King Co. SFH New Listing Absorption Rate

New Listing Absorption Dropping Rapidly From December High

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By request, here are a few alternative takes on recent home listing activity. Since one of the biggest issues driving the current crazy market is a lack of enough home listings, we can get an idea of whether or not there is any relief on the horizon for buyers by looking at listing activity.

First up, here’s a chart I just created: New listing absorption. This is a simple look at the ratio of pending sales to new listings. If more homes are going pending in a month than there are being listed, this ratio goes above 100 percent, which is obviously not great for buyers.

King Co. SFH New Listing Absorption Rate

Unfortunately we can’t really compare this metric pre-2008 and today, since the NWMLS changed how they define “pending sale,” but what’s interesting to me about this chart is that just last December we saw new listing absorption an all-time high of 159%, while as of June it has fallen to almost the lowest level since the market bottomed out in 2011. However, this is obviously a very seasonal metric, and the low point for the year usually comes in June or July, so it would not be surprising if this is the lowest level we see this year.

I suspect that one of the first signs we’ll see of the market softening is when new listing absorption starts to drop, so I’ll be keeping an eye on this.

Next up: a comparison of total on-market inventory growth through June for each year:

On-Market Inventory Growth Through June

It’s interesting that last year was actually the strongest year on record for listing growth, only to be followed up by new all-time lows this year. At least the growth in the last few months is promising.

Next, here’s a yearly comparison of the total number of new listings just in the month of June:

Total New Listings in June: 2000-2017

2017 saw the largest number of new listings in a June since 2007, the year home prices peaked in the Seattle area. This is definitely a good sign, but we’re still quite a ways from what I would consider to be a “healthy” amount of new listings. We would like to see this number get above 4,000 in June for the market to be less insanely tilted against home buyers.

Finally, here’s a raw look at monthly new listings since January 2000:

New Listings 2000-Present

We’ve been on a slow and steady upward trend since listings bottomed out in 2012, but we still have a ways to go before we get back to a balanced market.


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.

91 comments:

  1. 1

    Based on the Accuracy Window of the Data Tim Shows

    Seattle’s real estate market hasn’t changed in 10-20 years…same old same old….

    Actually these general data issues were with us in the 70s and 80s too….Seattle has always been over crowded [and lacked a planning brain] with jammed freeways…welcome to an even far worse Seattle today. Hail to the Seattle Council Approved Income Tax [the Seattle Times made it front page “good news” this week]….its what the people wanted??? LOL

    Seattle has always been a bit organized crime….take the Under Ground Tour for the history facts on prostitution, etc…

  2. 2

    Thanks Tim!

    So seemingly new listings are down slightly, but considering we’re dealing with more units over time the downward trend is greater on a percentage basis.

    Interesting how so few people wanted to sell in 2012–given what happened after that actually was a bad time to sell. One of the few times the masses made the right decision! Also interesting how bad the 2000-2002 period was–before my time.

    Tim, would it be possible to do a more traditional absorption rate chart, where it’s charted against total inventory rather than just new inventory?

  3. 3
    uwp says:

    Interesting stuff!
    Thanks Tim.

    Crazy how many listings there were being added throughout the 2002-2005 era.

  4. 4
    ronp says:

    Amazes me how critical national loan qualification standards are and were. They really define the demand curve. I guess Texas avoided a lot of the 2007 bubble. We need to emulate them in WA perhaps?

  5. 5
    Erik says:

    RE: ronp @ 4
    The Seattle housing market is based on software and airplanes. The Texas market is based on oil and taco sauce. Are you suggesting we drill for oil and start competing with la victoria taco sauce? Don’t think so pal. We are winning as the biggest thriving city for the second year in s row. We want to continue innovating and inventing. Let Texas produce the taco sauce.

  6. 6
    greg says:

    RE: Erik @ 5

    Erik, the poster is likely referring to the stricter lending limits in place in Texas. In fact stricter limits are common in a number of countries and when enforced they do help prevent markets going out of control.

    Not claiming it is a perfect solution but it does tend to keep prices in less aspirational areas more affordable.

  7. 7
    OA says:

    RE: ronp @ 4

    LOL

    Erik, almost every time I read your posts I just assume you’re trolling as you tend to say some crazy things. But then there’s a part of me that thinks that you legitimately might mean the stuff you say.

    So which one is it? lol

  8. 8
    Erik says:

    RE: OA @ 7
    My comments are made to be riddles. For instance, in the last comment I don’t really believe that la victoria taco sauce makes an impact on the economy in Texas. That said, I think I make a great point that what drives our economy is completely different than what drives the economy in Texas, so how does anyone expect the areas to behave the same? My guess would be that Texas went through an oil boom during the last crash, which kept their housing prices stable.

  9. 9

    RE: ronp @ 4

    People who own houses are not busy trying to find ways for them to be worth less. People who don’t own houses do that. One of the reasons why living (and usually owning) in the area you represent is usually a pre-requisite to holding public office.

  10. 10
    MGSpiffy says:

    As someone who owned 2 homes in Texas before moving here in 08… There are two factors that contributed to much lower home purchase prices in Texas, and as a result, mortgage payments that more people could still swing in a downturn.

    1) Lots and lots of flat land to build on, with few to no restrictions – the metro areas in Texas just continue to expand outwards for the most part. One year you will drive by empty fields, the next year it’s a sea of rooftops. Already the I-35 corridor is just one or two counties away from being a continuous mega-city of it’s own.

    2) High property Taxes, usually around 3% of assessed market value, and throw in another 0.5 to 1.0% for insurance as escrow items, and you have effectively added 4% to the interest rate if most of the house is financed. The monthly payment is a limiter for a lot of people, so if half of it is going to escrow items, that’s only half available for the P & I portion.

    I had a house in a nice area: 4k sq ft, 3.5 car garage, .7 very treed acres, lots of custom touches, 1 lot away from large lake, with great view, 1400sq ft of deck, 40k gal 11′ deep pool. bought for $300k in ’02, sold for $245k in early ’08 (was divorcing and saw the crash coming/reading Ben’s blog, had to dump it). It resold as a bank repo around Dec ’14 for $199k. Taxes & Insurance were almost $10k/yr

  11. 11

    Interesting post! However, I think things are worse than they appear because the inventory needs to be adjusted for population. I did a quick and dirty version here for those interested.

  12. 12
    wreckingbull says:

    By Erik @ 8:

    RE: OA @ 7
    My comments are made to be riddles. For instance, in the last comment I don’t really believe that la victoria taco sauce makes an impact on the economy in Texas. That said, I think I make a great point that what drives our economy is completely different than what drives the economy in Texas, so how does anyone expect the areas to behave the same? My guess would be that Texas went through an oil boom during the last crash, which kept their housing prices stable.

    Oooh clever – I like riddles! By the way, Austin, MN is not in TX. Confusing, right? How can two cities have the same name????

  13. 13
    S-Crow says:

    From Ben Jones Housing Bubble Blog July 4th personal remarks regarding “Supply”:

    Article Ben Quoted:

    ‘We saw in the 2000s with the United States, Ireland and Spain, they went on absolute building sprees and yet, all the while, their economists were saying high prices were caused in part by shortages’

    Ben’s Remark:

    Isn’t that interesting, because they say the same thing now we heard endlessly in the early 2000’s. Right before guys in tuxedos started auctioning off new shacks in California (instantly making FB’s out of their recent buyers).

    The obvious question is why economists say these things? For hundreds of years houses were adequately supplied and prices barely moved above inflation. I watched a video where Chinese developers were throwing up a tower in days, 24/7. San Francisco is at a 70 year high in construction, Boston 60 years. You will more commonly hear the word glut than shortage associated these days with New York City or Miami. And if these big cities with relatively strong economies can be overbuilt, why would there be a shortage in Boseman Montana or Omaha Nebraska?

    There isn’t. Let’s take a little wander in time, to the last time shortage turned to glut. When the dam broke last decade, this wasn’t the only myth that was destroyed. Trees didn’t grow to the sky. That mobile home in California wasn’t worth a million bucks, soon to be three million. Suddenly people weren’t going to live with their parents into their 40’s to save a down payment. All new paradigm mental creations to explain away what hadn’t been logical ever before and never will be.

