NWMLS: Listings drought intensifies, months of supply hits a new record low in December

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December market stats have been published by the NWMLS. Here’s a quick excerpt from their press release:

“Exceptionally Low” Inventory Slows Year-End Home Sales, Contributes to Steep Price Hikes around Greater Seattle region

“While all year we’ve been bemoaning lack of inventory and escalating prices, the statistics show 2017 was a banner year in many respects for real estate in the Puget Sound region and throughout the Northwest,” stated Mike Grady, president and COO of Coldwell Banker Bain. He cited year-over-year gains in both prices and values, commenting “As a result of this strong market, homeowners are experiencing bountiful gains in property values.”

Brokers expect momentum to continue despite uncertainty about interest rates and taxes.

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate believes the Central Puget Sound housing market will remain one of the strongest in the nation. “It will be another happy new year for real estate activity.” As the new year unfolds, he expects buyers “will emerge from winter holiday hibernation in big numbers” in part thanks to the Seahawks. “Without the Seahawks in the football playoffs, the 2018 housing market will be more intense earlier in January rather than heating up after the Super Bowl,” Scott remarked.

Scott also anticipates a “frenzied, multiple-offer market” in the more affordable and mid-price ranges, as well as “good-to-strong” sales activity in the luxury market close to the job centers. Positive job growth and attractive interest rates will propel activity, he suggests, adding “In the more affordable and mid-price ranges, the impact of the new federal tax policy is minimal.”

Literally nobody puts off buying a house just because of a few weeks of playoff football. What a stupid thing to suggest. Also, I seriously think Lennox used the word “frenzy” in literally every single monthly NWMLS news release in 2017. He’s having a “frenzy” frenzy.

Now let’s dive into the numbers for December.

CAUTION

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

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

December 2017 Number MOM YOY Buyers Sellers
Active Listings 1,168 -37.8% -28.7%
Closed Sales 2,094 -5.8% -2.8%
SAAS (?) 0.86 -1.7% -10.2%
Pending Sales 1,459 -34.1% -11.1%
Months of Supply 0.56 -34.0% -26.7%
Median Price* $635,000 +0.7% +15.5%

This is the lowest level on record (going back to 2000) for months of supply. The previous record low was December 2016 at 0.76, and the record low before that was December 2015 at 0.86. Supply and demand have never been as far out of balance in the Seattle area as they are right now.

Here’s your closed sales yearly comparison chart:

King County SFH Closed Sales

Closed sales fell six percent between November and December. Last year over the same period closed sales were down four percent. Year-over-year closed sales were down three percent, which is an astoundingly small decline given how few listings there have been.

King County SFH Pending Sales

Pending sales were down 34 percent from November to December, and were down eleven percent year-over-year.

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

King County SFH Inventory

Inventory fell 38 percent from November to December, and was down 29 percent from last year. Total on-market listings are at an all-time low.

Here’s the chart of new listings:

King County SFH New Listings

New listings were also down from a year ago, falling 13 percent.

For the whole of 2017, new listings were down 2.7 percent from the whole of 2016, while pending sales were down 4.0 percent.

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

King County Supply vs Demand % Change YOY

I wish there were some change here but it’s the same story as it has been for a while. Bad news for buyers, great news for sellers.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

Year-over-year price changes have been edging up over the last few months, to 15 percent in December.

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

King County SFH Prices

Up slightly from November, but still currently $22,000 below the all-time high hit in July.

December 2017: $635,000
July 2007: $481,000 (previous cycle high)

Here’s the article from the Seattle Times: Eastside home prices surge to new record; Capitol Hill area hits $1 million median


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.

146 comments:

  1. 1
    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.

  2. 2
    Mikal says:

    What time are the Seahawk’s playing this weekend?

  3. 3

    2012 is the year which really stands out for inventory because it’s the year that didn’t really have a recovery as the year went on. The market has never really recovered from that year, and things have just gotten worse from there. I don’t have a theory of what happened in 2012 that would have lead to that result–does anyone else have a theory?

    Tim, football can definitely have an impact, particularly on open houses. For someone who works five days a week, it can take away half the time they have each week to look, assuming they don’t have a DVR and that they only care about professional football. My issue would be more it assumes football fans don’t like any of the other teams. One year I was fortunate enough to have two teams I liked playing in the Superbowl, and neither was from Seattle.

    If I were to make a football argument I would argue it has already had an effect. NFL football TV ratings are lower this year. Rather than watching football on Sunday, people were out buying houses the last quarter of the year. And of proof of my theory, I’d point to the record low inventory! ;-) :-D

  4. 4
    Eastsider says:

    2017 has the second highest number of closed sales (after 2016) in a decade. So is it really a drought?

  5. 5
    Erik says:

    Correction Tim, I would put off buying a house to watch the Seahawks. They aren’t that good this year so they have not taken a lot of time away from me. If they were good I’d be watching all games to scout out the competition. Seahawks need to invest in lineman on both sides and get rid of that loser Walsh. He missed a short game winning field goal against us last year in the playoffs that allowed us to win. Seahawks decided that’s the guy for us. Now he loses game winning field goals for us. Makes no sense!

  6. 6
    ESS says:

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

    Here is an article in today’s Seattle Times about the current housing market. For those who think the real estate market is going to collapse in 2018. – probably not unless there is a major political or economic event. Seattle is becoming the new San Francisco north – a wetter colder version but rapidly catching up in terms of housing costs.

    Probably the most interesting factor are the strong increase in prices in the more marginal areas such as Pierce, Snohomish and Kitsap County. Probably a result of more potential buyers traveling further out from the Seattle core to locate housing they can afford. Those increases will also support housing prices in King County as further out “bargains” are snapped up.

  7. 7
    GoHawks! says:

    Current months supply stands at about 17 days. Curious how the bears think prices are going to fall? A few have cited the slowing rental market, but what else barring some unforeseen event (North Korea, stock market etc)?

  8. 8
    Justme says:

    RE: Eastsider @ 4

    >>2017 has the second highest number of closed sales (after 2016) in a decade. So is it really a [supply, Ed.] drought?

    You beat me to it. The inventory==supply fallacy still dominates the headlines. There is plenty of supply. But people believed in the low-inventory fallacy/propaganda and the FOMO-factor was strong. Maybe we should call it the FOMO Frenzy.

  9. 9
    Justme says:

    RE: GoHawks! @ 1

    Uh, my prediction is about Case-Shiller Seattle and not NWMLS King County SFH median, but having said that, I noted that the NWMLS data caused Tim to make the following remark

    >>Up slightly from November, but still currently $22,000 below the all-time high hit in July.

    That’s all I have to say about that :-)

  10. 10
    toad37 says:

    HQ2 will take a little of the sizzle off this steak, hopefully. (???) That and when the Fed converts dollar dominated debt in to digital currency (??)

  11. 11
    GoHawks! says:

    RE: Justme @ 9 – I appreciate you being willing to make a call and stick with it. Given 17 days worth of supply, seems like prices will go past last summer’s high.

  12. 12
    Eastsider says:

    RE: GoHawks! @ 11 – I doubt it will get much worse than 17 days of supply. Wages, interest rates, immigration, and tax laws do not support higher RE prices in 2018. The stock market (and crypto?), on the other hand, is still going strong. But will it continue moving higher?

  13. 13
    Erik says:

    RE: Eastsider @ 12
    Uh, prices don’t get higher as the situation gets worse. Prices get higher until equilibrium is met, I would guess that equilibrium for inventory is around 8000 homes for sale in king county. We are at approximately an 1/8th of that. Supply/demand should push prices up until Seattle inventory is 8000. Of course there could be outside forces affecting this, so there isn’t a direct correlation between housing prices and supply/demand.
    It would be fun if we had a graph of months of supply vs Seattle housing prices. There is a correlation there. It would be interesting to see how those plots interacted with time on the X-axis.

  14. 14
    whatsmyname says:

    By Justme @ 8:

    RE: Eastsider @ 4

    >>2017 has the second highest number of closed sales (after 2016) in a decade. So is it really a [supply, Ed.] drought?

    You beat me to it. The inventory==supply fallacy still dominates the headlines. There is plenty of supply. But people believed in the low-inventory fallacy/propaganda and the FOMO-factor was strong. Maybe we should call it the FOMO Frenzy.

    Maybe it’s a healthy, more honest market. By your often stated theory of inventory as surplus, homeowners are evidently much less likely to list stale and overpriced properties than they usually are.

  15. 15
    wreckingbull says:

    There are some amusing mental gymnastics going on in this thread, apparently by those highly vested in RE.

    No, we don’t have a perpetual price growth machine where KC prices affect outlying prices, which then affect KC prices, which then affect outlying areas, which then affect KC prices, which then affect outlying areas, until prices rise to infinity.

    No, prices do not immediately track macroeconomic trends, especially in a market with high transaction costs and temporal duration.

    I think I have read the comments here for close to 12 years, and it is amazing how similar some of the tropes being dragged out today were dragged out before. I suppose it is comforting in a strange way.

