December Stats Preview: For-sale inventory hit an all-time low

With the close of December, all of 2017 is now in the books. Today we’ll look at our regular monthly “preview” charts, and the rest of this month we’ll update as many of our stats as possible to look at how the whole of 2017 played out.

Short story for December: Inventory hit a new all-time low point in both counties. Foreclosures are still basically zero, and sales were surprisingly strong given how low the inventory is.

Here’s the snapshot of all the data as far back as my historical information goes, with the latest, high, and low values highlighted for each series:

King & Snohomish County Stats Preview

Here’s hoping that the market might turn a corner for buyers in 2018.

Next, let’s look at total home sales as measured by the number of “Warranty Deeds” filed with King County:

King County Warranty Deeds

Sales in King County decreased four percent between November and December (a year ago they also fell four percent over the same period), and were up less than one percent year-over-year.

Here’s a look at Snohomish County Deeds, but keep in mind that Snohomish County files Warranty Deeds (regular sales) and Trustee Deeds (bank foreclosure repossessions) together under the category of “Deeds (except QCDS),” so this chart is not as good a measure of plain vanilla sales as the Warranty Deed only data we have in King County.

Snohomish County Deeds

Deeds in Snohomish decreased one percent month-over-month (vs. a five percent decrease in the same period last year) and were down two percent from a year earlier.

Next, here’s Notices of Trustee Sale, which are an indication of the number of homes currently in the foreclosure process:

King County Notices of Trustee Sale

Snohomish County Notices of Trustee Sale

Foreclosure notices in King County were down 62 percent from a year ago and Snohomish County foreclosure notices were down 65 percent from last year. The few dozen foreclosure notices going out in each county is as close as the number ever gets to zero.

Here’s another measure of foreclosures for King County, looking at Trustee Deeds, which is the type of document filed with the county when the bank actually repossesses a house through the trustee auction process. Note that there are other ways for the bank to repossess a house that result in different documents being filed, such as when a borrower “turns in the keys” and files a “Deed in Lieu of Foreclosure.”

King County Trustee Deeds

Trustee Deeds were down 75 percent from a year ago. Just two dozen homes were foreclosed on in King County last month.

Lastly, here’s an update of the inventory charts, updated with previous months’ inventory data from the NWMLS.

King County SFH Active Listings

Snohomish County SFH Active Listings

Inventory fell 37 percent between November and December in King County, and was down 28 percent from a year earlier.

In Snohomish County listings were down 35 percent month-over-month and down 32 percent year-over-year.

Note that most of the charts above are based on broad county-wide data that is available through a simple search of King County and Snohomish County public records. If you have additional stats you’d like to see in the preview, drop a line in the comments and I’ll see what I can do.

Stay tuned later this month a for more detailed look at each of these metrics as the “official” data is released from various sources.


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.

77 comments:

  1. 1
    Deerhawke says:

    In a previous thread, there was some talk of the ““real estate cheerleader testiness index”.

    Some of that testiness has got to be the difficulty of putting together deals when there is nothing to sell in the MLS listings.

    How is it possible to have 1177 active listings but 3453 warranty deeds? I know these are both crude indicators, the first static and the other more dynamic, but still ,,, this is absurd. Something has to give.

    I think this is the year when sales will really start to lag because there is so little to sell.

  2. 2
    Matt says:

    Adding a prediction to the pile started on the other thread.

    Seattle will see 10%+ or more price increases on homes under $1 million in 2018. Growth will be slower than that for higher priced homes. The new tax bill will save couples on the tech salary scale about $6-10K per year which I predict many will want to invest into a home. For homes up to $1 million in sale price, the reduction in the mortgage deduction limit will have a negligible effect. The tax bill will further hurt the affordability of most other major tech centers like the Bay Area, New York, and Boston which will help drive the growth of satellite campuses in Seattle.

  3. 3

    By Deerhawke @ 1:

    Some of that testiness has got to be the difficulty of putting together deals when there is nothing to sell in the MLS listings.

    How is it possible to have 1177 active listings but 3453 warranty deeds? I know these are both crude indicators, the first static and the other more dynamic, but still ,,, this is absurd. Something has to give.

    It would be better to consider active listings to sold listings, but I’ve mentioned this before. There’s been enough new stuff coming on to keep the sales at rather decent levels (check the last NWMLS post by Tim). But you’re right it’s getting to be absurd. You can have sales above 2,000 if you have over 2,000 new listings, but when you only have about 1,200 listings that is much harder than if you have over 4,000 listings.

    Yes, it’s more difficult for buyers’ agents, but one thing is easier. Far less showing/previewing due to the lack of properties to show/preview.

  4. 4
    ESS says:

    Caveat – predicting future trends, such as what direction the stock market will go, or specifically how much real estate will increase in this new year should be left to highly trained and experienced professionals such as fortune tellers.

    So with that proviso, this is what I think will happen this year if the demand side the past few years continues. Prices will continue to increase, and the percentage of “affordable housing” will decrease. As a result there will be demands to do something about the situation that will be presented in terms of an “emergency”.

    With a Democratic legislature and governor, look to legislation to repeal the prohibition of rent control to either pass, or undergo a spirited debate.
    Of course rent control only helps out a fortunate few, and increases the price of housing for both buyers or renters. Economists of all ideological leanings generally condemn rent control as a counter productive measure to increase modestly priced housing. Rent control has been a dismal failure everywhere it has been enacted. But politicians, whose primary job is to get re-elected are so cynical that they will implement bad policy for immediate political advantage, understanding that much of the public will view their efforts as noble attempts to alleviate a problem that is much in part the result of government overregulation over the years as well as other factors. After all, it isn’t results, but intentions that guides policy, especially in the overwhelming progressive community that Puget Sound has become.

  5. 5

    When I get some time I’m going to have to try to look at those 24 properties which were foreclosed. They have to be some gems!

  6. 6
    N says:

    I’m not convinced YET that rental rates will flatten or go down but what if they follow the trends of NYC, Honolulu, SF, Chicago etc, all down well into double digits – will that combined with the tax changes change the demand side of the for sale market?