    We were getting back to reason. Then they started: housing was to create wealth in the mind of the public and save the economy. Every lever was pulled and stayed pulled. Prices shot up: “Oh, it’s just that prices had gone down too much!” we were told. Then as prices exceeded old highs that was discarded: “We aren’t building enough, it’s a shortage!”

    And that’s why they do it. Yes, these economists who talk about shortages are plain and simply full of sh#t.

  14. 14
    Erik says:

    RE: wreckingbull @ 12
    Here’s a riddle for you wreckingbull… How does a complete moron make a lot on money and retire early???? Well, the story begins early in a young man’s life when he was shoved in the lockers by other boys. Given swirlys in the bathrooms. Chosen last on the playground. As a result this young boy made a best friend named hewelett packard because it was the only one that would hangout with him.

    After a few years went by and hewelett packard and wreckingbull, I mean this young social reject became the best of friends. The boy would program hewelett for hours and hours to avoid being picked on and made fun of on the playground.

    To the young man’s surprise people that could program hewelett were offered a lot of money to program him. The young man who previously lived in the basement of a musician’s house was now able to afford more.

    This now full grown man was told by the mainstream to diversify his money. The man made much more than most men because of his special skill, so he diversified his money. He bought stocks, real estate, etc. His goal was diversity so he didn’t lose it. He was able to retire early not because he was smart or a money genius, it was because he lacked social skills and got lucky.

    This now old man goes around trying to offer financial advise even though he knows nothing of finances. He bumped into the right skill at the right time that he gained not because he was a go getter, but instead he was pushed into a secluded life by society.

    The End

  15. 15

    RE: Erik @ 14

    Article yesterday on Boeing leading the Dow and being up 35% YTD, You’re supposed to keep us up to date on these things, Erik. :) http://www.cnbc.com/2017/07/12/a-surprising-stock-is-leading-the-dow-this-year.html

  16. 16
    uwp says:

    By S-Crow @ 13:

    From Ben Jones Housing Bubble Blog July 4th personal remarks regarding “Supply”:

    I made the mistake of reading the comments on that blog. Pretty much what I expected.

    Then, just for fun I checked back to posts the last few summers:

    June 2012: Shades Of 2005 In Florida
    June 2013: Putting Some Additional Air Into The Bubble
    June 2014: Did Housing ‘Recover’ Too Much?
    June 2015: The American Dream Continues To Fizzle
    June 2016: Their Wager Might Be Shakier Than They Thought
    June 2017: It’s A Long Time Coming

    Yes, someday house prices will come down.
    It may even be in the coming year.
    But, man, at least The Tim only had endure a couple years before he was right about Seattle. (And most US markets were turning over within the year of Seattlebubble’s founding.) Then he bought at almost the exact bottom. This is truly the best bubble blog!

  17. 17
    Erik says:

    RE: Ardell DellaLoggia @ 15
    Yeah, Boeing stock is doing great partially because they took pension and pay away from employees. Leadership robbed the employees and fed the share holders and themselves.

  18. 18
    Dave says:

    RE: Erik @ 17
    On the topic of local economics, I did observe that the C919, (China’s upcoming aircraft,) was quite the buzz at the 2017 Paris air show. That and the cool weapons.

    These days Amazon should pick up the future fallen Boeing labor pieces for the Seattle economy so no worries.

  19. 19
    Dustin says:

    Last year in July, I was looking for rentals up to $1000/mo in the Seattle area using craigslist’s map search tool and was frustrated by the apparent lack of inventory. Out of curiosity, I used the tool to compare the number of available rentals in my price range to the total number of rentals of any type, and was surprised how small my “affordable” fraction of the housing market had become. I made a graphic showing the side by side comparison.

    Today, a little less than a year later, I repeated the same process to compare the results. While the number of rentals under $1000/mo has declined somewhat, the total number of rentals has increased to about double what we had a year ago. These are just general numbers reflecting unfiltered (and possibly erroneous or duplicative) results, but if you’re interested you can see the numbers here.

    I’m aware that the Seattle building boom has been responsible for adding a lot of new rental units to the market, but we wouldn’t necessarily see this degree of an increase in the number of available units over the long term if population growth were keeping pace with new construction and rental rates were balanced with the needs of the market.

    Since high rents have been a major factor driving buyers to accept increasing prices for real estate, the prospect of significant deflation in value of the rental market could mean relief on the horizon for anyone waiting on the sidelines for more affordable housing opportunities.

  20. 20
    uwp says:

    RE: Dustin @ 19

    Looks like about a 10% difference in Seattle (North of Burien and South of Edmonds). Not that drastic.

    Do you know that dates of those two screen shots? I know inventory for homes varies based on day of the week, it might be the same in rentals. A screen shot of Seattle housing inventory on a Tuesday evening is going to be lower than the following Sunday night.

  21. 21
    Dustin says:

    RE: uwp @ 20 – I saw a larger % difference, but it’s possible that was due to higher priced rentals outside the Seattle city limits. That might make sense, as in a glut situation I’d expect prices to come down in farther out, previously more affordable areas like Shoreline, Renton and Burien before they would come down in Queen Anne or Capitol Hill.

    You make an important point that the numbers would vary by date or day of the week, which I didn’t account for. The 2016 numbers were observed on 7/25, while the the 2017 set were observed today. Since most rentals start on the 1st of the month, there needs to be a margin to correct for the fact that the number of available rentals would be higher on on the 13th than on the 25th.

  22. 22
    uwp says:

    RE: Dustin @ 21
    Thanks for the extra info. More information is always good. :)

  23. 23
    Brian says:

    Since we’re on the topic of Craigslist rental inventories, I thought I’d share some data I’ve been gathering just out of personal interest for a few months.

    Weekly inventory levels from 3/16/2017 to 7/11/2017 for the following:
    5mi radius around 98101 (downtown Seattle)
    20mi radius around 98005 (central Bellevue)
    20mi radius around 98005, below $2K
    5mi radius around 98005, below $2K

    http://i.imgur.com/SfoUNfy.png

    I was more interested in Bellevue, hence more Bellevue data sets. I attempt to gather the data the same day of the week (Tuesday), but sometimes forgot til Wednesday. I also try to gather it at around 9am, as I imagine more listings may show up later in the day. A radius with a zoomed out view is the only way to get an accurate count week to week, as the count bubbles on the map seem to move around a lot.

    It doesn’t really tell you much yet, other than the heat of the spring/summer rental markets is eating up inventory that gathered during the winter. It will be more interesting to see what happens come this fall.

  24. 24

    One thing I haven’t seen, but haven’t really looked for either, is some type of analysis of the change in rentals over time. As more and more of the rental mix consists of units in newer buildings with perhaps better amenities, you’d expect the average rents to rise, absent perhaps a significant increase in vacancy rates. There rising rents wouldn’t be a bad thing because it would mean that there are new high paying jobs that allow people to live in the newer units being constructed. And you could even have a situation where the rents in some of the older lower-end rentals were dropping notwithstanding a rising average rental price.

    Has anyone seen that sort of an analysis of the rental market?

  25. 25

    RE: Erik @ 17
    The 737 Engineering Part Drawings are in Japanese Now

    We gave all our Manufacturing Aerospace secrets to Japan [and China too?]….but we got Amazon slave labor jobs in return….LOL

  26. 26

    By softwarengineer @ 25:

    RE: Erik @ 17
    The 737 Engineering Part Drawings are in Japanese Now

    Even more troubling are the implications of what Microsoft has been doing!

    http://www.pcworld.com/article/2038728/it-is-a-good-day-to-bing-microsoft-adds-klingon-support.html

  27. 27
    Kmac says:

    By softwarengineer @ 25:

    RE: Erik @ 17
    ….but we got Amazon slave labor jobs in return….LOL

    For all the crowing I hear online about all the high paying Amazonians being a contributing factor to excessive house valuations, I wonder.
    I’ve heard several first hand stories from Amazon employees in warehouses and they certainly are NOT making enough to send housing to stratospheric levels.
    They have to hustle like nobody’s business and many of them are working two jobs.