  16. 16

    By whatsmyname @ 14:

    Maybe it’s a healthy, more honest market. By your often stated theory of inventory as surplus, homeowners are evidently much less likely to list stale and overpriced properties than they usually are.

    Honest, maybe, but healthy, no. I’ve been calling this market just as unhealthy as what we had in 2009, but just in completely different ways. The difference is in 2009 the impact was on sellers (and brokers/brokerages) while now it’s on buyers.

    On another topic, that sales have been relatively high, that does not mean that they have been unimpacted. There’s really no stat that tells us what the excess demand is–how many more sales there could have been with more inventory. and/or more moderate price increases. What this gets to is you could say that the imbalance between supply and demand has only been about 2,000 units since 2012, the drop in inventory since then, but in reality, we don’t know what the imbalance is because there are not any stats for buyers who wanted to buy but did not buy.

  17. 17
    whatsmyname says:

    RE: Kary L. Krismer @ 16 – I was kidding – not that there isn’t a point there for Justme.

  18. 18

    By wreckingbull @ 15:

    No, we don’t have a perpetual price growth machine where KC prices affect outlying prices, which then affect KC prices, which then affect outlying areas, which then affect KC prices, which then affect outlying areas, until prices rise to infinity.

    I’m not sure where you see that said. What was said is that the prices in King County and Seattle, in particular, have started to affect prices in more outlying areas. Part of that is just normal market behavior. As one thing becomes more expensive buyers will look for alternatives and the rising demand for the alternatives will impact their price. We saw some evidence of that in the prior thread in the discussion of foreclosure auction sales.

    By toad37 @ 67: 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.

    Part of it though is probably due to other factors, like maybe locals trying to buy before interest rates rise or just a perception of a better economy or better employment, etc.

  19. 19
    wreckingbull says:

    RE: Kary L. Krismer @ 16 – I never really liked the term ‘pent-up-demand’, but in this case I think it applies.

    If city, county, and state government got their act together and made condos, row houses, and other entry-level properties possible and attractive to builders, there would be a flurry of sales activity in this lower tier.

    Which is why I stand by my prediction of a massive condo conversion craze coming in the next five years. We have city ordinances that require a waiting period, and that waiting period will expire for many properties at a time of soft rental demand.

  20. 20

    By whatsmyname @ 17:

    RE: Kary L. Krismer @ 16 – I was kidding – not that there isn’t a point there for Justme.

    I almost mentioned the unhealthy point yesterday, so your post just prompted me to again raise the topic.

  21. 21

    One the continuing topic of Seattle government failing to get the big picture, now Costco is suggesting people shop at their stores outside the city limits to avoid the sugar tax. Over $10 of tax on a $16 item is going to motivate people to do their $300 shopping trip in some other city. I’m not sure what Seattle’s share is of the $30 of sales tax, but I know that their share is of sales tax collected in other cities.

    https://www.seattletimes.com/business/retail/costco-suggests-shoppers-go-to-tukwila-to-avoid-seattles-sugary-drinks-tax/

  22. 22
    district says:

    RE: Kary L. Krismer @ 18

    Yes, and more generally, the point seems to be that price increases are relatively uniform. If prices spiked on capitol hill and nowhere else, that would be a very bad sign, and something that could quickly correct itself.

    But if, as seems to be the case, price increase in desirable core areas spread out to secondary parts of the market, one could make a plausible case that the whole market is increasing in value.

    To put it another way, it seems reasonable that close-in desirable areas are more subject to speculation. If there are price increases in secondary and tertiary markets, it seems likely that people are being pushed out of the city. That is, the price increases seem at least partially tied with net population increase (of high income earners), rather than pure speculation, which I take to be ESS’s point in #6.

  23. 23
    Eastsider says:

    By Erik @ 13:

    RE: Eastsider @ 12
    Uh, prices don’t get higher as the situation gets worse. Prices get higher until equilibrium is met, I would guess that equilibrium for inventory is around 8000 homes for sale in king county. We are at approximately an 1/8th of that. Supply/demand should push prices up until Seattle inventory is 8000. Of course there could be outside forces affecting this, so there isn’t a direct correlation between housing prices and supply/demand.
    It would be fun if we had a graph of months of supply vs Seattle housing prices. There is a correlation there. It would be interesting to see how those plots interacted with time on the X-axis.

    Yes, prices don’t get much higher when the equilibrium is met. 8000 may be the magic number in a normal market. But in this bubbly market, the equilibrium number has to be lower simply due to price elasticity. I.e. Higher prices => Lower # of sales. Note that I am not claiming any specific ‘equilibrium’ number here. But 2016 has the highest number of sales in the last decade. The -2.8% YoY sales in 2017 may mean that we are near the equilibrium.

  24. 24

    If You Owned Motel 6 as a Small Business Real Estate Investor

    And ten-fifteen or so illegal aliens were destroying the room illegally and you called ICE to get the vermin out of your room….why does the Washington State AG think Motel 6 should be prosecuted and not tyhe illegal aliens????

    This happenned recently in Seattle and its a good example of Sanctuary Cities losing their minds….

  25. 25

    SWE’s EOY Investor Report for Dec 2017

    Dec 0.20% 0.48% 1.11% 0.47% 1.60%
    YTD 2.33% 3.82% 21.82% 18.22% 25.42%
    Last 12 mo 2.33% 3.82% 21.82% 18.22% 25.42%

    Long term CDs, long term bonds, US Stocks, Foreign stocks, foreign stocks

    As you can see the stocks are heading for Mt Everest under Trump….there is HOPE!

    Progressive Government Bureaucracy kept our GDP stifled at 1-2%….its been over 3% [even with hurricanes and fires] the last 4 QTRs…..now blame Trump for giving us HOPE again…LOL

  26. 26
    Kmac says:

    By district @ 22:

    But if, as seems to be the case, price increase in desirable core areas spread out to secondary parts of the market, one could make a plausible case that the whole market is increasing in value.

    Granted, this is SeattleBubble, but I think it is amusing how so many think that the “core” area is the same as “desirable” area.
    I know many, many people who think the “desirable” area is Seattle’s outlying areas, and that Seattle proper (the core) is a pit to be avoided at all costs…..

  27. 27
    ARDELL DellaLoggia says:

    RE: Kmac @ 26

    But you are wrong and they are right when you are talking about real estate. You may desire to go where homes never appreciate so you can pay less and have less traffic. But in a real estate value discussion, “desirable” has only one meaning.

  28. 28
    ARDELL DellaLoggia says:

    RE: Eastsider @ 23

    Just a little perspective. I remember the day the in-house Economist told me the equilibrium number for The DOW was 3,000. :)

  29. 29
    GoHawks! says:

    Given the rise of the stock market, is the usual relation between median incomes and median homes prices not as valid as it normally would be? In our area, are a higher % of homebuyers than normal or in other areas supplementing their incomes with stock market gains. 2,094 closed sales in December, how many were influence by stock options or relocation bonuses. Essentially items that don’t factor into median income calculations.

    It’s a little like inflation statistics taking out food and energy. What would median incomes look like if stock options and bonuses were factored in.

  30. 30
    ARDELL DellaLoggia says:

    RE: district @ 22

    Not uniform on The Eastside and this will become apparent again soon and this season. Those 10 ranked schools that dropped to 6 and the 8 that dropped to 3 are not going to move forward with uniform appreciation to the 8,9 and 10 schools. Heads up! Eyes open! There’s been a change and very recently.

  31. 31
    Kmac says:

    By ARDELL DellaLoggia @ 27:

    RE: Kmac @ 26

    But you are wrong and they are right when you are talking about real estate. You may desire to go where homes never appreciate so you can pay less and have less traffic. But in a real estate value discussion, “desirable” has only one meaning.

    I get that, but I think the difference sometimes gets lost in the communications process.
    Using the comparison of “where homes never appreciate” and “have less traffic” isn’t really applicable unless you are talking north of Marysville or south of Auburn and then still that is a reach.

    But point taken…

  32. 32

    RE: Kmac @ 31

    I think we may have a different definition of “never appreciate” because you don’t have to go North of Marysville or South of Auburn to find my definition. I just looked up 10 homes in 10 areas that “never appreciate” and they are not that far out. For instance “bought in 2006 for $389,000 just sold for $380,000”. That’s what I call “never appreciate”. Yes they went down and back up, but I don’t call that “appreciation”.

    Another WELL north of Auburn but South of Downtown Seattle, bought new in 2007 for $393,000 just sold for $395,000. That would be on my “never appreciate” list. Technically I guess it did, but I’d call that none because it didn’t appreciate enough to not have to bring money to the closing table.

  33. 33
    Kmac says:

    Except you are noting previous bubble pricing to current [bubble??] pricing.
    Your example works to show what you are saying.

    If you went further back, or forward to the low of market bottom, your results may differ.
    And does appreciation make an area more “desirable” or is having a nice home and better overall quality of life more “desirable”?

    Not arguing with you, but just sayin’…

    But it is tiring hearing all of the hipsters thinking that Seattle is the cat’s meow (please excuse my aged vernacular- LOL)and if you can’t afford to buy in to the overheated Seattle market that you are _____________ (fill in the blank).
    Lots of people choose not to frequent the Seattle market and it has nothing to do with property values, social standing, appreciation etc.