  7. 7
    GoHawks! says:

    RE: N @ 6 – Feels like the tax changes will be a non-event here per Tim’s previous two detailed posts on the topic.

    Feels like 2018 will start similar to 2013-2017. Demand is still steady while inventory continues to dwindle away.

    At what point do downsizers or mobile owners (those that could pick up stakes and try a new area) decide that it’s time to cash out? Landlords too.

  8. 8
    uwp says:

    By Kary L. Krismer @ 3:

    Yes, it’s more difficult for buyers’ agents, but one thing is easier. Far less showing/previewing due to the lack of properties to show/preview.

    Looking on the brightside! :)

    Re: Supply/Demand, it would seem that the lack of supply the last couple years should be forcing demand to roll over year after year as well, just making things even more imbalanced as listings dwindle further.

  9. 9
    uwp says:

    Semi-off-topic:
    Interesting Article on land as a source of wealth, and how merely looking at the growth in the price of homes over time (the oft-cited 2-3 percent), leaves out the income from rent (implicit if you’re living in the house), which brings the rate-of-return pretty close to equities, even without leverage.

    Based on this paper: Rate of Return of Everything.

    Maybe it’s a basic understanding, but I’ve always seen it said that the main way owning a house is a competitive investment is because of the leverage. But that would be like looking at the gains in the S&P 500 over time without taking into account dividends.

  10. 10

    RE: uwp @ 9

    “Maybe it’s a basic understanding, but I’ve always seen it said that the main way owning a house is a competitive investment is because of the leverage. But that would be like looking at the gains in the S&P 500 over time without taking into account dividends.”

    To get the benefit of the gains and dividends in stock, you have to buy the stock. Usually without “leverage”. To get the gains and income from a house you only have to invest a small portion of your own funds. The borrowed funds are the “leverage”.

    Example most here are familiar with. An SB commenter bought a $100,000 property with zero funds invested at time of purchase. All “leveraged”. Sold it two years later for a $125,000 net profit. To have a similar result in stock you have to spend the $100,000 invested vs borrow it. The interest on the “leverage” is only about $8,000 over the carry period vs $100,000 invested in the stock.

  11. 11
    Erik says:

    RE: Ardell DellaLoggia @ 10
    Sounds like a pretty motivated commenter.

    Same sb commenter needs a power agent to 1031 his/her condo for a triplex or fourplex in a nice area of Seattle like Ballard. He/she just wants well positioned real estate he/she can rent out for many years while perhaps living in one of the units.

  12. 12
    Erik says:

    I heard that if you have 5 rentals, you can package them all together for financing purposes and take out a heloc on the five by combining the equities.

    Anyone heard of this or have any information on this?

  13. 13

    RE: Erik @ 11 – Try a loan broker or a portfolio lender like Washington Federal, but I suspect that even if there is such a program they might not do it for condos. That could complicate it.

  14. 14
    Erik says:

    RE: Kary L. Krismer @ 12
    Thanks for the tip, I’ll check into it.

  15. 15

    By Kary L. Krismer @ 5:

    When I get some time I’m going to have to try to look at those 24 properties which were foreclosed. They have to be some gems!

    I just looked at 10 of the 24 and the thing that really stood out is only one tried to sell (short), and then there was one which was merely a sale by a trust.

    I wonder if the ones who didn’t try to sell are just ones where the person died or is somehow incapacitated or missing, etc. Sometimes people do just drop off the face of the earth.

  16. 16
    David says:

    RE: Kary L. Krismer @ 3 – I have a 2016 house for sale in Burien and I am not doing any open house. The house has no pets and no shoes on since day 1. Why let people come through and trash it.

  17. 17

    RE: Erik @ 11

    It doesn’t usually work well to your purpose Erik because they usually then put a lien in the full amount on all of the properties. If you borrow $100,000 total, ALL of your properties carry a $100,000 lien so that the loan gets paid off when you sell any one of them. Be careful of that aspect and make sure to ask about that.

  18. 18

    RE: Kary L. Krismer @ 14

    Sometimes it is a reverse mortgage and they won’t take the option to just hand it to the lender after they have borrowed out all of the equity. The last one I sold had only about $20,000 net proceeds when she passed and it was a bit iffy, but worth a shot.

    Often they are not in good shape as the person doesn’t have extra funds to take care of the house. I think they can borrow the money for taxes and insurance as part of the monthly payment borrowings, but not repairs. Or when the lender comes out to assess money for repairs they lower the cap based on current condition and “call” the loan. Just saw one like that except the owner was still living in it.

    As long as they die before using up the equity it works well. But when they are just much older by the time the equity runs out, the bank forecloses when it hits break even unless the owner understands and just leaves and basically does a “Deed in Lieu”. They are supposed to just hand it over to the lender, but sometimes it ends up in foreclosure instead.

  19. 19
    ESS says:

    By uwp @ 8:

    By Kary L. Krismer @ 3:

    Yes, it’s more difficult for buyers’ agents, but one thing is easier. Far less showing/previewing due to the lack of properties to show/preview.

    Looking on the brightside! :)

    Re: Supply/Demand, it would seem that the lack of supply the last couple years should be forcing demand to roll over year after year as well, just making things even more imbalanced as listings dwindle further.

    Yes you would think so. Furthermore, the supply of lower cost housing is diminished by both the lack of new middle class condos, and the fact that it is virtually impossible to build what was once known as a “starter house” (independent structure of less than 1500 square feet on a separate lot). And those “starter houses” are targets for developers starved for buildable lots, thus further diminishing supply. Unless there is a major decrease in employment, population growth slowdown or even decline, or some other “black swan” (such as a major spike in mortgage rates), housing should continue to increase in price at some rate, or remain at current prices.