    I am sure that someone involved in the software end of things is doing much better, but how many are there doing that in relation to the total head count?

  28. 28
    StupidLifeDecisions says:

    By Kmac @ 27:

    By softwarengineer @ 25:

    RE: Erik @ 17
    ….but we got Amazon slave labor jobs in return….LOL

    For all the crowing I hear online about all the high paying Amazonians being a contributing factor to excessive house valuations, I wonder.
    I’ve heard several first hand stories from Amazon employees in warehouses and they certainly are NOT making enough to send housing to stratospheric levels.
    They have to hustle like nobody’s business and many of them are working two jobs.

    I am sure that someone involved in the software end of things is doing much better, but how many are there doing that in relation to the total head count?

    i don’t know the total headcount of their software and other high salaried employees, but it seems pretty obvious to me that it’s made a significant impact on housing/rent prices here. also, i think amazon has influenced other tech companies to hire more in this area. BUT, a lot of the people moving here to take these jobs are going to move somewhere else eventually.

    even if there isn’t some sort of downturn to trigger that, tech is going to start moving elsewhere.

    i’m very anti- amazon (so many reason why, my favorite one is the true story on how jeff bezos removed the tip jars from the amazon cafeteria because an amazon exec was told by cafeteria staff he couldn’t use the change from the tip jar to pay for his lunch, so he complained to jeff). hypocritical americans on both sides of the aisle might be too stupid, slow, lazy, in love with price fixing and fraud-friendly to see it, but it’s more likely than not that europe is going to go after them big time.

    stock tip: buy walmart.

  29. 29
    ronp says:

    RE: S-Crow @ 13 – So you are saying supply has no effect on housing cost? https://fred.stlouisfed.org/series/HOUST

  30. 30
    S-Crow says:

    RE: ronp @ 29

    Obviously not. Supply does have an effect. However, Heart Attacks are caused by high blood pressure, COPD, etc. Supply glut is caused by people who are exiting the market due to pressure to sell due to debt load. I’m seeing a lot of inventory build and if that is added to by people who have a lot of leverage in the game or they realize their debt load becomes unserviceable then it’s off to the races. There is a LOT of leverage buying homes to flip and very high LTV’s in more “affordable” ranges of $500K and under. People are using their homes as ATM’s for cash out refi’s (increasing CLTV’s) and to shift debt onto the homes increasing CLTV’s. This is the same play book from 2006-7 with all the cash out and shifting debt onto housing from refi’s and when our office was closing purchases where 7 of 10 homes were 100% financed.

    I don’t want to see people get their asses handed to them. I have no joy in seeing people stressed out financially and the fallout that comes from it: causing issues to family, marriages, health, etc.

    People had better have a plan and very local regional banks (lending to builders/developers) and credit unions lending into this environment had better have a plan. It is unsustainable to have 52% increases in some housing prices in the last 16-24 mos as I see and over 100% increases in others in the same time period.

    There will be no warning signs just like the last bubble. This debt load freight train will just blindside people because no one could have seen it coming down the tracks. Fannie and Freddie new policy at the end of July expanding debt to income ratios to an incredibly stupid 50% gross income guarantees no one will see this debt load freight train coming. It’s all Stealth.

    NWMLS Data= Sales
    Escrow Data: Real time data on Debt Loads, Income levels, Interest Rates, Loan Programs, CLTV’s, etc.

    If we are not in the Euphoric stage we are fast approaching it.

    Enjoy the weekend!
    S-Crow

  31. 31
    sfraz says:

    RE: S-Crow @ 30 – Thank you. Drops the mic….

  32. 32
    Erik says:

    Justme… Please ask the Tim to compare the Fred housing starts graph to median house prices.

  33. 33
    Erik says:

    RE: S-Crow @ 30
    You said “I’m seeing a lot of inventory build and if that is added to by people who have a lot of leverage in the game or they realize their debt load becomes unserviceable then it’s off to the races.”

    I’m not seeing a lot of inventory build. I believe we are at an all time low for this time of the year. What inventory are you referring to?

    Yeah, it’s not fun to see people in pain and lose their money, but America is full of opportunity. Unfortunately to create opportunity there has to be winners and losers, that’s kinda how it works. I’d rather see an intelligent hard worker bump out someone that inherited their wealth even though it cause pain and heartache.

  34. 34

    By S-Crow @ 30:

    Supply glut is caused by people who are exiting the market due to pressure to sell due to debt load.
    . . .
    There will be no warning signs just like the last bubble. This debt load freight train will just blindside people because no one could have seen it coming down the tracks. Fannie and Freddie new policy at the end of July expanding debt to income ratios to an incredibly stupid 50% gross income guarantees no one will see this debt load freight train coming. It’s all Stealth.

    NWMLS Data= Sales
    Escrow Data: Real time data on Debt Loads, Income levels, Interest Rates, Loan Programs, CLTV’s, etc.

    As to the first sentence, that can be a cause, but there can be a lot of other causes. Company relocation away from this area would be an obvious one. You can also have situations where rising prices cause increases in active listing inventory, which is typical, but you don’t see that this time due to the incredible buyer pressure. The concern is selling will leave you homeless, and that concern has apparently even lead sellers to breach their contracts–not a typical situation at all.

    As to the second quoted paragraph, I agree there very well may not be warning signs, or at least the warning signs won’t be the things we are looking at locally. And speaking of locally, your “escrow data” is too limited. As I’ve often said in response to Tim’s posts regarding reporting, no real estate agent don’t see enough of the market to really know what is going on overall, and the same would be true of escrows (although escrows do more transactions on average than real estate agents, but it’s still not enough). And even if an agent or escrow did have such broad data that they did have a decent understanding of the market, but may very well be something entirely external which causes or next set of problems.

  35. 35
    whatsmyname says:

    Very quiet here in the last 29 hours. Maybe some of the folks who have been waiting to buy since 2005 will chime in with their opinions/predictions?

  36. 36
    ronp says:

    RE: whatsmyname @ 35 – Waiting to buy? I think most have bought by now? http://www.calculatedriskblog.com/2017/04/corelogic-house-prices-up-70-year-over.html shows you were supposed to buy in January of 2000 and January of 2010. Hopefully we have no second bubble and people get hurt again.

    For the Seattle region if there is continued employment growth we will inch towards Bay Area prices. So plenty of home appreciation above overall inflation rate. In 2017 Seattle Metro $440,100 and San Francisco Metro $851,900 (per Zillow).

    Wow that metro price for Seattle seems low for someone in NE Seattle. Geez.

  37. 37
    Erik says:

    RE: ronp @ 36
    The computer programmers/software people on here refused to buy 2014 and beyond. It was like one programmer wrote a program in their heads and they all followed it. They complained about low inventory and didn’t like the color or whatever. The self thinkers urged them to put their dream of the perfect home to the side and buy something. They were unable to compromise. They continued to complain everyday thereafter about the lack of options and whatever else they could complain about.

    For people like whatsmyname and myself the whole thing was frustrating to watch these people complain and complain while being too afraid to buy. At this point, I really want to sell the homes I purchased during that time and sell it to them at the top of the bubble. We tried to help them, we tried to console them, now I just want to load them up with debt at the top of the market and watch them lose their home when the next bubble pops.

  38. 38
    sfraz says:

    RE: Erik @ 37 – Wipe that unbridled greed off your chin Eric, it isn’t becoming. This is a FALSE recovery. F.A.L.S.E. Pure manufactured BS, brought to you by the central bankers. They’ve added trillions to the 2008 debt. The economic indicators we have relied on no longer make sense. We have already passed the “sell by date” for these multiple bubbles. This crash is going to be a mother. http://news.goldseek.com/GoldSeek/1498230000.php

  39. 39
    GoHawks says:

    RE: sfraz @ 38 – you putting your money where your mouth is? Are you short the stock market etc?

  40. 40

    By whatsmyname @ 35:

    Very quiet here in the last 29 hours. Maybe some of the folks who have been waiting to buy since 2005 will chime in with their opinions/predictions?

    Maybe they were all out looking at houses this weekend?