    And let’s not forget , that once upon a time not that long ago, Seattle wasn’t the nationally “desirable’ area that it seems to hold title to now.
    Being a kid here in 60’s/70’s I had observed while growing up that even Seattle proper was somewhat considered second rate, primarily because of the weather, to many from other regions.

    If I was from Cali or some other fair weather state and I had moved to Seattle for a high paying tech job, there is no way I’d hang around here after the shock of two wet NW winters. Appreciation or not.
    Moving here for a paycheck doesn’t seem worth it to me, but to each their own.

  34. 34
    toad37 says:

    By Kmac @ 33:

    If I was from Cali or some other fair weather state and I had moved to Seattle for a high paying tech job, there is no way I’d hang around here after the shock of two wet NW winters. Appreciation or not.
    Moving here for a paycheck doesn’t seem worth it to me, but to each their own.

    That’s why I think a bunch of Amazonians will want to relocate to HQ2.

  35. 35
    ARDELL DellaLoggia says:

    RE: Kmac @ 33

    I had two recent clients go back home after a couple of years. One is currently at 6 degrees where they are and the other at 12 degrees. My Cali clients who had to return were crying that they had to leave. Another whose house I sold when they went to California, came back. Weather is rarely the impetus for a move, or for happiness or lack thereof.

  36. 36
    David says:

    RE: Kmac @ 33 – I hear they are opening the Ed Murray Preschool in Seattle. Trust me, the rest of the country does not have a good opinion of Seattle.

    Just go East and start asking. Between Ed Murray and the Seattle City Council – this area is mostly loved by Californians and tolerated by those who moved here for jobs. In the 90s, the South was where all the job growth was. Tech switched that to the PNW/Cali. Take away the job growth and give people an opportunity to leave and they will for warmer pastures. It has happened before.

    Something tells me that Amazon will locate somewhere in Texas or further south. Maybe Northern Virginia.

  37. 37

    RE: Kmac @ 33

    Apologies. I didn’t explain that correctly by assuming everyone knew the flip side of that coin. Compare to ones in what are “desirable” areas and instead of $393,000 sold for $395,000 I’m coming up with $800,000 sold for $1,200,000 over the same period of time. Or this condo $472,000 sold for $750,000. $1,350,000 sold for $1,800,000.

    I’m using houses in both examples that were built at and sold in late 2006 or 2007 because they haven’t had any substantive improvements between the two sold prices.

    Compare that apples to apples using Monroe, as example, and you get a $594,000 selling for $620,000. Or a Renton Sold for $660,000 in 2007 selling at $650,000.

    “Desirable” in a real estate conversation is never “out where prices are lower” because that means “out where prices never go up” or they wouldn’t be lower.

  38. 38

    By ARDELL DellaLoggia @ 35:

    RE: Kmac @ 33

    I had two recent clients go back home after a couple of years. One is currently at 6 degrees where they are and the other at 12 degrees. My Cali clients who had to return were crying that they had to leave. Another whose house I sold when they went to California, came back. Weather is rarely the impetus for a move, or for happiness or lack thereof.

    I would agree. More typically it’s something to do with work, like not liking the new people they’re working with even though it’s with the same company.

    There are actually very few places that have consistently great weather, and those have other drawbacks like overcrowding in CA or high prices and limited travel in HI. Also, look what most of the country has been going through the last week with the extreme cold. Going through that sort of thing year after year doesn’t get them to move. And personally, I’d take our rain any day over the humidity which exists on much of the east coast during the summer months.

    It took me a while to get the highlighted quoted portion. I thought you were giving some sort of a geographic location on the earth relative to the equator! ;-)

  39. 39
    Kmac says:

    I know of a several houses in Monroe(and plenty of other places) that have appreciated more than 20% in the just the last 18 months.
    May be behind Seattle’s crazy rise to the top of the yearly percentage increase, but still not anything to sneeze at.

    I just hope this craziness waits for me to fully retire [and sell] before it takes its downward trajectory, which will happen. The only question is when?

  40. 40

    By Kmac @ 39:

    I just hope this craziness waits for me to fully retire [and sell] before it takes its downward trajectory, which will happen. The only question is when?

    I agree, but not to get the money out of my house, that’s secondary. I don’t think I could handle dealing with a lot of short sales and REOs again. I was good at those transactions, but banks drive me nuts with their stupidity. On normal transactions a bank’s interference is relatively slight, albeit still annoying, but on short sales and REOs it permeates the entire transaction. I don’t look forward to those ever becoming common again.

  41. 41
    toad37 says:

    RE: Kary L. Krismer @ 40

    I left the mortgage industry in 2008. I really respect those that stayed in the housing/financial related industries during the stretch that followed… can’t imagine how brutal it must have been.

  42. 42
    Blurtman says:

    By Kmac @ 39:

    I just hope this craziness waits for me to fully retire [and sell] before it takes its downward trajectory, which will happen. The only question is when?

    Nominal versus real is something to consider as well. Nominal prices might not crash, but you might get less real wealth out of your house in the future, depending on what you want to do with those dollars. We are certainly experiencing asset inflation currently, in spite of the gimmicked government inflation statistics.

  43. 43
    Blurtman says:

    They’re fleeing the state!

    https://www.northamerican.com/migration-map

  44. 44

    By Blurtman @ 42:

    By Kmac @ 39:

    I just hope this craziness waits for me to fully retire [and sell] before it takes its downward trajectory, which will happen. The only question is when?

    Nominal versus real is something to consider as well. Nominal prices might not crash, but you might get less real wealth out of your house in the future, depending on what you want to do with those dollars. We are certainly experiencing asset inflation currently, in spite of the gimmicked government inflation statistics.

    Or more likely, with inflation the real value might not increase, but the nominal value will as people move into real estate to deal with inflation. That scenario would be particularly beneficial to those who are leveraged, because they’d get the increased nominal value of the real estate and pay back their debt in deflated dollars.

  45. 45

    By Kmac @ 31:

    I get that, but I think the difference sometimes gets lost in the communications process.
    Using the comparison of “where homes never appreciate” and “have less traffic” isn’t really applicable unless you are talking north of Marysville or south of Auburn and then still that is a reach.

    But point taken…

    The interactive map in the Times’ article would support that statement. There are actually parts of Seattle which have underperformed.

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

  46. 46
    whatsmyname says:

    By Eastsider @ 4:

    2017 has the second highest number of closed sales (after 2016) in a decade. So is it really a drought?

    To be fair, what Tim said was that there was a listings drought. Looking at his charts, it appears that December active listings were the lowest on record, and December new listings also appear to be the lowest on record. And year long numbers for both were lower than 2016. It seems like drought is a pretty fair term, although I’m sure some will disagree.

  47. 47

    RE: Kary L. Krismer @ 45

    Rather than “desirable” vs “underperforming”, I tend to break it down to “primary” and “secondary” markets since the underperforming areas are the ones side by side the desirable ones when I am doing my stats. There is a push-pull relationship where the primary market will go up 18% in one year and the “next door neighbor neighborhood” goes up 6%. In the following year there is the reverse. As the Primary Market gets too pricey from the 18% bump, the secondary market gets it’s bump. This can go on and on in a “rinse and repeat” fashion. When they move in unison up or down to the same degree, that is often more a trend sign than when they are alternating bumps.

    I see it most often when running Kirkland where 98033 bumps up first and then pushes into 98034 in the following year. Same thing might be evident in Bellevue 98004 vs 98005. Not as simple as Zip Code, but on The Eastside it’s easier to pinpoint than in Seattle because you have more cohesive product and none built at the turn of the century.

  48. 48
    ARDELL DellaLoggia says:

    RE: whatsmyname @ 46

    They are only reporting what is left unsold at the end of the month, so it could actually mean the reverse. More are selling could mean more came on and sold and inventory to choose from was not fewer.

  49. 49
    whatsmyname says:

    RE: ARDELL DellaLoggia @ 48 – With all due respect, I referenced both listings at the end of month and new listings during the month. New listings visually appear to be at an all time low in December, and Tim reports the total of New listings for the year at less than 2016.

  50. 50
    Eastsider says:

    RE: whatsmyname @ 46 – Check out 2017 vs 2013 data on closed sales, pending sales, inventory, new listings in the charts above. Tell me if you still think there is a ‘drought’ in 2017. IMO 2017 is a great year compared to the dreadful year 2013.

  51. 51
    whatsmyname says:

    RE: Eastsider @ 50 – Compared to 2013, 2017 had 7 months of lower new listings, 3 months of about the same new listings, and 2 months of higher new listings. EOM was consistently about 1500-2000 fewer listings. Again, Tim’s drought is in listings, although the overall consistency in EOM might indicate a similarly miserable overall market for the given level of sales.

  52. 52
    Kmac says:

    By Blurtman @ 43:

    They’re fleeing the state!

    https://www.northamerican.com/migration-map

    This link backs up what I was told by a rental truck agent a few months ago.
    Was told that all of their yellow trucks were leaving state and were having a heck of a time bringing trucks back in.