  20. 20

    RE: ESS @ 18

    They still build starter homes. They just build them where the land price warrants it. Like this one where they bought the lot for $68,000 in 2016 and sold the new house for $291,000 in 2017. Being an agent I can’t tell the joke line that follows…and then they sold it in short order. :)

    3 x lot. You can’t get a starter home on a $500,000 piece of dirt. But you can get one where the dirt is $100,000 or less.

    https://www.redfin.com/WA/Tacoma/8439-S-M-St-98444/home/109044213

  21. 21
    ESS says:

    RE: Ardell DellaLoggia @ 19

    Which precludes most of Seattle and the surrounding cities, I would guess.

    We used to do a fair amount of business in Tacoma,. and there are some nice neighborhoods. I believe that an issue holding back Tacoma from being an attractive destination for both tourists and residents is that the waterfront in the downtown area is dedicated to industry, and isn’t what anyone would consider “picturesque”. But perhaps things will improve with the downtown UW campus, that new car museum and the desire for individuals to reside in a city with reasonably priced housing.

  22. 22
    Deerhawke says:

    RE: Matt @ 2

    I think this is a good point. Faster price for lower priced homes and slower price growth for the higher priced homes.

    The lower end of the market is where I have seen the most competition (18 offers, $200K over the $600K asking price, etc.) in contrast to the top end (1-3 offers and $25K over asking).

  23. 23
    ARDELL DellaLoggia says:

    RE: ESS @ 20

    If it gets too good then the value of the land goes up and they will build to suit 3 x lot. It’s a loose rule of thumb. But houses don’t go up, land goes up. So they have to increase square footage to get to 3x lot. Where land is expensive.

    Small houses on expensive land by definition have to be old and built back when the land was cheaper.

  24. 24
    ARDELL DellaLoggia says:

    RE: Deerhawke @ 21

    Define “top end” please?

  25. 25
    AverageJoe says:

    Tim – what is your prediction for the Seattle housing market? I see a few headwinds, such as

    1) Amazon growth finally halting with hq2
    2) Rising interest rates (still low though)
    3) Tax changes likely impacting 1M+ housing market having some pressure on most of east-side market
    4) Seattle minimum wage hitting $15 per hour
    5) Much of apartment construction boom finally getting ready for possession putting price pressure on apartment rents and hence cooling pressure to “need to buy”.

    There may be some tail-winds as well due to tax cuts. What’s your take overall given today’s market conditions?

  26. 26

    By ARDELL DellaLoggia @ 22:

    Small houses on expensive land by definition have to be old and built back when the land was cheaper.

    Or back when houses were typically smaller. Look how many older 1 bathroom houses were built in the 30s-50s, into even the 60s. Or the transition from carport to garage, to two car garage . . .. If you built houses like that now they would have little appeal relative to their cost savings.

  27. 27
    Deerhawke says:

    RE: Kary L. Krismer @ 24
    RE: ARDELL DellaLoggia @ 23

    The top end of the market, as I see it, is mainly
    1) really well built 1900-1930 homes with some interesting traditional architecture that have been remodeled/rebuilt in place . In close-in Seattle neighborhoods, this starts at $1.25.
    2) teardown/new construction. In close-in Seattle neighborhoods this is now $1.5M and above. On a busy street or looking at the highway? On an odd tiny 3000 sf lot? Ok, maybe you will pay $1.3M. On a other hand, if you are on a really classy street, with views of the lake or the mountains, with a really great build and more than 3500 sf. You are at $2M and more.

    Kary is right about what consumers expect now. A little perspective. My family bought a typical postwar split-level brand new in 1958. Three small bedrooms, 1.5 baths. 1200 sf. One car garage. The “master suite” was 175 sf and had the luxury of an ensuite half bath. 120 sf kitchen. Knotty pine cabinets and 12 linear feet of turquoise formica countertops included. Appliances not included. Gravel driveway. No landscaping — just dirt. No trees or even grass was included. On a 10,000 sf lot. None of that would make any sense to the modern home buyer.

    But that is what a family with 4 little kids bought in 1958 for $15,000 on a 4% VA loan– $100 down. Seemed like a fortune at the time. We had to borrow the hundred bucks from my aunt.

  28. 28

    RE: Kary L. Krismer @ 24

    That’s not an “or” Kary. That is also the result of land value being cheaper.

    For instance the median square footage for a *house built in Seattle from 1900 to 1927 was 1,927 sf. The median square footage of a house built in Seattle in your age range period of 1930 to 1950 was lower at 1,720 sf. Basically due to The Great Depression in 1929 that lowered land value. In the latter part of your subject, age range period, a volume of cheap land-small houses were built with government intervention as “post-war” housing units. This greatly increased the “home ownership” stats by 1960, but not so much price of homes to the same degree.

    Even going back to 1900 to 1927, the largest of homes were built on the most expensive land of that time. The big estates were not on the cheapest of land plots, the bungalows were.

    *Median square footage calculated based on size of homes in Seattle sold in the last 10-11 years built in that age period. Required Disclosure: Stats in this post are hand calculated by Ardell in Real Time and not compiled, verified or published by The Northwest Multiple Listing Service.

    Also of note, “Seattle” in the stats is Seattle today and for the last 10 to 11 years. Back when the homes were built, some of them were not within the Seattle City limits, given those boundaries changed over time.

  29. 29

    By Deerhawke @ 27:

    My family bought a typical postwar split-level brand new in 1958. Three small bedrooms, 1.5 baths. 1200 sf. One car garage. The “master suite” was 175 sf and had the luxury of an ensuite half bath. 120 sf kitchen. Knotty pine cabinets and 12 linear feet of turquoise formica countertops included. Appliances not included. Gravel driveway. No landscaping — just dirt. No trees or even grass was included. On a 10,000 sf lot. None of that would make any sense to the modern home buyer.

    I was basing my comments on what I see as an agent. But your comments caused me to go back an look at two houses I lived in at a young age in Bremerton.

    The first was a 1958 built roughly 2000+ square foot 1 story w/ daylight basement, where the basement had a 3/4 bath (which I don’t remember at all), so 1.75 bath. The second was a 1961 built roughly 2500+ square foot 1 story w/ daylight basement, where the master had a 3/4 bath and the downstairs had a 1/2 bath, so 2.25 bath. Both were view properties, so maybe that’s why they had so many bathrooms relative to what was common for the time.