  41. 41
    uwp says:

    By Kary L. Krismer @ 40:

    Maybe they were all out looking at houses this weekend?

    I went to an open house this weekend in Greenwood: https://www.redfin.com/WA/Seattle/921-N-88th-St-98103/home/98387.

    Nothing too special, but still crazy busy. Probably 8-10 groups in the 15 minutes we were there. Seems anything under 600k is pretty desirable (and I doubt that one will end up under 600k).

    Still sucks to be a buyer.

  42. 42

    RE: S-Crow @ 13
    Yes….Kent’s Watershed is Humongous [Endless]

    Kent sells its GIANT EXCESS of spring water to Seattle. 90-99% of this water drains into the sea “wasted” anyway.

    Yet the Socialists in Kent call it a water shortage using FAKE NEWS…..visit the Kent City Hall [where I go to Toastmasters]…the FAKE water shortage posters are displayed all over. The Progressive Fascists use this against our watering in HOAs, we break no bylaw, but they scream at us if we soak our Heather and drain on the road….LOL

    My solution: use your green garbage container, fill it 1/2 way with 15 gallons of water and just dump it on the heather and bushes needing soaking [or they die]….it shuts the Progressive morons up.

  43. 43
    Erik says:

    RE: sfraz @ 38
    I hope it is a false recovery and the next downturn cuts deep. I just need to sell at the right time, rebuy for pennies on the dollar, and have myself a nice little income stream.

    Nobody will becoming on my chin!

  44. 44
    StupidLifeDecisions says:

    By GoHawks @ 39:

    RE: sfraz @ 38 – you putting your money where your mouth is? Are you short the stock market etc?

    i kind of agree with sfraz’s post about the stock market. to adress your response asking about shorting the stock market :

    it’s still going to be up for a while, so why short something now if it’s going to be up for a while. but i really think it’s going to be a very different story in another year to year and a half. we’re peaked.

    seattle real estate is probably on that same timeline. once things go down, companies will stop hiring, do lay offs, and lot of the people who have moved to seattle from other areas for tech and peripheral jobs are going to move back home or other opportunities. i also think tech is in a bubble, and even i didn’t, i do think they are starting to lookat other areas now based on a lot of what i’ve been reading.

    one thing that i’m sure no one here cares about, but i think is worth pointing out. you don’t get much bang for your buck here if you are looking for a big city lifestyle and have a career in non-tech. at this point, i can pay similar rent in nyc but make more money there and have a more access to big city lifestyle than here. those cities also have better public transportation so it is much easier not to have a car. plus non-tech salaries have not kept up here, that is why someone like me can move to nyc and live a similar or even better lifestyle, because their salaries reflect the cost of living, seattle’s do not. i would not be investing in seattle real estate right now. i’m sure you know a lot more about real estate than i do, but still i think this is a very foolish time to buy. i was wavering for a while, but i’m now convinced we have peaked (or are very soon to finish peaking).

  45. 45
    Erik says:

    RE: StupidLifeDecisions @ 44
    Ha! Could be a correction, but not a collapse. We haven’t had a 10% correction since the collapse that bottomed out February 2012. It would be very strange to go from a collapse to a collapse. Most markets will have 2 corrections before a collapse. Can you name a market that collapsed like the last downturn and turned around 5 years later and collapsed again? I can’t.

    Don’t make more “stupid life decisions” by being afraid like the computer freaks on here. You aren’t one of them, are you?

  46. 46
    Ross says:

    By Erik @ 45:

    RE: StupidLifeDecisions @ 44
    Ha! Could be a correction, but not a collapse. We haven’t had a 10% correction since the collapse that bottomed out February 2012. It would be very strange to go from a collapse to a collapse. Most markets will have 2 corrections before a collapse. Can you name a market that collapsed like the last downturn and turned around 5 years later and collapsed again? I can’t.

    Don’t make more “stupid life decisions” by being afraid like the computer freaks on here. You aren’t one of them, are you?

    I admire your gumption, but also think you’re at times a bit too optimistic (irrational exuberance). I’m be no means a housing bear, but bull/bear cycles don’t always repeat themselves. “past performance is not a predictor of future performance” is a good maxime to follow. While there are echos of prior booms and busts in the current ones; they are also different and usually caused by a different extravagance.
    My personal thinking is to take some chips off the table when I’m doing well. I might miss some further upside, but at least I don’t go broke. Bulls make money, Bears make money. Pigs get slaughtered.

  47. 47
    QA Observer says:

    By sfraz @ 38:

    RE: Erik @ 37 – They’ve added trillions to the 2008 debt. The economic indicators we have relied on no longer make sense. We have already passed the “sell by date” for these multiple bubbles. This crash is going to be a mother.

    There is some chatter about the debt ceiling again. For the all the bears out there, this may be your dream come true, but the uncertainty and consequences are just too gnarly to ignore. I sure hope we don’t get this point come Q4. The markets would crash well in advance, and interest rates would sky rocket. Whoops, you said you had an ARM. OH MY!

    https://www.thebalance.com/u-s-debt-default-3306295

  48. 48
    Erik says:

    RE: Ross @ 46
    Thanks…I think…

    Have your read Irrational Exuberance by Robert Shiller? I have and I can tell you that is way overrated and pretty boring. Mr. Shiller uses a ton of words to make the point that bubbles come from too much credit expansion. Read “The Housing Boom and Bust” by Thomas Sowell. He gets to the point and again claims that what really causes housing bubbles is credit expansion and excess inventory. We do not have excess of either.

    Now lets look at the current market. We are at record low inventory and mild credit expansion. The rest of the United States’ housing prices are not going up like Seattle is, so we aren’t in a United States housing bubble like last time. Therefore, how can we be at the top of a bubble?

    The best tool we have to predict the future is the past. Looking at the past bubbles, we are not near the top. Ross, I’ve given you historical reasoning and I’ve given you specific housing market reasoning. All the signs indicate that we are not at the top of the bubble or even close.

  49. 49
    ESS says:

    Article describing who is buying where and from what countries the buyers come from. Our good friends from the north have been more active recently………

    http://www.cnbc.com/2017/07/18/foreigners-snap-up-record-number-of-us-homes.html.

  50. 50
    jon says:

    Seattle is now second only to the Bay area for the best tech city.

    https://www.geekwire.com/2017/look-bay-area-seattle-rises-2nd-best-tech-city-u-s-passing-washington-d-c/

    This is apparently because Microsoft and Amazon have brought in so many engineers that it is a good place for other companies to poach. As the UW expands its CS program that will further increase the attractiveness of the area.

    This causes a big gap in tech vs. non-tech salaries going after the same housing, which is going to cause a lot more friction.

  51. 51
    ESS says:

    RE: jon @ 50

    Interesting article, and the tech ingathering should only accelerate.

    Interesting to note that both housing and offices expenses – Seattle is not near the top. Which dovetails with other information that Seattle tech workers get more bang for their salary bucks in Seattle than just about any hi tech city in the US.

    I don’t know how much friction there will be. There are still reasonably priced places to live in the Puget Sound area, if not in the trendiest of places in Seattle and the East Side. Something for everyone.

  52. 52
    Erik says:

    RE: jon @ 50
    Yeah, good article. This would tell me that Seattle has a ways to go in regards to housing prices. That is good news.

  53. 53
    ESS says:

    By Erik @ 52:

    RE: jon @ 50
    Yeah, good article. This would tell me that Seattle has a ways to go in regards to housing prices. That is good news.

    To paraphrase an old saying – from your typing to my retirement plans!!

  54. 54
  55. 55
    greg says:

    RE: QA Observer @ 47

    to be honest a reset seems like a somewhat logical way out of this, but doing it would ensure whoever is in power gets their butt handed to them in 2018.

  56. 56
    uwp says:

    RE: Kary L. Krismer @ 54

    I know there has been a lot of back and forth on the dueling studies, but I just don’t understand how it’s costing jobs when Seattle unemployment is at all-time lows. It’s at like 2.5%. People who want to work are finding work.

    Would Seattle be at 1% unemployment with a minimum wage back at $11/hr? It’s basically impossible.

    Restaurateurs have gone from complaining about how the Fight for Fifteen will destroy their business to complaining they can’t find someone to wash their dishes.