    Upon relaying this anecdotal message, SB commenters had generally surmised that it most likely was disgruntled retirees fleeing their humble abodes, to another state, where they can continue to live in a hovel in the backwoods, without having newcomers tell them they are dumb for not maximizing their property usage to the best and highest usage…..

    I read somewhere that Idaho is the fastest growing state at this time.

  53. 53
    Eastsider says:

    RE: whatsmyname @ 51 – Okay, 2013 has the same color code as 2009. 2017 vs 2009. Explain the ‘drought’ in 2017 when it has ~800 more closed sales every month. Was there a ‘drought’ or ‘flood’ in 2009?!

  54. 54
    ARDELL DellaLoggia says:

    RE: whatsmyname @ 49

    Thank you. I’m staging a house and scanning comments during my smoke breaks. :) Historically how many listings came on is a hard number to track, so didn’t expect that number to be available. I’ll look for it when I have more time. Appreciate the heads up!

  55. 55
    whatsmyname says:

    RE: Eastsider @ 52 – For the level of sales in 2009, I would say that listings were already flooded at the start of the year, and flood conditions continued through the year, although with some amelioration later in the year.

  56. 56

    By ARDELL DellaLoggia @ 53:

    Historically how many listings came on is a hard number to track, so didn’t expect that number to be available. I’ll look for it when I have more time. Appreciate the heads up!

    The numbers are published. In King County, SFR there were 31,147 in 2017 and 31,973 in 2016. The ones for December were 901 and 1,033 respectively. The problem is you don’t know how many are really new listings, as opposed to listings that came on after another listing expired or was canceled. I’m fairly certain that the NWMLS doesn’t strip those out. And there can be many reasons for a canceled listing, including merely the broker changing firms if they are allowed to take their listings with them.

    Numbers from NWMLS sources, but not guaranteed by the NWMLS.

  57. 57
    Justme says:

    RE: Eastsider @ 52

    Thanks for the effort in debunking the “inventory==supply” fallacy. Good job. The “low-inventory” propaganda is going to hurt a lot of people, and must be counteracted.

    RE: Kary L. Krismer @ 55

    Total new listings for King County SFH, per your data, just tabulated for ease of comparison.

    31,147 in 2017
    31,973 in 2016

    Looks like the yearly supply hardly budged at all. There just is no crisis in supply, contrary to what the inventory-wanker bubble-mongers are spouting. They have been screaming about “low inventory” for years now, and trying to conflate inventory with supply, but EOM inventory is just one component of the supply.

    PS: Kary and/or The Tim: It would be great to get monthly stats also on delistings (cancelled + expired listings). That would help refine the supply model further. Do you think NWMLS can provide that?

  58. 58
    whatsmyname says:

    RE: Justme @ 56 – Justme, thank goodness you are here. We need an expert to help us understand why there are so many fewer stale and overpriced listings than there were in 2010. Thank you in advance for having the ability to explain this.

  59. 59
    ESS says:

    While discussing and comparing the number of listings in King County over the past few years, one should also consider the population growth of the county in question. Not only are there less listings from a few years ago, but there has been significant increase in population over that time. Thus the numerical decline of listings is even more acute as a percentage of the population from a few years ago. The website and the specific statistic is presented below, but one rather suspects that population numbers for Snohomish County would also reveal significant population increases as well during this decade of declining listings.

    http://www.kingcounty.gov/depts/executive/performance-strategy-budget/regional-planning/Demographics.aspx

    “Demographic Information: In 2011 the U S Census Bureau released population counts from the 2010 Census that confirm Washington State and King County growth in recent years. In April 2010, the Census counted 1,931,249 people in King County. In the years since 2010, the Washington State Office of Financial Management (OFM) has published annual population estimates for Washington counties and cities. OFM’s estimate of King County’s 2016 population is 2,105,100.”

  60. 60
    whatsmyname says:

    RE: ESS @ 58 – All this population growth talk is just side B of the inventory bubble mongering record you hear every day. These so called growth numbers are cooked up by bubble-wanking REIC agents posing as government employees. They don’t even “know” – hence the word “estimate”. They are wrong; but even if they are right, they are still wrong because they don’t include people who are on their way out right now, people who are packed up to leave, people who are thinking about leaving, people who would leave in a second if they could just get that great job in Texas/Florida/Virginia, people who might leave for health reasons, or because they don’t like the weather, people who are ALREADY PLANNING to retire somewhere else, all the people at Amazon who are all moving to HQ2, people who are dying, people who might die in an auto accident, people who will definitely die from other causes.
    If you could get numbers on those, then we would have something. Instead, you try to put your MOFO in the general population.
    Shame!

  61. 61
    Justme says:

    When the truth is not good enough, just make something up.
    –BubbleMongers Mantra

  62. 62
    whatsmyname says:

    By Justme @ 56:

    Total new listings for King County SFH, per your data, just tabulated for ease of comparison.

    31,147 in 2017
    31,973 in 2016

    Looks like the yearly supply hardly budged at all. There just is no crisis in supply, contrary to what the inventory-wanker bubble-mongers are spouting. They have been screaming about “low inventory” for years now, and trying to conflate inventory with supply, but EOM inventory is just one component of the supply.

    Did you just conflate New listings (and no EOM inventory) with supply – while castigating those who conflate EOM inventory (and no New listings) with supply?

    If you didn’t exist, we’d have to invent you.

  63. 63
    whatsmyname says:

    RE: Justbs @ 60 – “When the truth is not good enough, just make something up.
    –BubbleMongers Mantra”

    Good one. Did you just make that up?

    Good to see you’re still here. You are awfully quiet on the question of why there are so many fewer stale and overpriced listings than there were in 2010. Can’t explain how your theory works in a dynamic environment??

  64. 64
    Doug says:

    I sure hope that yield curve spread can stay positive throughout 2018. I’m not ready for this party to be over anytime soon.

  65. 65
    ESS says:

    RE: whatsmyname @ 59 – By whatsmyname @ 59:

    RE: ESS @ 58 – All this population growth talk is just side B of the inventory bubble mongering record you hear every day. These so called growth numbers are cooked up by bubble-wanking REIC agents posing as government employees. They don’t even “know” – hence the word “estimate”. They are wrong; but even if they are right, they are still wrong because they don’t include people who are on their way out right now, people who are packed up to leave, people who are thinking about leaving, people who would leave in a second if they could just get that great job in Texas/Florida/Virginia, people who might leave for health reasons, or because they don’t like the weather, people who are ALREADY PLANNING to retire somewhere else, all the people at Amazon who are all moving to HQ2, people who are dying, people who might die in an auto accident, people who will definitely die from other causes.
    If you could get numbers on those, then we would have something. Instead, you try to put your MOFO in the general population.
    Shame!</blockquote

    People come and go for all reasons, they always have and always will. But no one can deny that the population has seen significant growth over the past decade. Every indication from US census figures, state population estimates, drivers licenses statistics, employment figures, square footage of commercial office space, number of residential units, number of vehicles traveling on all our roads, vacancy rates, etc etc indicate significant growth. Not to mention the high percentage of individuals who are living together only because they can't afford their own digs. And while the high end rental market may be getting a bit soft because of major overproduction, detached houses, especially "affordable" ones are yet to show any significant decline in demand. And like oceanfront property in Malibu – they aren't making any more reasonably sized detached single family houses in the immediate Seattle area on a scale to meet present and future demand.

    But we agree at least on one issue – too many government employees on all levels in this state and we could use a reduction both in the number of employees and superfluous programs that often are of no use that always appear to be funded by property taxes.

  66. 66
    whatsmyname says:

    RE: ESS @ 64

    What’s this? I never made any such statement.

    (note to readers: ESS is a notorious bubble cheerleader who tries to distract honest home seekers by wearing no panties under that cheer outfit.)

    ………………………………………………………………………………………………………………………………………………………………………….
    I appreciate your defense of the clearly confirmable population growth around here. I hope that you realize this was a parody posting.

  67. 67
  68. 68
    Alyx says:

    RE: whatsmyname @ 65 – Can you stop trolling Justme? It doesn’t add much to the discussion.

    If you want to disagree with what Justme is dishing out, feel free to post your own contrasting predictions.

    It’s hard enough that comments here are all linear.

  69. 69
    ess says:

    By whatsmyname @ 65:

    RE: ESS @ 64

    What’s this? I never made any such statement.

    (note to readers: ESS is a notorious bubble cheerleader who tries to distract honest home seekers by wearing no panties under that cheer outfit.)

    ………………………………………………………………………………………………………………………………………………………………………….
    I appreciate your defense of the clearly confirmable population growth around here. I hope that you realize this was a parody posting.

    Ah – excuse my missing your parody. Having worked in the legal field for a number of years, many times what appeared to be parody to this listener was certainly delivered in great seriousness by those who almost believed it themselves.