    Going back further, years ago my wife had an early 20th-century listing where the house was about 3000 square, but I’m fairly certain it only was built with one bathroom. Probably having that one bathroom was probably seen as a huge improvement over an outhouse. ;-)

  30. 30
    N says:

    https://wolfstreet.com/2018/01/02/suddenly-us-rental-markets-diverge-by-bedrooms/

    A special word about Seattle.

    The median asking rent for one-bedrooms in Seattle is now down 7.2% from the peak in August last year and the median two-bedroom is down 7.9% from the peak in April 2016. It seems the declines, though still small compared to the surges of the past, are more than just a seasonal blip.

    Seattle’s economy is strong, but in 2017, its epic construction boom completed nearly 12,000 new units, counting only buildings of 50 or more apartments. This does not even include condos that have been acquired by investors and have reappeared on the rental market. This supply of new units continues and will apply more pressure on rents.

  31. 31
    Deerhawke says:

    RE: N @ 30

    No question that the rental market is flat and soft. Lots of new demand, but a ton of new supply. It is making me think of fixing up two of my rentals and putting them on the spring market.

    Starting in 2018 or 2019, after the buildings have passed their 6-year statute of repose, a certain number of those high end rentals will be converted to high-end condos. That will help bring back starter units in this economy.

  32. 32
    Toad37 says:

    Have a feeling plenty of owners are planning on listing this spring. Should be interesting to see the numbers.

  33. 33
    Go Hawks! says:

    RE: Toad37 @ 32 – There will be the usual spring uptick, but not enough to meet demand. People sell when prices drop, not when they rise.

  34. 34

    RE: Deerhawke @ 31

    Are you any more apprehensive about buying tear downs now than you were in 2014?

    I hold my breath a bit with each new listing and more so with each new one. But they have all worked out great. I have a starter, $650k, Wedgwood I’m getting ready. I’m probably holding my breath less on this one than I did on the last higher end one in Redmond listed in 4th Quarter. Hope tends to spring more eternal in 1st Quarter than 4th Quarter.

  35. 35
    Eastsider says:

    This may be of interest to many –

    Vancouver Home Prices Appreciated 15.9% in 2017
    https://www.mansionglobal.com/articles/84979-vancouver-home-prices-appreciated-15-9-in-2017

  36. 36
    GoHawks! says:

    RE: Eastsider @ 35 – Interesting prices kept on appreciating even after the tax that was implemented.

  37. 37
    Erik says:

    RE: Toad37 @ 32
    Doubtful. We are holding on to the Seattle real estate rocket ship. Prices will go up this spring and inventory will stay low. Yay for Seattle real estate!

  38. 38
    Erik says:

    RE: Ardell DellaLoggia @ 16
    Thanks for the heads up. I’ll check it out.

  39. 39
    Green-Horn says:

    RE: Deerhawke @ 1

    I’m not exactly familiar with how the Professors Case and Shiller have constructed their model to do their statistics, but how do they account for qualitative variability of the market? Especially in situations when the numbers vary so widely from very many to very few, it’s not hard to imagine these strain comparability.

    Another thing I’ve noticed the properties that actually do make it on to the market is an impression that they’re really scraping the very bottom of the barrell. Much more often I see either properties with very serious defects, such as unattractive locations on very busy arterials or other peculiar context that make them ill-suited for tear-down and posh replacement or else very grave construction deficiencies that might make even the boldest flipper pass on the opportunity. It’s as if the property owners are emboldened by the lack of competition and are throwing their absolute dregs of properties on the market encouraged by the expectation that buyers will bite because there are hardly any other choices. Even the new homes that are available entail serious compromises in terms of space, privacy and convenience. The developers show they have absolutely no problem taking the most challenging sites in the most uninspiring settings among dilapidated neighbors to turn a rundown teardown into a five or six-pack of high and tight garageless townhomes that stare down into rubbish and junk car filled yards next-door or across the street. This is one thing I have a hard time understanding about Seattle: the on-street parking drama that those who spend $600K, $800K and more have to deal with among neighbors who blight the neighborhood with their properties that show the droop of decades of deferred maintenance fed by rain and rot, but at least those rundown properties can boast plenty of convenient parking and maybe even a some kind of garage even if it is sagging!

    All you seasoned real estate pros no doubt have more experience to be able to report their own impressions of the quality of the product that is still actually available. Not only am I no pro like you guys, I’m also relatively new to the area. But in the 4 years I’ve been here, even to this “Green-Horn” it seems like what’s available for sale has just gotten crummier and crummier as time has gone by.

    Could the unusually poor quality of the remaining dregs available for sale from which homebuyers have to choose actually be depressing market statistics?

    In other words, if the market were more balanced with more inventory and with more typical number of the better kind of homes relative to the dregs would statistics read even higher?

  40. 40
    ESS says:

    By Eastsider @ 35:

    This may be of interest to many –

    Vancouver Home Prices Appreciated 15.9% in 2017
    https://www.mansionglobal.com/articles/84979-vancouver-home-prices-appreciated-15-9-in-2017

    Thanks for posting, Eastsider

    A number of contradictory conclusions can be reached from the article:

    -citizen and legal resident real estate demand, not foreign buyers are the cause for increasing prices.
    -foreign buyers are willing to pay the foreign tax as a cost of doing business and are continuing their purchasing of real estate in Vancouver.
    -the tax reduced the overall increase in prices, prices could have increased even more without imposing the foreign real estate tax
    -other factors that the legislative body failed to consider and factor in when passing the foreign real estate tax, such as net migration from other provinces, limited areas to build as a result of natural boundaries, a robust economy etc. The same issues Seattle is experiencing.

    The issue for real estate investors in Seattle:

    Will the increase in prices bode well for Seattle area investors as prices still are increasing faster than Seattle prices for a west coast city closest to Seattle and area? Will foreigners be more attracted to less expensive Puget Sound real estate? Will there be a crackdown on the transfer of international funds in certain countries that will slow down future investment in both cities?
    Is what is happening in Vancouver irrelevant as Seattle presents a different market entirely? Do the immigration laws in Canada favor the wealthy that are likely to purchase real estate, unlike the US where the focus on immigration is family oriented and less financially motivated? Does the election of Trump have anything to do with anything at all?