  57. 57

    By uwp @ 56:

    RE: Kary L. Krismer @ 54

    I know there has been a lot of back and forth on the dueling studies, but I just don’t understand how it’s costing jobs when Seattle unemployment is at all-time lows. It’s at like 2.5%. People who want to work are finding work.

    Would Seattle be at 1% unemployment with a minimum wage back at $11/hr? It’s basically impossible.

    Restaurateurs have gone from complaining about how the Fight for Fifteen will destroy their business to complaining they can’t find someone to wash their dishes.

    The strength of the economy is masking the results if you just look at unemployment numbers. This study is focusing more on a particular part of the market and how many hours they are actually working. It’s sort of like how Obamacare is causing an uptick in part time employment for people who want to be full time employees.

    The restaurant situation is just one of the other side effects. I never really understood why restaurants thought it would hurt their business–given the economy. The ever improving economy would more than offset the extra they had to pay because the demand from high paid tech employees for for their goods and services would increase dramatically. They probably would have been raising prices even without wage increases. It’s actually good to know that some of their low end employees are apparently doing better off and finding better jobs than dishwashing. My fear was more that low paid employees living in the city of Seattle would be displaced by better qualified employees living outside the city.

    The point is though, businesses adjust to costs. Some employees will only be impacted in that their hourly wage will go up. They will be the winners. Other will have their hours reduced or they might even be laid off. They will be the losers.

  58. 58
    Erik says:

    RE: ESS @ 53
    I’m not really sure what that means, but I think you are saying that your retirement plan depends on the Seattle housing market, right? Mine too. Much easier to make money in Seattle real estate than by working hard for someone else. It would be nice to have a few paid off so that I have a constant income when I retire. If I had 5 condos paid for and just collected the income, I’d have $7500/mo, which I could easily survive on. My small pension could be used for beer money.

  59. 59
    ess says:

    By Erik @ 58:

    RE: ESS @ 53
    I’m not really sure what that means, but I think you are saying that your retirement plan depends on the Seattle housing market, right? Mine too. Much easier to make money in Seattle real estate than by working hard for someone else. It would be nice to have a few paid off so that I have a constant income when I retire. If I had 5 condos paid for and just collected the income, I’d have $7500/mo, which I could easily survive on. My small pension could be used for beer money.

    Erik – yes and no. My retirement plans don’t totally depend on the real estate market. We bought years ago – so the equity is there. But rising market prices gives us more options of what we can to do in retirement when it shows up in a few years. For us, real estate is only one part of the financial picture, as hopefully it will be with yours. There is financial safety in diversification, because there are no guarantees regardless of the particular investment vehicle employed.

    Hope for the best – plan for the worst. Worst case scenario for housing in Seattle? A 30-50% decline of residential prices with a similar softening of the rental market. Having been through those declines and survived – I know we can do it again. I would suggest the same review for anyone buying rental property. One should never plan for guaranteed increases in prices and rents – because it just won’t happen. There is a real good chance both will decline in the next few years. I also view our other investments in a similar manner. Real estate isn’t the only investment that can tank. It makes for much more realistic planning if negative returns are factored in as a worst case scenario. And if the various investments don’t have any significant decline – great – will have more income for retirement.

    But at least you are giving it a shot, and as I was a real estate investor who started out at age 22 – I find that commendable. And our first investment, my partners and I had no idea what we were doing, so you are already ahead of me. All I knew at the time was that I was really worried how we would meet the 180 dollar a month mortgage for a duplex in the U District. Well – we met it and then some over the 15 years we held on to that investment.

    Whether it is the stock market, real estate, or any other type of investment, there are always going to be negative individuals who will always have theories for you not to do anything. How much, if at all Seattle real estate will continue to rise is anyone’s guess. But in the last 30 years, whether one invested in Seattle real estate or stock market index funds, one made out reasonably well. No one knows what the future will be tomorrow for any investment – but in 5-10 years – most investments, if held, usually turn out OK. If one can’t hold that long, one should consider other investments vehicles

    To quote a well known investment advisor who recommends investing passively in diversified index funds through buying and holding via dollar cost averaging with US stocks, international stocks, and bonds: the secret to retirement success is not to get rich, but not to die poor. Sounds good to me.

  60. 60
    noogakl81 says:

    So for all of the news coverage Bremerton has received with KUOW’s Legion of Boom series, headlines in the Seattle Times like “Fast Ferry cuts Seattle / Bremerton Commute in Half”, and local TV stations promoting Bremerton’s affordable housing, I would like to mention some things that these sources fail to disclose.

    There are 3 round trip sailings of the fast ferry in the morning and 3 in the evening. The boat carries 118 passengers. So you can take 354 people per week day into Seattle on the fast ferry. There are thousands of people walking on to the Washington State Ferries. Contrary to the narrative, not everyone priced out of Seattle can move to Bremerton, buy an affordable house and count on taking the fast ferry to Seattle.

    Furthermore, there is a lot of uncertainty with taking the fast ferry. To secure a seat, you can make a reservation, but you must be at the dock 10 minutes before departure to get the seat. You can gamble in the walk-up line (33 spots available) But all of the spew about the Seattle / Bremerton fast ferry being faster than the bus to Ballard is not exactly true when you account for the time waiting in line.

    Also the bus comparison is not exactly fair, because it is easy to add more buses to bus lines when the capacity is filled. The transit agencies can much more cheaply purchase and operate buses, than they can fast ferry boats. It is also much more expensive to ride than a bus. $150 for a monthly pass + $50 for a Kitsap Transit bus pass if you commute. $12 round trip for individual trips.

    Also, it does not appear that the fast ferry was designed for warm summer days. There are no windows in the boat that open. The only opening is the door. When you ride it in the afternoon, temperatures can easily get to 75 degrees or warmer within the boat. And there is no place on the boat for people to step outside. During the trip you are required to stay inside the boat.

    And there have already been sailings cancelled due to mechanical issues with the boat and service only started 10 days ago. It isn’t a new boat, but you would have hoped to avoid these snafus during your highly publicized rollout of the new service.

    Finally, because Kitsap Transit is operating the ferry, and Kitsap Transit buses do not run on Sunday, neither does the fast ferry. This will really put a dent in the ridership, as there are a lot of major sporting and other events in Seattle on Sundays and if you live in Bremerton, you will have to take the slow ferry.

    I moved to Bremerton and bought a house a month ago and I am glad I did. Reduced traffic, greater proximity to nature and things to do for the kids, and a lower cost of living are big selling points. I do think it can attract people in tech who will be able to work on the slow WSF boat on their commute into Seattle and on their commute home.

    The fast ferry will probably get its issues worked out with time and people who need to be at their job in order to work will probably use it extensively. It is also super fun to be riding in a boat going 50 mph across the water like a car on a freeway.

    But it isn’t a scalable solution to grow Bremerton’s population. There are thousands of walk-on passengers on the Washington State Ferry boat every commuter day. The fast ferry can only take 354. If you decide to move to Bremerton to escape Seattle’s high cost of housing, plan on taking the slow ferry.

  61. 61
  62. 62
    Brian says:

    It’s kind of ridiculous how there are virtually no new listings except on Thursday and Friday every week. Don’t agents want their listing to stand out by listing on another day of the week?

  63. 63

    By Brian @ 62:

    It’s kind of ridiculous how there are virtually no new listings except on Thursday and Friday every week. Don’t agents want their listing to stand out by listing on another day of the week?

    This is one instance of “monkey see, monkey do” that I agree with.

    When there is so little inventory standing out is not really a concern.

    You want your listing to stay active through the weekend so that you increase the chances of multiple offers. Even with a review date some buyers will try to jump the process with an offer that expires earlier. Listing on a Thursday or Friday works best to accomplish the goal of getting through the weekend while minimizing the offers than come in to jump the review date.

  64. 64

    RE: noogakl81 @ 60 – Didn’t the prior passenger only ferry have issues with beach erosion? I haven’t seen that mentioned, nor have I seen that this vessel minimizes the wake.

