Seattle Bubble

On last Friday’s delistings update post, a reader requested that I provide a view of the data showing cumulative year-long numbers.

So, here it is:

What stands out to me is how relatively stable the number of new listings has been through the past eight years, varying less than 20% from the lowest year (2008) to the highest (2001). Compare this to stale listings, which experienced an increase of 282% from 2005 to 2008.

Here are the total variances for each of the four indicators charted above:

Stale Listings: 281%
New Listings: 19%
Delisted: 183%
Sales: 81%

Note that all we’re doing here is adding up the monthly totals. This means that sales and delistings are only counted once, whereas a home that sits on the market for five months would count as a “stale listing” five times in the yearly total. However, this is not enough to explain away the entire massive variance in stale listings from 2005 to 2008.

In 2005, the largest number of stale listings in any single month was 3,081 in November. In 2008, stale listings peaked at 8,862 in August.

In a way, when we talk about stale listings, we’re really measuring another form of supply and demand. But when it comes to listings, it would appear that stale listings will be a more telling indicator of when the housing market has truly stabilized than the number of sales or delistings.

Yesterday’s conversation in the comments touched a little bit on homes that are being delisted (taken off the market without selling), so now seems like a good time to post another update to the listings and sales breakdown chart. Below is the breakdown of homes on the market and homes that went off the market last month in King County (SFH only).

For a full explanation of this chart, check out the post What happens to listings.

January’s 1,159 delistings came in 16% lower than the same month last year, a reversal of the trend that had seen dramatically increasing delistings throughout much of 2008. Last month even came in below the 2000-2006 average for January delistings, which was 1,767.

Delistings typically drop as we head into the spring, and there is no reason not to think that will happen this year as well. The number of homes being delisted is still exceeding the number of pending sales, which is still an indication of a slow market, but in January the difference between the two was only 12 (compared to an average difference of 746 the previous three months).

Let’s take a look at 2008’s fourth quarter closed sales volume for King County:

That’s a drop of 31% from 2007, and also 31% from the previous quarter. The “usual” drop from Q3 to Q4 is 10-20%. At this point, I really don’t think sales have much further to drop. They’re practically as low as they can go.

I think we’ll start to see sales pick up this year, if we start to see sellers get realistic with their pricing. If not, we’ll probably stay here in the gutter throughout 2009.

Also, here’s an update to the listings / sales breakdown chart for King County SFH. For a full explanation of the data below, refer to this post. Be sure to check out the delisting tag for previous posts on this subject.

The year-to-year change in delistings stayed in the single digits for all of the fourth quarter, signaling that the delisting situation seems to have reached a plateau. Hopefully this is an indication that wishy-washy sellers with unrealistic dream prices are no longer bothering to put their homes on the market.

Here’s the breakdown of homes on the market and homes that went off the market last month in King County (SFH only).

While the number of delistings had been dramatically increasing year-over-year earlier since June last year—even reaching 200% YOY in April—the rapid growth seems to have leveled off, with November’s 1,758 delistings nearly matching the November ‘07 level of 1,767. The 2000-2006 average for November delistings was 1,111.

Inventory has leveled off, delistings have leveled off, while pending and closed sales continue to decline 20-40% YOY. Until we see all of these factors flattening and beginning to turn around, I don’t expect we’ll see a bottom in pricing.

While we wait for November sales statistics from the NWMLS, let’s take a look at a couple more charts of sales from the last few months to round out the big picture of what’s going on with local home sales.

First up, here’s a look at the total closed sales by quarter, for every quarter since 2000:

The third quarter this year looked very much like the first and second quarters, with the volume of closed sales coming in far below every other year on record. With just 4,510 total SFH sales closed in King County, Q3 actually came in lower than even the worst Q4 on record, which was 2007 at 4,524.

Next up, here’s an update to our listing breakdown graph, introduced and explained by Deejayoh in February this year. For historic charts of this data going back to 2001, check the ‘delisting’ tag.

The number of delisted homes (red) in October was somewhat high at 2,087, but not unprecedented for the first full month of fall. 2000-2002 saw similar numbers of delisted homes in October as well. In October last year, as we headed into the slow season, the market had 7,493 “stale” listings. This October there were 8,196 “stale” listings, a 9.4% increase.

Another thing that is somewhat interesting is that the number of homes delisted in October exceeded the number of homes sold by 760. That never happened from January 2003 through September 2007, when monthly sales exceeded delistings by an average of 1,786. Since October last year, delistings and sales have been relatively even.

Those of you that have been following King County inventory may have noticed something a little odd about June’s official end-of-month inventory count from the NWMLS. While the number of listings appearing on local home search sites seemed to indicate that June’s inventory would be a few hundred higher than May, the NWMLS statistics for the month showed a drop of nearly 500.

In order to satisfy my curiosity on this, I went back to the listings chart we have used in a couple previous posts, and there was definitely something unusual about June:

Click to enlarge

The number of new listings (light blue) declined slightly from May to June, just as it did last year. The number of sales (green) increased slightly, which was opposite the move from last year. But the interesting thing is the number of homes that were simply pulled off the market with no sale (red): 2,262 in June vs. 1,459 in May—a 55% increase.

I’m not alleging that this implies any sort of funny business. I just find it interesting that so many people would suddenly give up all at once like that. With 2,262 homes delisted and only 1,965 sales, last month marks the first time on record (back to 2000) that there have been more delistings than sales in a spring or summer month.

Does this signal a shift in the mentality of home sellers in King County? Are the “voluntary sellers” pulling their homes off the market, leaving only those that “must” sell? I think these are interesting questions to consider. We should keep an eye on the inventory and sales statistics in the coming months to shed more light on this matter.