    While I don’t know the answer to the above questions, rising prices in Vancouver should be viewed as a positive for property owners in the Puget Sound. The closest city to Seattle and the Puget Sound area is still experiencing robust price increases that are greater for the Puget Sound area, even though prices are much higher than down here.
    Furthermore, I wonder if and how many Canadians priced out of the Lower Mainland are purchasing real estate in northern Washington State, such as in Blaine and even Bellingham?

  41. 41
    Anonymous says:

    Apartment rents in downtown seattle, belltown dropped from 2800$ in august to 2250$ in January for a 2bed . Similar drop for 1bed. Very Steep drop in rental prices are seen. This will directly impact people buying houses. Prices will start dropping.

  42. 42

    By Green-Horn @ 39:

    Another thing I’ve noticed the properties that actually do make it on to the market is an impression that they’re really scraping the very bottom of the barrell. Much more often I see either properties with very serious defects, such as unattractive locations on very busy arterials or other peculiar context that make them ill-suited for tear-down and posh replacement or else very grave construction deficiencies that might make even the boldest flipper pass on the opportunity. It’s as if the property owners are emboldened by the lack of competition and are throwing their absolute dregs of properties on the market encouraged by the expectation that buyers will bite because there are hardly any other choices. Even the new homes that are available entail serious compromises in terms of space, privacy and convenience. The developers show they have absolutely no problem taking the most challenging sites in the most uninspiring settings among dilapidated neighbors to turn a rundown teardown into a five or six-pack of high and tight garageless townhomes that stare down into rubbish and junk car filled yards next-door or across the street.

    I would agree with you as to the new homes, but those less than desirable locations are simply what is left. What I’m waiting to see is how those resell when the market is not so hot. We’ve gone again to a period where new means a premium price, but when resold in a more balanced market they are going to be faced with a less than premium location discount.

    As to the older properties, I’m not so sure. Yes there are some properties with serious issues, which may or may not have been cosmetically fixed to look nice, sort of like what REOs used to often be, but even worse structurally. The bulk of the inventory I’ve seen though (which admittedly is a small sample) has been presented rather well, and I’ve not noticed the same location issues you note (again as was the case previously with REOs, where a high percentage of them were near freeways, etc.)

    Finally, I’ve been saying for two or three years that this is a market where people should sell if their house has difficult to fix issues, because buyers are more likely to overlook those issues in this market.

  43. 43

    Don’t believe the hype!

    https://www.seattletimes.com/business/real-estate/bitcoin-like-cryptocurrency-used-to-buy-home-in-tukwila-likely-a-first-for-seattle-area-market/

    The only issue on this transaction is that lenders want to know where down payment funds come from because they don’t want to have some third party, not on the deed of trust, later claiming an ownership interest. The mortgage company was willing to work through those issues. This is not some revolutionary transaction.

    Doing a transaction in actual Bitcoin would be much more problematic, if not nearly impossible (due to REET).

  44. 44

    RE: Kary L. Krismer @ 42
    When I Was Hunting for a Home in the early 90s

    Same dilemma….45 degree building sloped lots in Des Moines for like $100K; only ones left at the time. At the same time Investors Edge had 4000SF duplexes on half acres for 1/2 price as REPOS. Sammamish sported water logged plateau land requiring special COSTLY septic systems [above ground]. Kirkland was cramming apartments in until no one had a view of the park or lake and yes, for the time, the rent was HORRIFYINGLY HIGH in the 80s too…..

    Meanwhile Boeing Management moved from Seattle to St Louis…

  45. 45
    N says:

    @ 40 ESS –
    It’s interesting to note however that those price gains were driven by the condo market. SFH’s actually dropped 13% in Vancouver, and that is despite a lower number of listings (who says its all about the inventory number?)

    http://vancitycondoguide.com/year-in-review-2017/

    The average sales price of a detached home fell 6.5% in 2017 from $2,825,000 to $2,642,000. The median sales price dropped 13% from $2,300,000 to $1,999,000. Again these metrics are not perfect, most of the price movements came from the higher end. But with a full years worth of data it’s clear the trend was down for the detached market.

    New Listings fell in 2017 by 9% to their lowest total since 2009. Sellers initially suppressed inventory in early 2017 but new listings returned to more normal levels as the year progressed. This will be an important stat to watch in 2018.

  46. 46

    The DOW just broke 25,000…

  47. 47
    redmondjp says:

    By Ardell DellaLoggia @ 46:

    The DOW just broke 25,000…

    To infinity, and beyond!

  48. 48
    Maktub says:

    Trees grow to the sky

  49. 49
    uwp says:

    By Anonymous @ 41:

    Apartment rents in downtown seattle, belltown dropped from 2800$ in august to 2250$ in January for a 2bed . Similar drop for 1bed. Very Steep drop in rental prices are seen. This will directly impact people buying houses. Prices will start dropping.

    Do you have any links to this info?

  50. 50
    Erik says:

    RE: Kary L. Krismer @ 42
    I didn’t understand the why the fact that the buyer sold bitcoin stock or currency to buy a house mattered. It appeared to me that the author was making it sound like the buyer used bitcoin when in reality, he sold bitcoin for American dollars and then bought the house.

    Did I miss something here? Buyer sold bitcoin and transferred money to dollar bills and then bought house. So what…

  51. 51

    RE: Erik @ 49 – That’s why I said “Don’t believe the hype.” It’s practically “Fake News!”

    That the buyer was invested in a Bitcoin-like thing is probably more of a concern for the seller because of the possible impact on financing, which is related to tracing issues. Other than that, this transaction is little different than selling Microsoft or Amazon stock to cover your earnest money. Or maybe it would be similar to using Microsoft stock if you’d been holding the actual stock certificates for 10+ years and then somehow sold those and deposited the funds into a bank account.