  65. 65

    RE: Brian @ 62

    Kary ruined it. Buyers used to have 4 to 5 days to process and maybe get a pre-inspection. He hated that. For the life of me I can’t figure out why. It worked jus fine for four years. Then all hell broke loose with new interference from the haters.

  66. 66
    noogakl81 says:

    Re: kary @ 64, prior to starting the ferry service, they did a lot of testing with the boat and determined that there was little effect on shore erosion from the passenger ferry.

  67. 67
    Nate says:

    Hi,

    I am looking at buying a house in Kitsap Peninsula as well (probably more like Silverdale) and betting on improved Fast Ferry service. Kingston & Port Orchard Fast Ferries are coming online soon and more boats are getting added for the Bremerton service (Source: https://www.facebook.com/kitsapfastferry/).

    I can’t stand the I-5 (especially) & I-90 traffic and the stratospheric costs of buying a home anywhere that avoids taking them but still be <40 minutes at peak hours. Ferries are overwhelmingly attractive to me, no traffic jams, no accidents, no bad drivers and views! Hopefully they can scale the service that can truly meet the needs of commuters.

    Sources: https://www.facebook.com/kitsapfastferry/

  68. 68

    By ARDELL DellaLoggia @ 65:

    Kary ruined it. Buyers used to have 4 to 5 days to process and maybe get a pre-inspection. He hated that. For the life of me I can’t figure out why. It worked jus fine for four years. Then all hell broke loose with new interference from the haters.

    Huh? They still get 4-5 days. Thursday or Friday to typically Tuesday or Wednesday. I have no idea why you said that. I said just the opposite–that it keeps the property on the market through the weekend.

    And who in their right mind would think that pre-inspections are a good thing. Buyers spending money before they even have the right to buy a property? Sellers having multiple inspectors going through their properties possibly causing damage (and not knowing which inspector caused the damage). Buyers not knowing what damage was caused by inspectors after their inspector went through. Sellers possibly not getting the same legal protection that a post-mutual acceptance inspection woudl provide. And buyers being turned off knowing that others are doing pre-inspections and not making an offer at all for a property, reducing the number of bids received by a seller. You’ve completely lost your mind on that one! Pre-inspections are clearly one of the more stupid “monkey see, money do” things that agents adopted in this market.

  69. 69

    RE: Kary L. Krismer @ 67

    Kary,

    Saying it’s “Monkey See; Monkey Do” is like saying the only reason people don’t pay $1.00 for a gallon of milk is because they see other people willing to spend more than a dollar.

    It’s a Market and market conditions apply. I did this data again for you in case something changed, but on a smaller scale than last time as peeking inside every sale is tedious to get this data.

    Kirkland 98033 Sold in the last 60 days between $400,000 and $1,500,000.

    ONLY FIFTEEN of 123 buyers were able to do an inspection AFTER their offer was accepted.

    ONE HUNDRED AND EIGHT BUYERS vs 15.

    If you want to get legislation passed giving every home buyer the legal right to do an inspection before buying a house…go for it. There is legislation for condo buyers to be able to cancel on the Resale Certificate, so it’s quite possible. Go fight for what you believe in.

    In the meantime, stop it with wanting people to do what is not possible to do 88% of the time. Last I checked it was 86% so things aren’t getting better as to that issue.

    What exactly do you want people to do Kary? Stage a sit in until milk is $1.00 and no house is sold without an Inspection Contingency? 88% of the time Kary…not once in a blue moon!

    (Required Disclosure: Stats in this comment are not Compiled, verified or published by The Northwest Multiple Listing Service. They are hand calculated by Ardell in Real Time.)

  70. 70

    RE: Ardell DellaLoggia @ 69 – You don’t even know what “Monkey see, monkey do” means? It means someone does something because they see someone else doing it without thinking about whether it’s a good idea. It has nothing to do with buying milk for $1.00. It doesn’t matter that only 15 of 123 were able to do something (or more accurately whether 108 sellers did something stupid). What matters is whether that’s a good market practice.

    I listed five reasons off the top of my head last night that allowing pre-inspections is a bad thing. Four of those five things are items that are bad for the seller. You didn’t dispute a single one. Guess what? The seller controls whether pre-inspections are allowed. Sellers are allowing pre-inspections that are not in their interest. Why? Because of “Monkey (agent) see, monkey (agent) do.”

    I will note that part of your 15 out of 123 are also sellers accepting offers without any buyer inspection. Clearly a bad practice. The fact that it occurs with some frequency doesn’t make it a good thing. Again it just means “Monkey see, monkey do.”

    Finally, it is somewhat amazing to me that listing agents are so afraid of buyer post-mutual acceptance inspections when the market is so strong. Buyers have little negotiating ability when there are other known buyers willing to step in if the first buyer wants too much. To me it’s just listing agents being lazy. They want their commission, but they don’t want to have to hassle with negotiating an inspection response. So instead they allow virtually any buyer to do a pre-inspection on their clients’ houses. Some listing agents put buyers through more of a review before they are allowed to view a house than what many/most agents do to allow buyers to do an inspection!

  71. 71

    By Ardell DellaLoggia @ 69:

    If you want to get legislation passed giving every home buyer the legal right to do an inspection before buying a house…go for it. There is legislation for condo buyers to be able to cancel on the Resale Certificate, so it’s quite possible. Go fight for what you believe in.

    Legislation is only one form of law. Another is case law. The Alejandre v. Bull and Douglas v. Visser cases effectively did just what you are suggesting–for the buyers of informed sellers.

    But to make it clear, I don’t want to prohibit the practice. I just want sellers to be informed. Again they control whether there are pre-inspections. If they are told the four (or more) disadvantages and then still want to do it, that’s their decision. But instead what’s more likely happening is agents are coming in recommending allowing pre-inspections without any disclosure other than: “That way the buyer won’t be able to back out.”

    What’s sort of funny about that is I would guess that probably in many of those 108 transactions the buyer would have been able to back out by asking for the completion of Form 17 if an answer wasn’t filled in. Very few sellers fill out Form 17 correctly. And probably 10%+ of those had some defect in the contract that would have allowed the buyer to back out due to a defect in the contract.

    But the main point is listing agents and/or sellers are the ones allowing the practice that you claim is so widespread. Absent a seller’s permission there is no right to do a pre-inspection. If sellers were advised as to the advantages and disadvantages of the practice, it’s doubtful even 10% of them would allow pre-inspections.

  72. 72
    Minnie says:

    RE: Kary L. Krismer @ 68

    “And who in their right mind would think that pre-inspections are a good thing. Buyers spending money before they even have the right to buy a property? ”

    The last time I purchased a vehicle it was pre-owned, and before I bought it I took it to a mechanic for a pre-inspection….I believe I paid $100 (I can’t recall). I felt it was prudent to do so. I think pre-inspections are worth the money. I believe its a small price to pay to get a pre-inspection on a home. i

    The problem with submitting an offer with inspection is that a buyer does not have to give a reason for walking away from the deal. And then as a seller, you will have a black mark on your property as it looks like it failed on inspection. Additionally, your property could be tied up for days, up to a week.

    In the case of inspectors destroying property and not knowing which inspector did it, isn’t it up to the listing agent to organize this? Additionally, if an inspector causes damage they are supposed to declare it. I think that for 3% commission, the least that the agent can do is either be present during a Buyers inspector or heard the cats.

  73. 73

    This explains what I mean by “monkey see, monkey do,” specifically agents adopting a practice just because they see someone else doing it. The second example used is one we’ve talked about before–listing agents asking language to be stricken from the purchase and sale agreement that benefits their clients! And in that case there’s little or no downside if a buyer not to comply with the seller’s request.

    https://www.youtube.com/watch?v=esd0eLwkBRo

  74. 74
    wreckingbull says:

    RE: Minnie @ 72 – Why would you pay for a vehicle inspection before the seller accepts your offer? Wouldn’t you do it after an initial price is negotiated? If bad things show up in the inspection, you renegotiate. Perhaps I am doing it wrong, but this is how I have always purchased used vehicles.

