenterPopulationChange instead . Note that there is also other forms of rentals, such as condos and houses being rented out. This can be incorporated in the equations, too, but for the moment just count them as apartment units to keep things simpler. Some such supply is flexible and/or opportunistic and does not require new construction or old demolition, though.

    CLAIM:I think the above model is more explicit and complete than any other model that has been proposed or implicitly discussed on seattlebubble blog in the last several years.

    PROPOSAL: I suggest that people that want to make arguments abut rental supply and demand do so by filling in the numbers that they have into the variables in the above model, and providing references(links and descriptions) to the data they use

    Now, On the data side, what has been bandied about today:

    popchange2016=1100 (per month, supposedly, from July 2016 census, which is old data)
    aptSupplychange2017=10000 (claimed, this looks suspiciously like the 2015 number)
    aptSupplychange2018=12000 (claimed. this looks suspiciously like the 2016 number)
    aptoccupancyratio=1.8 (how do we know that incoming renters stay at this ratio, too? It matters!)

    As a reasonable reader can see, there are problems with the data: What geographical area is covered? Is the claimed time period correct? Also, there are lots of variables in the model for which we do not have any data, or for which the data is sprinkled around in old blog threads. Suffice to say that works needs to be done. I’m going to stop right here for the time being.

  68. 318

    By kl @ 315:

    RE: Kary L. Krismer @ 310 – Why do you think the US Constitution provides protections to non-resident, non-citizen aliens, who are not even on US soil?

    Being a non-resident non-citizen could certainly be an issue, and part of the reason the residents of Guantanamo are not on US soil. But note one of the fact patterns addressed in the decision today was a resident alien couple who were affected by the EO affecting their bringing over family members. The court allowed the injunction to stand there. I would expect the same result if that restriction had been based on religious status rather than national origin.

    Also remember, the original travel ban was pretty broad, and I believe included some people who were resident aliens that might not have been allowed back in. So there you could get a religious based decision if the EO has expressly been religious.

    Finally, I assume there is some Constitutional issue there applied to non-resident non-citizens, otherwise the TROs and injuctions would not have been issued. Perhaps it’s the impact on US Corporations, like the impact on the couple mentioned above.

  69. 319
    Erik says:

    RE: Kary L. Krismer @ 264
    A lawyer’s job is to take money from workers. That’s what they are trained to do. It is scary to see lawyers stepping into jobs as real estate agents. What stops these snakes from turning on their own clients?

  70. 320
    Doug says:

    Seeing CS March to April at 2.63%

  71. 321
    wreckingbull says:

    RE: Kary L. Krismer @ 293 – Yes, I am one of those crazy people who actually wants money left over for aggressive savings, a solo-401K, travel, hobbies, an emergency fund, and entertainment. My taxes and insurance are now about $1000 per month.

    What really strikes me about today’s young buyers is their optimism. A high-tech couple bringing in 300K/year seem to think they will always bring in 300K (or more) a year. When I was a young person calculating affordability, my equation was very different. I calculated a price in which I could continue to afford the home if I lost my high-paying job and had to work some sort of temporary job for several years. You don’t see that much anymore.

    Instead, you have people (such as someone posting in this thread) who forgo this planning and simply mail in the keys and start over a few years later when job prospects improve.

  72. 322

    By Erik @ 319:

    RE: Kary L. Krismer @ 264
    A lawyer’s job is to take money from workers. That’s what they are trained to do. It is scary to see lawyers stepping into jobs as real estate agents. What stops these snakes from turning on their own clients?

    Post 264–behind on your reading?

    I’d suggest getting a copy of The Official Lawyer’s Handbook, D. Robert White, 1983. It’s out of print, so you’ll have to buy it used. It’s a comedy piece and pretty good.

    It has a legal terms section, which includes:

    “Accord and Satisfaction– 1. Resolution of a claim for breach of contract, whereby the parties agree to alter the original terms of the contract. 2. Carnal indulgence in the rear seat of a Japanese automobile.”

    “Fee–1. In real property law, an unrestricted estate in land. 2. A term whose loud utterance– ‘Fee?’–constitutes the lawyers equivalent for ‘Is there a doctor in the house?”

    and

    “Layman–What lawyers call the person they screw.”

    The book also takes you through the steps of becoming a lawyer–taking the LSAT, going to law school, working for a firm, etc., but it somehow missed the part about becoming a real estate agent.

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