    These sorts of issues can pop up in other contexts too, such as not letting a lender know about a bank account and then using that account for the money you bring to escrow. But it has next to nothing to with the asset being something Bitcoin-like, and everything to do with tracing.

    This is the key paragraph of the news story.

    Guild Mortgage had called Fannie Mae to confirm it would accept bitcoin as an asset for purposes of securing a mortgage. It would, the federal agency told the company, as long as there was a full paper trail documenting the buyer had paid for the cryptocurrency and then sold it back into U.S. dollars, and used that for the down payment.

  52. 52
    ess says:

    RE: N @ 45

    interesting reading about a city I resided in for over two years. From then until now, the changes and increase of population have both been dramatic.

    Vancouver is somewhat different than Seattle insofar as condos outsell single family detached houses, and a majority of new construction is directed at the condo market and not single family homes. Single family residences in Vancouver are occupied by those who have lived in them for a very long time, or the very wealthy. Even in the suburbs from what I have observed, I would hazard a guess that new condo and townhouse construction outnumbers single family developments. The single family detached housing market in Vancouver is no longer an option for the middle or upper middle class as it still is in some Seattle areas.

    The average Vancouver employee doesn’t earn all that more than his American counterpart. Thus the average buyer in the Vancouver area, especially if they are single and not part of a two earner income family, is only considering purchasing a condo rather than a single family detached house. And that segment of the market has increased in price almost 20% after the implementation of the foreign real estate tax. The tax has not helped the average Vancouverite, and single detached homes will have to undergo a much greater decline in price before there is even a possibility that middle class two income families, let alone individuals can purchase. Or in other words – there are other factors – such as supply and demand, that are factors that are driving up the price for “moderate” priced (condo) housing.

    It will be interesting to see both what will happen in the future. I enjoyed living up there as a kid out of graduate school- now it seems that it is just too crowded.

  53. 53
    Toad37 says:

    I’ll post if I’m a winning bidder at king county foreclosure auction tomorrow. If i am, it will mark A top… :-))

  54. 54
    Erik says:

    RE: Toad37 @ 52
    I wouldn’t go to the auction unless you are paying cash. I compare the sold price at the kc auction to the estimated value every week. Seems like you can’t get a good enough deal to justify the hard money and risk anymore.

    Auctions are great in a recession, but we are far from that.

    Do you think you can get a better deal at the auction?

  55. 55
    Justme says:

    RE: Erik @ 53

    >> compare the sold price at the kc auction to the estimated value every week.

    Where do you get your data, Erik?

  56. 56
    Anonymous says:

    By uwp @ 48:

    By Anonymous @ 41:

    Apartment rents in downtown seattle, belltown dropped from 2800$ in august to 2250$ in January for a 2bed . Similar drop for 1bed. Very Steep drop in rental prices are seen. This will directly impact people buying houses. Prices will start dropping.

    Do you have any links to this info?

    You can take a look at Craigslist. Many are giving free perks like free parking for 6 months and also rent free months. Also the prices dived very steeply.

    Average price may be around $2500, but still a steep drop.

  57. 57
    mountainfamily says:

    By Deerhawke @ 27:

    RE: Kary L. Krismer @ 24
    RE: ARDELL DellaLoggia @ 23
    My family bought a typical postwar split-level brand new in 1958. Three small bedrooms, 1.5 baths. 1200 sf. One car garage. The “master suite” was 175 sf and had the luxury of an ensuite half bath. 120 sf kitchen. Knotty pine cabinets and 12 linear feet of turquoise formica countertops included. Appliances not included. Gravel driveway. No landscaping — just dirt. No trees or even grass was included. On a 10,000 sf lot. None of that would make any sense to the modern home buyer.

    Hey, I just got one of those in a nice NE Seattle neighborhood, in nearly original condition, for a “steal” in the mid 600s! Mine has coral laminate countertops and only one bathroom, though. I have chuckled/despaired/shaken my head over how much money I paid for such a basic house, but overall I’m thankful to have it. We can update it slowly, but it will only ever be a modest home. Positives are its huge lot, solid construction, no bad remodels to undo, gorgeous old-growth cedar siding, hardwoods, nice big windows, and a good layout for raising young kids. Also, it came with a hand-crank pencil sharpener in the kitchen :)

  58. 58
    toad37 says:

    RE: Erik @ 54 – The possibility is there or I wouldn’t be going.
    I have a lot to learn so I’m starting small. I have some great contacts in the business helping me. I totally agree if you factor in hard money costs it doesn’t seem worth the risk, but I’m sure some make it work.

  59. 59

    RE: toad37 @ 58RE: Justme @ 55RE: Erik @ 54RE: Toad37 @ 53 – I was wondering about this issue when I noted the low numbers of trustee deeds. Are there now way too many participants at the auction, making it practically impossible to get a good deal? Or are there so few offerings that the participants have practially disappeared? The latter is similar to what my concern is about having too little active inventory.

    Something less than 24 Deed of Trust trustee sales a month (because part of them are just sales by other types of trustees) really doesn’t make for much of a market. But maybe the average quality of those few foreclosures has gone up because many of them may be people who have just randomly dropped off the face of the earth or otherwise are not paying attention to something. I suspect the hard money lenders who typically finance these things would probably have the best understanding of what’s going on now.

  60. 60

    I was wondering about the trustee courthouse sales when I noted the low numbers of trustee deeds. Are there now way too many participants at the auction, making it practically impossible to get a good deal? Or are there so few offerings that the participants have practically disappeared? The latter is similar to what my concern is about having too little active inventory.

    Something less than 24 Deed of Trust trustee sales a month (because part of them are just sales by other types of trustees) really doesn’t make for much of a market. But maybe the average quality of those few foreclosures has gone up because many of them may be people who have just randomly dropped off the face of the earth or otherwise are not paying attention to something. I suspect the hard money lenders who typically finance these things would probably have the best understanding of what’s going on now.