  75. 75

    By Minnie @ 72:

    The last time I purchased a vehicle it was pre-owned, and before I bought it I took it to a mechanic for a pre-inspection….I believe I paid $100 (I can’t recall). I felt it was prudent to do so. I think pre-inspections are worth the money. I believe its a small price to pay to get a pre-inspection on a home. i

    Wreckingball already addressed this to some extent, but did the seller of the car give you permission to do that before they negotiated what you were going to pay, or even knew whether you could pay? In some markets over half the offers that come in are written by agents who cannot even draft an offer, but listing agents let their clients do pre-inspections without even knowing that!

    I suspect what you did on the car is what I am suggesting for houses. Do an inspection after you have come to terms on buying the property. I’m not saying don’t do an inspection at all. In fact my listings say that the buyer is encouraged to do an inspection after mutual acceptance.

    The problem with submitting an offer with inspection is that a buyer does not have to give a reason for walking away from the deal. And then as a seller, you will have a black mark on your property as it looks like it failed on inspection. Additionally, your property could be tied up for days, up to a week.

    The buyer not having to give a reason is actually something that benefits the seller. They don’t have to deal with dealing with whatever the reason was to back out–a reason that might even be made up if the buyer had to give a reason to back out.

    I’ve not noticed a difficulty of houses selling after they flip back. It’s even possible they might sell for more money. But again, in this market the buyer backing out is less likely than in other markets, so why sweat it?

    But yes that is the benefit. IMHO it doesn’t even come close to the disadvantages, particularly the risk of being sued.

    In the case of inspectors destroying property and not knowing which inspector did it, isn’t it up to the listing agent to organize this? Additionally, if an inspector causes damage they are supposed to declare it. I think that for 3% commission, the least that the agent can do is either be present during a Buyers inspector or heard the cats.

    The damage might not be noticed right away and/or there might be two inspections in a row.

    A listing agent should not be present during a buyer’s inspection. They do not want to hear anything that is said because their seller would then have to disclose it to future buyers. That would be almost as bad as a listing agent asking for an inspection report.

  76. 76
    Dustin says:

    By Minnie @ 72:

    And then as a seller, you will have a black mark on your property as it looks like it failed on inspection.

    From a buyer’s perspective, I would want to know the reason the previous buyer didn’t approve the inspection before crossing out a good option, especially in a low inventory/reduced choice market like this. I’d probably want to ask if the seller is aware why the previous buyer disapproved their inspection, which could be a good thing if the seller isn’t trying to hide that information. I think the “black mark” effect is more of a combination of factors related to the property’s condition and marketing. Sellers who do their homework can make smart decisions to avoid it.

  77. 77
    Anonymous Coward says:

    By Kary L. Krismer @ 75:

    Do an inspection after you have come to terms on buying the property.

    As the buyer, how can you price your offer if you don’t know whether or not there are major issues with the property? The pre-inspection is used by both parties to make all offers final offers, rather than having to deal with “Here’s a number on a piece of paper which I hope will be big enough to win a bidding war but which I’m going to lower (not at all? significantly? who knows?) when it comes time to write the big check at closing. Please take my offer and hope my final price (offer minus post-inspection deduction) is still big enough to make it the best offer on the table”. Serious question for you: how do you solve this problem for your sellers?

  78. 78

    RE: Anonymous Coward @ 77 – That’s actually a bigger issue for buyers on bank owned properties, because there the bank typically won’t make any post-acceptance adjustments to price or make any non-safety related repairs. So you have to offer based on assumptions, and with bank owned the assumptions should assume a number of things are bad (even if the bank has come in and made cosmetic fixes).

    But from the sellers’ side on normal transactions, except for one transaction where an engineer asked for 15 different repairs (including removing trees and their stumps from the side yard) and where an inspector called for very expensive changes which were not necessary (as later demonstrated by obtaining the opinions of the original architect and contractor), I don’t think I’ve ever seen repairs or adjustments that would exceed $10,000. That’s a small number in most transactions, and if I’m anywhere close to right about how buyers are discouraged by sellers who encourage pre-inspections, that number would probably be more than made up in most cases through the receipt of more offers possibly for higher dollar amounts. Keep in mind that offers will frequently vary by more than ten percent. Inspection adjustments are minor in comparison.

    Don’t get me wrong on this. Whatever local buyer’s agent was a genius who first went to a seller and said: “Can my buyer do an inspection before making an offer?” They were really representing their client’s interests well. And assuming the buyer obtained a written inspection report about the only impact on the seller would be any effect on a buyer who came to the house during the inspection, assuming the Douglas v. Visser case would still apply (not clear). The problems result as the practice has become more widespread and more listing agent/seller driven rather than just a rare event. The concern you’re expressing about adjusting price or even of a buyer just backing out are both minor relative to discouraging offers and increasing post-transaction liability.

  79. 79
    ess says:

    How will the rental market fare in Seattle? Apparently fairly well here and in other areas of the US, according to the article referenced. Also note, new housing construction of all types is not keeping up with population increases. And new apartment construction in Seattle is skewed on the luxury end of the price range, according to a recent Seattle Times article. While rents may become somewhat softer in the future, I don’t believe there will be any wholesale collapse of the rental market in this area, absence an economic catastrophe a la Boeing collapse of the 1970s.

    http://www.marketwatch.com/story/more-americans-are-renters-now-than-at-any-time-in-the-last-50-years-2017-07-19

  80. 80
    noogakl81 says:

    RE: Nate @ 67
    Nate,

    There have been discussions regarding the purchase of a backup boat for the Bremerton fast ferry, but nothing I have read about getting a second boat that would be in operation any time soon.

    Kingston is going to its fast ferry next year.
    Southworth (not Port Orchard) is scheduled to get its fast ferry in 2021.
    I am guessing that any additional ferries won’t happen until after Southworth gets its promised ferry. But maybe not.

    There are lots of nice things about the Kitsap Peninsula. Agree with you on all your points. Good luck with your move.

  81. 81
    Nate says:

    By noogakl81 @ 80:

    RE: Nate @ 67
    Nate,

    There have been discussions regarding the purchase of a backup boat for the Bremerton fast ferry, but nothing I have read about getting a second boat that would be in operation any time soon.

    Kingston is going to its fast ferry next year.
    Southworth (not Port Orchard) is scheduled to get its fast ferry in 2021.
    I am guessing that any additional ferries won’t happen until after Southworth gets its promised ferry. But maybe not.

    There are lots of nice things about the Kitsap Peninsula. Agree with you on all your points. Good luck with your move.

    Actually, a second boat is going to be operational as early as next year and they are supposed to be building one more – total 3 but that I don’t know when it’ll come to fruition.

  82. 82
    noogakl81 says:

    RE: Nate @ 81 – Where and when did you hear that they are adding another boat next year on the Bremerton line? I saw nothing on the Facebook page you mentioned earlier and I have seen nothing mentioned in the Kitsap Sun. The only thing I mentioned recently was discussion of having a backup boat for cases where the main boat is broken or needing repairs.

    I ask when you heard this because things have not exactly gone according to plan or according to what they originally said regarding the fast ferry service. I will give you two examples.

    1. The original plan was that Kitsap County would cut a deal with King County to have King County maintain / provide the labor for the Kitsap fast ferries. They were not able to make a deal, so Kitsap County had to hire all their own people to work / maintain the ferries.

    2. The original promise with the fast ferry was that you could transfer directly from a Kitsap County Bus to the ferry and vice-versa. They said that the whole cost would be cheaper than paying for a Kitsap transit bus pass and Washington State Ferry bus pass. See http://www.kitsaptransit.com/uploads/pdf/pof-presentation-10-25-16.pdf .

    However, this is not the case. A monthly pass on the fast ferry with a bus pass costs $40 more than than a monthly pass on the ferry only, and the cost is ~$40-50 more than buying a Kitsap Transit bus pass with a monthly WSF pass. For whatever reasons the economics that they envisioned for the fast ferry did not work out as they originally promised.

  83. 83
    noogakl81 says:

    RE: noogakl81 @ 82 – I guess I see in the link I posted that in the original fast ferry plans, a second Bremerton boat is supposed to be purchased and operational for 2019, but not next year. But this is the same link that said the fast ferry pass would be cheaper than Washington State Ferries, so who knows?