    I know when the real estate market is not doing well – having lived through a number of real estate declines around here as an owner of my own residence as well as rental real estate. But whether anyone likes it or not – all indications for the immediate future are for a very tight Puget Sound housing market. And even if prices decline 10 -20% in the future, as it very may well before prices recover once again, housing is still going to be pretty expensive around here compared to most other parts of the country. But if individuals believe it is bubble or cheerleading, then by all means – keep on renting. No reason to encourage potential customers to exit the rental market.

  70. 70
    whatsmyname says:

    RE: ess @ 67 – All good points.

  71. 71
    Erik says:

    RE: whatsmyname @ 68
    Your comments have been fairly logical up to this point. The indicators I’m familiar with all say housing prices in Seattle are headed up for the foreseeable future. Why do you think seattle housing prices are headed downward? Please don’t just say cause it’s been good too long or quote some obscure article. This housing is fundamentally headed upwards based on the fundamentals.

    When the frank Dodd act is repealed is when we need to start worrying. Mortgage companies aren’t taking on too much risk. Supply is very low. Demand is high. We could have a nationwide recession, but I don’t think seattle housing prices will go down much because there are so many people waiting for a buying opportunity. Seattle is to Asia as New York was to Europe.

    I’d love to hear why I am wrong because I’m just not seeing it.

  72. 72
    uwp says:

    A market where new listings drops by ~3% and pendings drop by roughly the same amount does not sound like a market that is peaking in sales. It sounds like a market where sales are constricted by new listings.

    Month end inventory (stale inventory) dropping 30% YOY is just another sign that home buyers are reaching for the junk that is out there because it’s the only thing available. I continue to believe that until inventory/new listings can get closer to the 6,000+ number, the “frenzy” will continue.

  73. 73

    RE: Erik @ 69
    Yes Eric

    Theories on the never ending increases in Seattle Real Estate all end up a train crash anyway….debt can never keep growing as it is today…we’re on our way to where “Man has never been before” [old Star Trek logo]….theories are a like brainless math equations, unplanned and anomalous.

    It reminds me of Glen Beck’s blackboard….a bunch of nonsense with no common sense.

    I don’t like Sessions or Bannon anymore once I got more recent reliable data…they’re stealth establishment NWO MOLES to me now…IOWs intelligent folks change their minds when given more RECENT salient facts. The past does not always equal the future, its that simple.

    Toastmasters trains this philosophy BTW.

  74. 74

    By uwp @ 70:

    I continue to believe that until inventory/new listings can get closer to the 6,000+ number, the “frenzy” will continue.

    I don’t think it needs to get that high. Even 4,000 would be a much more relaxed market for buyers.

  75. 75
    David says:

    Won’t the average Joe just run out of money to buy a house? Isn’t there an upward bound as to how many houses can be bought at say $600k?

  76. 76

    As to the supply argument, I think some of you may be missing the point. Assume two car dealers. One has 50 of the particular model you want, and the other has only 15, and most of those have been sitting on the dealer’s lot for over three months. Yes, you could buy at either dealer–their inventory isn’t going to restrict you. But assuming the likely negotiated price is the same at each dealer, which one would you rather shop at? All other things being equal, it would be the one with more inventory.

    So the issue isn’t that there are not houses to buy, at least up until this point. It’s just that the selection isn’t as good as normal, and when a buyer does finally find something they like it’s more likely some other buyer will be interested too. And that leads them to bidding more and/or using an escalation clause, which drives up prices.

  77. 77

    By Justme @ 56:

    PS: Kary and/or The Tim: It would be great to get monthly stats also on delistings (cancelled + expired listings). That would help refine the supply model further. Do you think NWMLS can provide that?

    The NWMLS doesn’t publish those stats, and they would be somewhat difficult to track. I think December had a total of just over 300, but again some of those may have been relisted, and December might be higher than normal due to the year-end.

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

  78. 78
    N says:

    Re: Rental Market:

    It’s not far fetched at all to see that we will reach a point where overbuilding happens. In West Seattle one of the prominent new apartment complexes, the Whittaker (future home of Whole Foods), is now offering 2 months FREE rent with a lease signing. That’s equal to $5k on their cheapest 2 bedroom or 16% off of the annual rent. Meanwhile a crane is up directly across the street for another 100+ complex to be built. Repeat all over the city and a softening of rents makes a lot of sense. And with rents becoming such a bargain compared to buying it surely will impact the for sale market at some point…

  79. 79
    wreckingbull says:

    RE: N @ 76 – We are already there, and the overbuild has momentum which won’t stop for years. Frankly, I’m sort of surprised we are seeing some softness so soon, though.

  80. 80
    NA says:

    By wreckingbull @ 77:

    RE: N @ 76 – We are already there, and the overbuild has momentum which won’t stop for years. Frankly, I’m sort of surprised we are seeing some softness so soon, though.

    A lot of new apartment buildings are condo quality, too. As a buyer I’d love to see these converted to condos over time to relieve some pressure on the SFH/townhouse market.

  81. 81

    By N @ 76:

    In West Seattle one of the prominent new apartment complexes, the Whittaker (future home of Whole Foods), is now offering 2 months FREE rent with a lease signing. That's equal to $5k on their cheapest 2 bedroom or 16% off of the annual rent.

    Two thoughts on that. First, did Seattle ever pass that law that required landlords to collect the deposit(s) over time? If so, I wonder if this is just a way to get around that somehow. Yes, you get $5,000 off, but when? I’m not sure how they would structure that, but there’s probably something they can do.

    Second, maybe the monthly rate isn’t all that great, and they’re already pricing in part of a future increase that they hope for, realizing that it would be less distressing to tenants to get that increase without an actual increase in the monthly rate. $2,500 a month, $25,000 a year in 2018 versus $2,500 a month, $30,000 a year in 2019. Even if $30,000 ends up too high for 2018 probably a lot would stay due to inertia.

  82. 82
    Erik says:

    RE: Kary L. Krismer @ 78
    Whitaker promised renters they would live above a Whole Foods and did not deliver. It pissed renters off that reserved an apartment, so they did not rent. Now the Whitaker is suffering as they deserve to for not delivering what they said they’d deliver.

    The whole thing made me mad because they shut down pcc market too. Now West Seattle is left with Trader Joe’s and metropolitan market, which is a small consolation.

  83. 83
    uwp says:

    RE: David @ 75 – My rough guess has been that things will meet resistance around $750k. Mean income of 4th quintile household in Seattle is roughly 105k = can afford about $3,200/month house payment.

    My thinking being really only the upper 60% of households are buying households. So that income range is more pertinent than overall median. If I had the time and skills I would actually research this to see if this is true, but for now, I will go with my gut.

  84. 84
    Doug says:

    RE: toad37 @ 67 – Yep and this one: https://fred.stlouisfed.org/series/T10Y3M

    I think 10y minus 3m is the more traditional spread used when people begin to talk about inversion, but 10y minus 2y is also a very good barometer.

    Definitely not 100%, though. For example, Black Monday occurred while the yield curve was quite steep. That said, equities were up 44% Y-o-Y in August of ’87 — so lots of factors to keep track of, but certainly the yield curve slope is the most important.

  85. 85
    S-Crow says:

    RE: wreckingbull @ 79 – Overbuilt comment got me thinking about my gaze into the Las Vegas night from the Stratosphere observation deck this weekend. First time I’ve been to Vegas. I was looking at the former Fontainebleau Hotel complex below that is unfinished that went belly up during the crash among other projects on the strip. Carl Ichan bought it out of bankruptcy and made a killing selling it this past August 2017.

    One of my sons was with me and asked me why I wouldn’t drop a couple dollars gambling. I asked him how much he made with his stock investments recently and he made quite the profit for small ” investment.” I said, “you made your money work for you didn’t you?” You had a better chance at that than gambling your money away. And I continued to remark, “you are viewing ground zero for the real estate bust.” I said, “do you know who made a killing off the bust here? People like Carl Icahn. Don’t be the people who think debt = wealth. ” Beneath all the lights and glam is a teachable moment. I hope it sticks with him.

    https://www.reviewjournal.com/business/casinos-gaming/fontainebleau-on-las-vegas-strip-sells-for-600m/

    Fast forward to 2018: Evidently Vegas has already made the current list as one of most overvalued real estate markets, again.

    It’s always different “this time.”
    Debt = Wealth
    I loved a tweet I read this morning: “It’s almost as if people get most confident at the wrong time.”

  86. 86
    whatsmyname says:

    By Erik @ 71:

    RE: whatsmyname @ 68
    Your comments have been fairly logical up to this point.

    Eric, I think the post numbers have changed some. But in the post above your post, I was agreeing with ESS, who I think you would agree with too. In the previous 2 posts I was doing my impression of Justme with whom I think we both disagree. He has quite a unique style, and I thought it would be obvious, but I was mistaken.

  87. 87
    Blurtman says:

    By S-Crow @ 85:

    RE: wreckingbull @ 79 – Overbuilt comment got me thinking about my gaze into the Las Vegas night from the Stratosphere observation deck this weekend. First time I’ve been to Vegas. I was looking at the former Fontainebleau Hotel complex below that is unfinished that went belly up during the crash among other projects on the strip. Carl Ichan bought it out of bankruptcy and made a killing selling it this past August 2017.