  61. 61

    Today’s article from the Seattle Times probably isn’t as bad as yesterday’s nonsense, but in case you missed it . . .

    https://www.seattletimes.com/business/real-estate/lawsuit-eastside-realtor-and-developer-conspired-to-inflate-home-prices-for-foreign-buyers/

    Basically, the plaintiffs are alleging that the real estate broker colluded with a builder to take advantage of foreign buyers from China, both of which apparently bought the properties without actually seeing them. The allegations seem pretty damning, particularly one that the builder allegedly paid the broker a bonus directly. But they are merely allegations, and to that . . ..

    One thing not mentioned in the article really stands out. Both sales were for approximately $200,000 less than list! That would implicitly call into question the claims of collision (as well as the multiple offer claims), but my point about that would be more a point I’ve made in the past. You should base your offers on what you think a property is worth, not what you think you can get it for relative to list. Sometimes the list price is high and sometimes low. And that is probably particularly true of houses priced in the seven-figure range.

  62. 62

    RE: Erik @ 54
    Cheap Foreclosures

    Has been a study of mine for decades in Seattle. Auction prices are way too high….the HUD ‘auction” home prices are so high they never get a qualified loan to pay it. The basement dwellers investment village idiots pump up bid prices way above their loan limits.

    Get lucky and deal DIRECTLY through a short sell with old owner and the bank with CASH Eric and keep it a secret until it closes. Or you’ll lost it to another investor. Wire ’em the purchase price money as fast as they let you…

    This method worked in Kansas too….now, flippers are begging me to sell ’em that house…LOL

  63. 63

    RE: softwarengineer @ 61 – The number of actuve short sale and bank owned listings is also very low–well under 40 in King County (SFR)

    Number from NWMLS sources but not compiled by or guaranteed by the NWMLS.

  64. 64
    Justme says:

    It is time for another PIWW: Periodic-Inventory-Wanker-Warning to those that believe or want to propagate the belief that end-of-month (EOM) inventory is a valid measure of supply. EOM inventory is the most effective propaganda tool that the RE industry has created to inspire FOMO (Fear of Missing Out) among potential buyers. As long as people believe that inventory tells the story of supply, they will overbid.

    The supply is much larger than the inventory, and especially when people use the “EOM inventory”. Inventory == largely surplus, as I have already pointed out elsewhere

    http://seattlebubble.com/blog/2017/06/27/case-shiller-seattle-real-estate-hot-hot-hot/#comment-263511

    Supply = Inventory + Pendings + Newlistings – Delistings + FailedClosings
    Demand = Closings + Pendings

    In many ways, month-end (active) inventory is mostly the SURPLUS of active listings from last month. It is NOT the pool from which this month’s demand must be fulfilled. Sure, the bubble cheerleaders and bubble-mongers want the public to think that inventory is the end-all and be-all of the market, but it isn’t. A large fraction of the EOM inventory are overpriced offerings that did not sell.

    Special note to Kary: yes, the end-month inventory includes a fraction of new listings that are too new to have had a chance to atract an offer and go pending yet. One way of putting it would be to break it down as

    Inventory = StaleOverpricedInventory + RecentInventory

    And: It would be better if we knew the Newlistings count for each day of the month. But we don’t. In fact, I’d love to have the daily data for all the variables in the above equations, but the RE industry does not want people to know.

    PS: There is of course also the pent-up supply, the non-active not-listed supply that consists of all the properties that are being held off the market while the owners are waiting for the peak price to arrive. These properties will be rushed onto the market as soon as the owners realize they missed the peak.

  65. 65

    RE: Justme @ 63 – A lot of that is right, but what your missing is that active inventory understates the problem! As I’ve repeatedly mentioned, many of those are stale for one reason or another, so the “real” number is lower.

    And again, another important number to look at is the number of new listings each month. You look at that together with the active inventory and the solds and pendings for the month. The new numbers will probably be out Monday (I’m surprised it’s not today), and those will have the year end YTD numbers, so it will probably be better to wait until we can deal with those. But so far the low inventory numbers have not really hurt sales because there have been a good number of new listings come on the market. Just not enough to keep the active inventory level steady.

  66. 66
    zach says:

    @toad37 -> For someone who is interested in learning about the ins/outs of buying a property at auction do you have any pointers in getting started?

    Thanks for any tips!!

  67. 67
    toad37 says:

    RE: Kary L. Krismer @ 59
    Today was only my second auction, but there isn’t a lot of meat left on the bone at these prices. Today was a small crowd and I think only 3 properties sold. My contact has been working King County for the last 10 years. He’s strongly considering working Pierce now… more volatility and more inventory, I think.
    I’ll post as I learn more.

  68. 68

    Well, the stats did come out today.

    The new listings YTD were down almost 850, and total active down about 450 to only 1,168. Total new for the month only about 900!

    Pending sales, YTD were also down about 1,400. Keep in mind not all the pending closed and not all the new were really new, but there’s no reason to think the percentages were up or down from last year.

    Closed sales for the month were only down about 60, and YTD they were actually up about 150, despite the lower active inventory most of the year.

    Oh, and for those of you who still care, the median was at $635,000 and the mean about $764,000.

    So anyway, the lower active inventory numbers haven’t hurt the sales much, but they’ve certainly affected buyers and sellers.

    (All numbers King County, SFR. All numbers from NWMLS sources, but not guaranteed by the NWMLS–and none of the differences compiled by them.)

  69. 69
  70. 70
    GoHawks! says:

    Who was the poster on this site that called the top this summer? New record prices during what is typically the worst month of the year.

    Eastside home prices surge to new record; Capitol Hill area hits $1 million median
    https://www.seattletimes.com/business/real-estate/eastside-home-prices-surge-to-new-record-capitol-hill-area-hits-1-million-median/

  71. 71

    RE: Justme @ 64

    I’ve been running my start of the year stats and there is virtually nothing for sale where I work. Not many pendings either. The higher pendings in one of the zip codes at 24 is mostly all new construction just waiting to be completed.