  84. 84
    Bubble Trouble says:

    A report from the other side of the state for anyone interested.

    Spokane/Coeur D’Alene r/e has gone crazy as well. Houses are sold within 24 hours, at least those under $250K (yes kids, you can actually buy a decent house for under $250K 300 miles away from Seattle :) ). Multiple offers are the norm. There is a never ending flow of people moving to the area, most of them from California. The story is usually this: sell the house in Orange County for $1.2M. Take the $500K equity in that house, buy something here for $250K here, put the other $250K in the bank. Rinse repeat a few thousand times a year. So now you have a no mortgage, vs a $3000-4000 mortgage “back home” and $250K in the bank, and no income tax, or if you live on the Idaho side, a much lower income tax and very low property tax.

    But there are no jobs in Spokane!! Well yes and no. There aren’t as many high paying jobs as LA or SF, true. But given the cost of living is a fraction of what it is in SoCal, you can get by making less and still come out ahead. And professionals like nurses, doctors, architects, etc still make close to what they’d make elsewhere. Or, as is often the case, people work remotely and/or travel for work. It’s the ultimate arbitrage. You earn a coastal salary with flyover cost of living. This is the case with people in tech and/or sales. Doesn’t matter where you live as long as you have access to an airport and high speed internet.

    Personally I have taken advantage of this bubble, having bought several properties between 2010 and 2012. Rents have skyrocketed to the point where my ROI is pushing 20%. That’s not including any appreciation. That’s around 50-80%, but that’s just gravy. It’s all about the cash flow for investment properties. There is a huge shortage of rentals in the area. There has been a building frenzy for apartments, so that supply has alleviated apartment shortage somewhat. But if you want a single family home to rent, in a good neighborhood, the supply is very low. To give you an idea, I had a lease end in June. The family that was renting decided to buy after 2 years of renting. I was sad to see them go since I couldn’t ask for better tenants. Anyway, I put up an ad on Craigslist and that same day I have over 10 inquiries and I had a signed lease 2 days later. Ended up getting 6 months rent upfront from the new tenants as well.

    Will this last forever? No. Nothing does. Will the crash come tomorrow or 3 years from now? Who knows. And even when it does, I bought so low at the bottom of the last crash, I’ll just ride it out and keep collecting rent until Bubble 3.0 starts again.

  85. 85
    piggyshooz says:

    Beyond the simple economics as additional building and local population growth, its important to consider the regulation impacts on the rental market. Specific to the city of Seattle, the socialist idiots at the city council are going after landlords to provide absurd rights in the favor of renters. After the city income tax fails in court, the communists will probably be trying to set up rent control. Landlords of residential properties will see their cash flow erode as prices rise but the yield for investment deteriorates. I know of 2 people in san Francisco locked in at rent rates so low that the landlord can’t cover tax and insurance prorated share from these tenants, so who picks up the difference?… the newer renters at higher rates since supply was artificially limited as the low rate renters will never move….counterproductive given what the policy was trying to achieve. Don’t underestimate the stupidity of our politicians when it comes to impacts on the local housing situation. RE: ess @ 79

  86. 86

    RE: piggyshooz @ 84 – Not politicians, but an initiative. Apparently whoever is behind this doesn’t have a clue about economics. They think price is determined by costs. (Link courtesy Rhonda Porter.)

    http://www.rhawa.org/blog/initiative-127-filed-in-seattle-may-require-landlords-to-open-their-books

  87. 87
  88. 88

    RE: Anonymous Coward @ 77

    You hit that nail right on the head! …and Kary didn’t answer your question. Mainly because he thinks the practice started because a monkey asked to do it and then some other monkeys copied the first monkey, which is not the case.

    The problem was created by buyers and their agents writing up offers on property “subject to inspection” before deciding if they were remotely interest in the property. Due to low inventory they were basically collecting houses to see at their convenience. They would write up everything that came on market Monday to Friday and then go see them on the weekend and decide which to buy…if any.

    This is why Listing Agents had to find a way to make “offers” more genuine and also have sufficient time on market to collect a few offers and hopefully at least one that wasn’t a flakey offer.

    That’s how “will look at offers on…” started and then with multiple offers the one with the inspection clause was usually the flakey one for reasons that had nothing to do with the actual inspection. It was just reserving a broad legal out. In fact it’s questionable that a buyer has to actually hire an inspector to cancel on the Inspection Congtingency since the buyer does not have to give the seller any info from the inspection in order to cancel.

    This could be solved with a better Home Inspection Contingency. In fact the one used when I started in real estate back in 1990 had a blank space for a $ amount saying buyer could cancel IF cost to repair items in the inspection exceeded X $. Some buyers put $1,000 and some put $5,000 and some put $10,000. This protected buyers from a house needing repairs over an amount that buyer was comfortable with. Every buyer was able to do an inspection, but not cancel for a $5 broken window lock, which under our currently used Inspection Contingency would give a buyer a valid right to cancel.

    Come up with a better Home Inspection Contingency form and this problem might just go away and give buyers better rights.

    There was also a limitation on type of repair. That would help with flippers who “win” with any price and then back it up to a price that incorporates the full remodel cost. That was happening a lot as well before no Inspection Contingency at all become the norm.

    All of these problems could be resolved with a little more thought as to the wording of the Inspection Contingency vs an outright legal out to cancel whether there is a good reason or not.

  89. 89

    RE: Ardell DellaLoggia @ 87 – I give up. You don’t understand how our inspection contingency benefits the seller. You don’t understand why the offer review dates exist. And you didn’t understand my answer to AC’s question, which he was apparently satisfied with.

    As to offer review dates, the Department of Licensing was actually threatening to sanction agents who had their listings go to pending/pending inspection too quickly too often. When I first heard that I thought it was sort of crazy. But having a listing stay on the market a minimum amount of time to get sufficient exposure is important. Yes a seller can accept at any time, but if an agent has a lot of really quick sales that indicates a problem with the agent not giving proper advice. DOL was concerned about that.

    If I have a buyer that backs out I won’t even typically tell the listing agent unless it’s a safety issue (e.g. no smoke detectors in a house with a Zinsco panel). The last time a client backed out I offered to tell the listing agent a couple of things that I thought could easily be fixed and help with a future inspection. They didn’t want to know. Sellers don’t pick a buyer’s inspector. They typically don’t want to know what some unknown inspector thinks.

    If the drafters of the forms totally lose their minds and the the forms are changed to require a buyer give a reason to back out, then that would be a reason to have a buyer do a pre-inspection. Fortunately I don’t think that will happen.

  90. 90

    RE: Kary L. Krismer @ 88

    If they were easily fixed, per your account, why did your buyer back out? You prove my point. Flakey buyers caused this problem. A minute ago you acted like buyers don’t cancel on inspection, now you remember a few of yours that did.

    AC was right. In a big bid up, price has to be final when you pick the “winner”. You ask why…because there are plenty of other offers. Because those offers expire by the time the first buyer cancels, which moves us to Minnie being right. The failed inspection you have no access to creates a stigma.

    You can’t recreate the same impact as when the listing was new.

    So back to AC’s question? How do you protect your seller from losing his initial, new on market momentum if you don’t pick a buyer who can’t flake out?

  91. 91

    By ARDELL DellaLoggia @ 90:

    If they were easily fixed, per your account, why did your buyer back out? You prove my point. Flakey buyers caused this problem. A minute ago you acted like buyers don’t cancel on inspection, now you remember a few of yours that did.

    Stop making things up. I didn’t say those couple of easy to fix things were the only things that caused my buyer to back out. There would have been no point in letting the listing agent the difficult to fix things that my client was concerned about. If my client had backed out over minor things I would have been upset with the client.

    Also, I never claimed that buyers never cancel on inspection. I said being able to cancel on inspection benefits the seller. You can’t seem to grasp that, but it does bring up another point on pre-inspections. If one of the buyer’s agents doing a pre-inspection gives the listing agent a copy of their inspection report, that would seriously upset the apple cart in dealing with the other offers. Everything “material” in that inspection would need to be disclosed to any other buyer before you accepted their offer.

    But other than that, another great post of nonsense as usual.

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