    RE investment firms can walk away from loans used to finance properties with nary a scratch. In fact, their credit rating does not seem to be downgraded to impact future borrowing. See Tishman Speyer.
    Individuals, not so much.

  88. 88
    Matt P says:

    RE: S-Crow @ 85

    Not almost, is.

  89. 89
    Minnie says:

    RE: uwp @ 83

    1- Many buyers are getting their downpayments from other sources (parents, cashing out stocks)

    2- Average Seattle HH income on paper may be $105k, but again that doesn’t include stocks and bonuses. People are cashing those out like crazy for home purchases or major remodels

    3- people are carrying a lot of debt

  90. 90
    Erik says:

    RE: whatsmyname @ 86
    Oops, I should have read the whole thread. In that case, keep up the good work.

  91. 91
    Erik says:

    RE: whatsmyname @ 86
    I stopped reading Justme’s comments a while back. I don’t mind a good troll, but justme is too obvious.

  92. 92
    Doug says:

    Just imagine if 1.5% 30y rates came to the US. Tough to see us going that low, but I do believe mortgage rates are at a near term top and only have room to go down from here.

    https://www.bloomberg.com/amp/news/articles/2018-01-08/extreme-rates-test-record-in-world-s-biggest-covered-bond-market?__twitter_impression=true

  93. 93
    Justme says:

    Shakespeare’s admonishment: Neither a borrower nor a lender be; / For loan oft loses both itself and friend.

    Justme’s corollary: Neither a troll nor a liar be; / For trolls oft loses both the truth itself and friend.

  94. 94

    I seem to recall this last year too, but I’m surprised at the lack of new listings after the first of the year, both in the total number for King County and the individual searches I do. I just always expect the new year to bring more new listings.

  95. 95
    Doug says:

    RE: Kary L. Krismer @ 94 – Looking back at some King County SFH Estately numbers and Y-o-Y declines over the years:

    1/9/2018: 1,163 (-26.4%)
    1/9/2017: 1,579 (-14.6%)
    1/9/2016: 1,849 (-31.4%)
    1/9/2015: 2,696 (-14.2%)
    1/9/2014: 3,142

    Total change since 1/9/2014 is now -63%! Oddly enough 63% is about how much homes have appreciated over that period as well (if not more).

  96. 96

    RE: Doug @ 95 – Thanks, but I was just focusing on how many listings come on the first week or two of the year. I always expect a lot more if for no other reason than a lot of people don’t want to list between Thanksgiving and Xmas. A “pent-up supply” type of thing.

    It’s sort of like how you would expect more listings as we near the end of K-12 school years because people can then move without affecting their kids’ schooling. There should be times when more listings come on–it’s not all just an even flow week to week.

  97. 97

    RE: David @ 75
    Seattle is a Progressive Rich Elite Sanctuary City

    It alleges it does not need average Joes, just more foreign overpopulation slaves for the rich and taxes for you average Joes…

  98. 98
    Eastsider says:

    RE: Doug @ 92 – Haha. This morning’s WSJ frontpage headline is “Treasurys Pull Back, Sending 10-Year Yield Above 2.5%.” I see 10yr above 2.75% sometime this year. That translates to 4.25% 30yr mortgage rate and I won’t be surprised if it hits 4.5%.

  99. 99
    N says:

    @ Kary 94 – Isn’t January always the lowest inventory month of the year?

  100. 100
    uwp says:

    RE: Eastsider @ 98
    Rates continuing to rise isn’t a sure thing.

    The 10 year has gone from 2.00% to 2.50% in just over three months, at the end of 2016 it went from 1.75% to 2.60% in only two months.

  101. 101
    Justme says:

    RE: ESS @ 59

    It is time to debunk the population growth numbers again, because the same old falsehoods are being repeated.

    a) The OFM non-census-year population estimates are based on the very questionable model that each added (new construction, rehab, whatever) housing unit automatically fills up with people:

    Population = Housing Units x Occupancy Rate x Household Size = HU * OR * HS

    Basically, the completion of new housing units is automatically and instantly translated into an increased population estimate. With the ongoing boom in Seattle apartment construction, this leads to some seriously errant numbers.

    Reference:
    http://seattlebubble.com/blog/2017/07/07/nwmls-falsely-inflates-seattles-population-growth/#comment-263707

    b) Even if someone actually had the true increase in population, which is considerably lower than the OFM numbers, population increase does not equal new demand, only netmigration+maturation-deaths does:

    POPULATION MODEL:

    popchange=migration(in)-migration(out)+births-deaths
    netmigration=migration(in)-migration(out)

    HOUSINGDEMAND model:

    housingDemandChange=netmigration+maturations-deaths
    housingSupplyChange=apartmentSupplyChange+condoSupplyChange+sfhSupplychange
    apartmentSupplyChange= apartmentsbuilt-apartmentsdemolished (etc for condo and sfh)
    aptoccupancyratio (etc for condo and sfh)
    maturations mean persons maturing from being a subset of a household to form a household themselves

    Reference:
    http://seattlebubble.com/blog/2017/06/06/nwmls-may-grand-slam-home-salespeople/comment-page-2/#comment-263464

  102. 102

    By N @ 99:

    @ Kary 94 – Isn’t January always the lowest inventory month of the year?

    Again, I’m just looking at a two week period, and only the new listings. I just expect a surge after the first, sort of like toilet flushings surge at halftime of the Superbowl. I’m not looking at long-term trends, just short-term.

    If you look at the chart above February is typically the slowest for new listings, but not the past few years. That perhaps is due to the change in the numbering system several years ago–not sure how well that matches up.

  103. 103
    Anonymous Coward says:

    By Justme @ 101:

    a) The OFM non-census-year population estimates are based on the very questionable model that each added (new construction, rehab, whatever) housing unit automatically fills up with people:

    Population = Housing Units x Occupancy Rate x Household Size = HU * OR * HS

    Note that in general I tend to be very skeptical of gov’t statistical estimates. Particularly ones that can be used to show that “we need more money”… But if developers were to build a bunch of units and then have them sit empty, wouldn’t that show up as a change in the “OR” part of that equation?

  104. 104
    uwp says:

    By Anonymous Coward @ 103:

    Note that in general I tend to be very skeptical of gov’t statistical estimates. Particularly ones that can be used to show that “we need more money”… But if developers were to build a bunch of units and then have them sit empty, wouldn’t that show up as a change in the “OR” part of that equation?

    Don’t try to use logic on Justme. It has no effect.

  105. 105
    Doug says:

    RE: uwp @ 100 – I see Bill Gross is out today calling for the bear bond market to officially begin if the 10y breaks 2.60%. What he’s actually doing is calling the top in yields based on his track record.

    I remember when Gross was the original bond vigilante in 2011: http://www.businessinsider.com/remember-when-bill-gross-was-a-bond-vigilante-2011-9

    That one didn’t play out as forecast. He’s since made a few more vigilante calls, each equally as wrong as the last. I wonder how much he’s lost on that trade? But hey, he’ll be right eventually (maybe).

  106. 106
    Justme says:

    RE: Anonymous Coward @ 103

    >>wouldn’t that show up as a change in the “OR” part of that equation?

    The OR (Occupancy Ratio) is not updated, and that is exactly the point: The OR (Occupancy Ratio) and HS (Household Size) are difficult to estimate, so OFM uses old values from the census (most recently 2010, 7 years ago)! The OFM methodology document states this flaw very clearly:

    QUOTE (from page 10 of http://www.ofm.wa.gov/pop/april1/psrc0306.pdf)
    When does the HU method perform poorly?
    1. When residential permit data, completions and demolition data are poor.
    2. When household size and occupancy rates are changing.

    Most estimation techniques lose accuracy during periods of change. Many
    models, like CMII, are built around “decade assumptions” or relationships and lack
    precision in capturing periods of rapid population change. The HU methods begins
    with the census period occupancy rates and PPH. Anything that changes these values
    will cause the estimate to go astray. Some examples are: a recession causing
    outmigration, rapid building caused by low mortgage rates, influx of population with
    higher fertility, aging housing , aging population, and change in house values.
    It is always of value to just understand when and why an estimation method is not
    working well
    ENDQUOTE

    Despite these warnings, the bubble cheerleaders uncritically base their demand hype on population numbers that very often have little to do with reality. And homebuyers do not know any better than believing the propaganda. Result: More bubbles, more pain, more losses for all of society. But the RE industrial complex profits.

  107. 107
    Justme says:

    RE: uwp @ 104

    >>Don’t try to use logic on Justme. It has no effect.

    After reading my explanation of the Housing Unit Model above (post 106), are you ready to retract your false statement, or would you like to join whatshisname in the blog hall of the shameless?

    It is a scandal that RE industry press releases and interviews never point out that the OFM data is highly inaccurate and questionable, and currently contain significant over-estimations. It took a regular citizen with some analytic skills to debunk the propaganda. Not that the RE economists could not do it. This is after all their job, But they don’t, because it is not profitable to tell the truth.