    I finished both Kirkland and Redmond Zip Codes http://raincityguide.com/2018/01/04/2018-home-prices-kirkland-98033/

    I’ll head into Issaquah and Sammamish before delving into Bellevue. I did 98115 in Seattle as I’m staging a new listing there now. I don’t post my Seattle stats usually, but nothing for sale in competition with the house I’m staging either.

    I have buyers in all of the areas where I work, so I know there’s nothing for sale without running the stats. Mostly I wanted the pie charts to show where the bulk of homes sold last year priced out as to closing vs asking.

  72. 72
    whatsmyname says:

    RE: Justme @ 64 – It is diabolical the way you bait that hook, but OK, I’ll bite.

    Are you saying that the numbers we have are so flawed that they can not be used even for trend analysis against similarly prepared numbers over many years? Are you saying that our analysis should be based on better numbers that we don’t have, and don’t expect to get? Is this the analytical method which prompted your 2016 forecast that people who didn’t get their houses listed fast and cheap last January were going to see their houses languish on the market all year?

  73. 73

    RE: Justme @ 64

    It’s not that “we” don’t want you to know. It’s just that none of us does it for the whole County because none of us works the whole County every day…or three Counties if you’re talking Case-Shiller. It’s just not a stat we “do”, but not because we don’t want you to know.

    At any given moment, so presumably at midnight :) any one of us can put in zero days on market. I get 299 right now for all Counties. So 299 listed today. 92 were in King. 58 were in Snohomish. 54 were in Pierce.

    5 of the 92 in King were not really new. But if you removed them from the Dec. month end count, you have to pull them back in. 25 of the 92 are rentals. 6 are 1 bedroom condos. 6 are 2 bedroom 1-level condos. 6 are 2 bedroom townhouses and 2 are 2 bedroom houses.

    41 of them are houses. 27 of those have a lot of at least 7,000 sf.

    Yes, we can calculate almost anything. But why would you think “but the RE industry does not want people to know.” That’s a pretty ridiculous comment.

    We share what we are doing and we are doing it to our purpose. We’re not hiding anything. It’s just that those of us who do this to that minute degree are doing it only in the areas where we work and not for all the Counties or even three Counties and often we don’t need to know that at all.

    I’m doing it every night now in the zip codes where I have clients because I want to double check the instant alerts in case something got missed. So I do a round up of zero days on market each night or 0-1 each morning. But no one is breaking that down at midnight every night for the whole County, just because we don’t. Not because we “don’t want people to know”. That’s just silly talk.

    Required Disclosure: Stats in the post are hand calculated by Ardell in Real Time and not compiled, verified or published by The Northwest Multiple Listing Service.

  74. 74
    Erik says:

    RE: Kary L. Krismer @ 59
    Super competitive and not worth going anymore in my opinion. The great and powerful mr peppers bought at the prime time. I bought after that but was still around $100k under the estimated value in 2015, 2016 and early 2017. In late 2017 and now the inventory in king county is so low I see places in prime areas going for about 20k under what they are worth. In my opinion, it would be better to buy through the mls cartel.

    Toad is way late to the party in my opinion. One could slip through the cracks, but it’s very unlikely. Agents frequent these auctions every week and buy for clients when good deals arise. For a single place there may be several bidders per agent. Last place I got had 4 people bidding through one agent. I bid $400k. I was the highest bidder, so the agent bid for me. Bidding started at $356k I believe. One more bidder stepped up and drove the price up to $363,300 and I got it at that price. I estimated the value at $510k, so it was a good deal. I could tell by the previous bids it would be a good deal since the ones before that were low. Add the hard money and I had to evict the guy living there, pay the agent, etc. say I got it at $400k. Not a great deal, but a good deal. Now I am fixing it up on the weekends for the next 2 years while I live in it. I will rent it out for 2 years after I live in it 2 years to take advantage of the capital gains exclusion. It would be nice to sell it for $650k, which I think is a very reasonable expectation. $650k-$65k-$425k=$160k profit. It’s not like I’m making tons of money at this, but it’s a nice hobby to make some extra cash and fund my negative cash flow properties.

  75. 75

    By Erik @ 74:

    RE: Kary L. Krismer @ 59
    Super competitive and not worth going anymore in my opinion. The great and powerful mr peppers bought at the prime time. I bought after that but was still around $100k under the estimated value in 2015, 2016 and early 2017. In late 2017 and now the inventory in king county is so low I see places in prime areas going for about 20k under what they are worth. In my opinion, it would be better to buy through the mls cartel.

    I was addressing more the unnecessary hoops the banks make people jump through just to play the game, but yes the value proposition of most REOs disappeared some time ago, and many were even overpriced. That may not necessarily be true of short sales, but those are very few.

    BTW, anyone else wonder when the banks are going to unload all their shaddow inventory? ;-) :-D

  76. 76
    Justme says:

    RE: Ardell DellaLoggia @ 73

    Just read this, Ardell. I think you have demonstrated that it is at least possible to get daily new listing counts in a form that is useful for creating and tabulating and graphing better supply statistics, even in real time.

    But it remains the case that the data provided by NWMLS to the public is severely limited in its usefulness, and that press releases generally appear to include data that is specifically designed to create buying pressure rather than truly inform buyers. The truth of the matter is that NWMLS and other industry groups do not want the buying public to be well-informed. Various people may disagree with me, but I think the general public has a pretty good hunch that what I just said is true,

  77. 77
    ARDELL DellaLoggia says:

    RE: Justme @ 76

    I’m 99% sure the data is not compiled to that purpose, but the commentary you see with it has bias as does pretty much everyone here. The brokerages tend to be sales vs data and fact oriented, so they do feed their sales associates “talking points” from what I have observed over the last 27 years.

    The data collected was never to the purpose of informing the public. That is why I’m 99% sure it is not gathered to misinform the public in any way. If anything the data has been cleaned up over the last 12 years because the public started seeing and using our data. For decades before that it was used only to our internal purposes. So if it appears the data collection is not designed to your specific desires at all times, you are correct. The mls members’ needs are always of more paramount importance and rightly so.

    That you can see what we are doing is still a relatively new phenomenon and there will continue to be changes as a result.

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