  108. 108
    uwp says:

    RE: Justme @ 107 – Do you think the occupancy rate is currently higher or lower than 2010 (the depths of the RE bust).

    Handy Chart

    Why, maybe they have been understating population growth for the last 7 years!!! I am truly thankful to have regular citizen Justme on the case!

  109. 109

    RE: N @ 99

    12/15 to 1/15 is usually the lowest. Kind of straddles the two months.

  110. 110
    Eastsider says:

    RE: uwp @ 100 – I am sure many don’t realize that crude oil went from $51 to $63 in last 3 months. Now maybe you think the rate will head up. Again, my 2 cents -10y will hit 2.75% and 30y mortgage 4.25% sometime this year.

  111. 111
    Doug says:

    RE: Eastsider @ 110 – You’re not wrong. It could easily happen. We could move 25 bps in only 2 days time.

    25 bps just isn’t a material move and a 4.25% mortgage rate also isn’t material. It’s an extra $100+ per month on an $800k mortgage.

    The real question is do you believe the US economy can structurally support a material and sustained move higher in rates? 200 to 300 bps? The answer is no.

  112. 112
    uwp says:

    By Eastsider @ 110:

    RE: uwp @ 100 – I am sure many don’t realize that crude oil went from $51 to $63 in last 3 months. Now maybe you think the rate will head up. Again, my 2 cents -10y will hit 2.75% and 30y mortgage 4.25% sometime this year.

    I do agree that rates will most likely go up from here.

    But I also know that people have been saying that rates would soon be heading up ever since mortgage rates hit 6% 10+ years ago. So, in conclusion, who knows?

  113. 113

    RE: Eastsider @ 110

    30 Year mortgages have been 4.25% for some time now.

  114. 114
    ess says:

    By uwp @ 112:

    By Eastsider @ 110:

    RE: uwp @ 100 – I am sure many don’t realize that crude oil went from $51 to $63 in last 3 months. Now maybe you think the rate will head up. Again, my 2 cents -10y will hit 2.75% and 30y mortgage 4.25% sometime this year.

    I do agree that rates will most likely go up from here.

    But I also know that people have been saying that rates would soon be heading up ever since mortgage rates hit 6% 10+ years ago. So, in conclusion, who knows?

    Right – no one really knows – except for long term trends. Bond gurus such as Bill Gross have determined that the bond market is in bear territory – again. I have been waiting for bonds yields to increase significantly for the past few years. They have been creeping up – ever so slowly.
    But lost in all the excitement of longer term interest rates is the resurrection of shorter term ones. Anyone notice that the money markets are paying 1.4% and more? This is quite a change from even one year ago when money markets were paying .05% a year. Good news for short term savers and retirees – both in terms of getting something for their savings that they need immediately, as well as those living in part on fixed income instruments such as CDs and CD ladders.

  115. 115
    Kmac says:

    By ess @ 114
    Anyone notice that the money markets are paying 1.4% and more? This is quite a change from even one year ago when money markets were paying .05% a year. Good news for short term savers and retirees – both in terms of getting something for their savings that they need immediately, as well as those living in part on fixed income instruments such as CDs and CD ladders.

    Right.
    I finally am pulling back in from having money on the sidelines, but want to keep it close.
    Some 12 mo CD’s are at 2% apr w/ 60 day early withdrawal penalty.

    Got to do something in this market that I don’t trust….
    New normal? I hope not.

  116. 116
    Erik says:

    RE: Kmac @ 115
    Make hay while the sun shines!

  117. 117
    whatsmyname says:

    By Erik @ 91:

    RE: whatsmyname @ 86
    I stopped reading Justme’s comments a while back. I don’t mind a good troll, but justme is too obvious.

    True enough, but very humorous to read. Today he is demonstrating the importance of citing authoritative references by linking to his own comments. Truly, a very stable genius.

  118. 118
    Eastsider says:

    By Ardell DellaLoggia @ 113:

    RE: Eastsider @ 110

    30 Year mortgages have been 4.25% for some time now.

    The latest rate published on Mortgage News Daily is 4.14% (+0.05%) today. It tracks 10y UST yield that is up .05% today.

  119. 119
    Eastsider says:

    By uwp @ 112:

    By Eastsider @ 110:

    RE: uwp @ 100 – I am sure many don’t realize that crude oil went from $51 to $63 in last 3 months. Now maybe you think the rate will head up. Again, my 2 cents -10y will hit 2.75% and 30y mortgage 4.25% sometime this year.

    I do agree that rates will most likely go up from here.

    But I also know that people have been saying that rates would soon be heading up ever since mortgage rates hit 6% 10+ years ago. So, in conclusion, who knows?

    There is a great tool you can use here. The Fed Fund futures currently predict 2 to 3 rate hikes in 2018. So it won’t surprise me if mortgage rate hits 4.5% this year. A .5% increase in mortgage rate translates to a 6% increase in interest payment on a $800k loan, or a reduced $750k loan on same interest payment amount. Is that ‘material’? Your call.

  120. 120
    Eastsider says:

    By Doug @ 111:

    RE: Eastsider @ 110 – You’re not wrong. It could easily happen. We could move 25 bps in only 2 days time.

    25 bps just isn’t a material move and a 4.25% mortgage rate also isn’t material. It’s an extra $100+ per month on an $800k mortgage.

    The real question is do you believe the US economy can structurally support a material and sustained move higher in rates? 200 to 300 bps? The answer is no.

    The stock market clearly believes that the US economy can withstand 50-75bps Fed rate hike this year. No one is talking about 200bps rate hike at this time.

    Btw, if we have a 75bps hike this year, we would have a 200bps hike within 2 years. Do you consider it ‘material’ and ‘sustainable’?

  121. 121

    RE: Eastsider @ 118

    If you are thinking something will change if rates “get to” 4.25%, I can tell it is already there and has already been there, regardless of what The Daily News may say. I don’t want to name all the lenders who are and have been there, but hopefully you will agree that I have more first hand knowledge of this than what you read on a news site.

    These days all mortgages come with a charge or a credit and that has been the case since they outlawed YSP. Since most borrowers prefer a credit to a charge, they are mostly at 4.25% as to rate.

    For instance Quicken Loans is quoting an APR of 4.25% today, so that is basically lower with a charge or 4.25% with no charge or a credit. But as to a 4.25% being a rate increase that will cause panic in the housing market, I can tell you for fact, many people have already been buying in this area with 4.25% as the “par” rate. I’m not guessing and I didn’t read it in a newspaper.

  122. 122
    Eastsider says:

    RE: Ardell DellaLoggia @ 121 – I am using MDN’s mortgage rate as a baseline, just as you would get the current credit card interest rate on bankrate.com. (https://www.bankrate.com/finance/credit-cards/current-interest-rates.aspx). MDN’s mortgage rate is widely quoted/used.

  123. 123
    Doug says:

    RE: Eastsider @ 120 – I promise you the next recession will be set in motion with 75 bps worth of hikes. Equities will still likely remain elevated, but the curve will be inverted and the recession will officially hit 6-12 months later.

  124. 124
    Eastsider says:

    RE: Doug @ 123 – The yield curve has steepened since the beginning of the year. I doubt it will invert after 3 hikes.

  125. 125
    toad37 says:

    S&P 500….been an absolute rocket blast, but support a lot of percentage points below. Not sure if they run for that last 10% or save if for later… they are planning that now along with how to handle the transition to a digital currency, imho. Bye-bye cash… the freedom was fun while it lasted!

    https://content.screencast.com/users/toad379304/folders/Jing/media/013df002-107d-44e4-bea5-342aa7eb509e/2018-01-09_2227.png

  126. 126
    Justme says:

    Here is some new data on housing unit completions and vacancy rates in Seattle. Apparently, the Occupancy Rate is down again. And that OR is for apartment complexes (and towers) that have reached “stable” occupancy, i.e. not the recently completed ones that are still rather empty.

    Yet another indication that that the OFM population estimation data is not accurate.

    https://wolfstreet.com/2018/01/09/seattle-apartment-market-rents-hit-by-new-supply

  127. 127
    wreckingbull says:

    RE: Justme @ 126 – Wow. The coming tidal wave of apartment units is even bigger than I thought. We are about to be absolutely buried.

    If my empire consisted of a couple of negative cash flow condos I’d keep a close eye on this.

    Folks, this is market distortion caused by poor policy, and no, I don’t say this as a builder or developer, just some chump in the SB comment section. It’s really not that complicated.

  128. 128
    Doug says:

    RE: Eastsider @ 124 – That’s not right. The curve has actually spent the last year flattening.

    Don’t confuse rising rates with steepening. If short term rates are rising faster than long term rates then the curve is flattening.

  129. 129
    Dustin says:

    By wreckingbull @ 127:

    RE: Justme @ 126 – Wow. The coming tidal wave of apartment units is even bigger than I thought. We are about to be absolutely buried.

    If my empire consisted of a couple of negative cash flow condos I’d keep a close eye on this.

    A collapse of the rental market for one-bedroom apartments could benefit a lot of the people who are struggling to find affordable housing and cope with Seattle’s rising costs of living. I’d go so far as to say many people in the area are probably hoping for such a collapse to bring back a sense of balance and normalcy and provide them with an opportunity to get a foot in the door.

    To some degree I think such a collapse would benefit Seattle as a whole – no area really benefits from having a high cost of living. Affordable conditions can foster more economic growth and a better quality of life for the people who live here. My opinion is that there has to be a niche in the housing market for the currently all but non-existent low end – place your bets where/what that will be when the conditions driving this market reach an equilibrium.

  130. 130
    Deerhawke says:

    A few things I believe about the 2018 market and beyond.

    1) Rents will Stagnate or Drop
    2) Interest Rates Will Rise
    3) For Sale Prices Will Rise Despite Rising Interest Rates

    In the Puget Sound region, we have a totally bifurcated housing market.

    The rental market appears seriously overbuilt and looks to be heading toward more of the same over the next few years. Developers building apartments over the past few years have made a killing. So in typical fashion, they are doubling down and hope for more of the same. Not going to happen. But will it really hurt them? Not really. It is not really their money. Their equity investors (those chasing returns in this market who put down the real money in the deals– the down payment to get the bank financing) bear the brunt of the risk — and will be the ones taking the big hurt.

    As in any “heads I win and tails somebody else loses” kind of structure, there is rampant over-investment that goes until it suddenly collapses. At this point, this is the real Seattle Bubble.

    It will take years to unwind the damage once the danger is “suddenly” recognized. Count on looking at holes in the ground that stay there until the next cycle ramps up. In the meantime, rents will at best stay steady but will more likely head downward.

    The picture is very different in the for-sale market. Demand has been strong and stable based on robust job growth and surging in-migration. Supply has consistently (and even predictably) been dropping since the end of the recession. We have less than a month’s inventory on hand and this lack of available product has even started to choke off pendings and sales.

    People will have to make more difficult choices now that interest rates have started to rise. This summer I had buyers who picked up jumbo loans at par at 3.75% . Now they are looking at 4.25% (or if they shop a bit harder 4.125%). Will this change really stop them from buying? For the most part, no. Because 2018 is the year people are really starting to push their employers for higher wages and bonuses. I think net wage growth will blunt the impact of higher interest rates.

    So over the near to medium term, competition in the for-sale housing market will be intense and prices will continue to increase. I have said I think we will see 8 percent in King County and 10% in Seattle. This may be overly conservative and I have also said I would not be surprised to see double-digit price increases for both markets.

    So, why oh why, do we not have a bridge between these two markets? If city and state leaders understood the markets they regulate, they would realize that the condo liability laws are creating over-investment in rental housing and underinvestment in for-sale stacked condo housing. The first answer is that they do not understand the markets they regulate. The second answer is that they do not want to acknowledge that the laws they passed created the problem. The third answer is that they do not want to appear to help rich developers and so they are ok with a glut of rental housing. Renters, their main constituents, will catch a break on their rents and they will claim credit for it.

    So what we will see becoming more and more obvious is that rental housing will become more of a commodity and for-sale housing will become more of a luxury.

    Commodities will get bid down. Luxuries will get bid up.

    How am I responding to these circumstances?

    I am thinking hard about ending the tenancy on two rental houses so I can rehab them and sell them in 2019. In essence, I am taking them out of the commodity market and putting them into the luxury market.

    I have judiciously bought several demo/build properties in good neighborhoods. I basically bought them at 2016 prices in 2017, so I feel good about the potential risk. But I am also keeping enough cash on hand to float me in case we have some kind of economic black swan event.

    Our local for-sale real estate market looks impregnable, but you can over-focus on what is right in front of you. Never forget that the business cycle has not been repealed. It is definitely NOT different this time.

    This recovery/expansion is very long in the tooth. Our next recession will come from outside the area. How? Who knows really? The stock market is completely overbought and it is hard to say when the euphoria over tax cuts will wear off. We have a genuine nutcase who was installed in the White House with Russian help and you can bet family indictments will create all kinds of instability. There are any number of economic or political risk variables — or a combination thereof– that could tip us toward a sudden recession. The next recession is out there waiting in the wings.

    I just don’t think it will be over the next 12-15 months. This party is probably going to go on a bit longer.

  131. 131
    Eastsider says:

    By Doug @ 128:

    RE: Eastsider @ 124 – That’s not right. The curve has actually spent the last year flattening.

    Don’t confuse rising rates with steepening. If short term rates are rising faster than long term rates then the curve is flattening.

    I wrote the curve had been steepening since the beginning of this year.

    https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

  132. 132

    RE: N @ 78
    Being A Seattle Landlord is Scary

    You better not evict “gypsie troops” of illegal aliens [call ICE] who trash your house….the Washington State AG will prosecute you for reporting illegal aliens to ICE. Like they did to Motel 6.

    Tenants can afford Seattle rent increases forever??? LOL…not with Seattle addiction to heroine taxations…example:

    http://rare.us/rare-politics/issues/taxation-nation/seattle-attempts-to-impose-morality-with-ridiculously-high-taxes-on-sugary-drinks/

    Your sugary drinks at COSTCO just went up 50% if this bill passes…from about $15/case to $22/case…

  133. 133
    Doug says:

    RE: Eastsider @ 131 – Yes, you are correct. In the 6 trading days of 2018 the curve is in fact steeper by 9 bps.

  134. 134

    There was an article yesterday about how the Fed might change its strategy and start allowing more inflation rather than trying to tap it down at 2%. I’d link the article, but I didn’t find it that interesting and didn’t make note of it.

    I do though sort of like the basic idea of them being more flexible on inflation because their efforts to control inflation also restrict economic growth. If they’re wrong about inflation, like they were in the early 70s, they can do damage to the economy. And letting the economy get a bit overheated might actually help with the rather stagnant wage growth (or conversely, their low target for inflation might be part of the cause of stagnant wage growth).

  135. 135
    Doug says:

    RE: softwarengineer @ 132 – I’m a big fan of opt-in taxes so the sugar tax is just beautiful. I hope it isn’t repealed anytime soon.

  136. 136
    Eastsider says:

    RE: Doug @ 135 – High-tech workers drinking lattes, mochas, and Frappuccinos are exempt from the sugar tax. Construction workers drinking gatorades are paying near double for their drink due to the beautiful opt-in sugar tax. SMH.

  137. 137

    By Doug @ 135:

    RE: softwarengineer @ 132 – I’m a big fan of opt-in taxes so the sugar tax is just beautiful. I hope it isn’t repealed anytime soon.

    I would tend to agree, which is why I’ve always hated Tim Eyeman’s car tab fee reductions (they’re opt-in because you can buy a cheaper car less often).

    But this sugar tax just goes to Seattle, so it’s not like it’s replacing some other tax or a tax to provide additional revenue. It’s just an additional tax.

  138. 138
    Erik says:

    RE: Doug @ 135
    These cola drinkers are the ones that are raising health insurance costs. I vote they tax carbohydrates by the gram. People would be a lot leaner and a lot healthier.

  139. 139
    Erik says:

    RE: Eastsider @ 136
    We need to put the screws to the high tech workers. Tax Diet Coke.

  140. 140
    Erik says:

    RE: Kary L. Krismer @ 137
    If the tax doesn’t provide additional revenue, then where is the money going?

  141. 141

    By Erik @ 140:

    RE: Kary L. Krismer @ 137
    If the tax doesn’t provide additional revenue, then where is the money going?

    I should have said additional necessary revenue. Seattle doesn’t need the money. But to answer your question, I think I read about a half million a year of the money is going to go to determine what kind of an effect the tax is having. Of course, they’ll probably ignore that study if they don’t like the results.

  142. 142
    Eastsider says:

    RE: Erik @ 138 – They should tax Seattle residents based on their weight. Time to sign up for weight watchers. LOL.

  143. 143

    By Eastsider @ 142:

    RE: Erik @ 138 – They should tax Seattle residents based on their weight. Time to sign up for weight watchers. LOL.

    Or better yet, force them to exercise!

    http://www.imdb.com/title/tt2089049/

  144. 144
    Ross says:

    By Kary L. Krismer @ 141:

    By Erik @ 140:

    RE: Kary L. Krismer @ 137
    If the tax doesn’t provide additional revenue, then where is the money going?

    […]
    Of course, they’ll probably ignore that study if they don’t like the results.

    Close. The Seattle way is to commission another study if they don’t like the results of the first one (or sometimes even when they do).

  145. 145
    Blurtman says:

    RE: Kary L. Krismer @ 134 – Do you really think assets have been appreciating 2% a year?

  146. 146
    Erik says:

    RE: wreckingbull @ 127
    I’d have to agree with you there, you are a chump.

    Yes, I’m concerned about to large amount of condos coming online when I’m already losing money. I’m going to sell the condo I’m in now in 2019. I should be able to stay afloat until then. When I sell that condo, I should have enough to endure a saturated market.

    We are way under where we should be in terms of condo inventory. I suspect some apartments will turn into condos and increase inventory. I’m holding onto these negative cash flow condos I have for as long as I can. I don’t want to pull any money out of the equity, but if I have to I will.

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