Sales Plummeting, Inventory Skyrocketing… Prices Crashing?

September market statistics from the NWMLS are here.

As usual, when a public link to the usual monthly press release with links to the recap pdfs becomes available, I’ll post it here. For now, here is a link to the data on the NWMLS Marketing page

Here’s your King County SFH summary:

September 2007
Active Listings: up 40.21% YOY
Pending Sales: down 32.14% YOY
Median Closed Price*: $450,000 – up 5.88% YOY

Pop quiz: What happens to home sales in an inflated housing market like Seattle when you cut the legs out from under the jumbo loan market? Apparently, you get plummeting sales and wild swings in the median. The 32.14% drop in pending SFH sales was the largest year-on-year dip on record, while the 26.4% drop month-to-month, was the third-largest. Only four months on record (which goes back to 2000) had fewer pending sales than last month, and every one of those was in the dead of winter (Jan-00, Dec-00, Dec-01, Dec-02).

Inventory continued the now-normal rate of a 40%+ YOY climb, putting the total number of houses on the market at nearly double what it was two years ago.

The big story this month (aside from the wild swing in the median) is Months of Supply, which reached a new record high of 7.21. That’s the first time the number has been above six since some time in the early ’90s, and quite possibly the first time ever over seven. Even I was surprised to see it jump so high so fast. Wow.

While the median price dropped nearly $30,000 (6%) from August, giving up almost all of this year’s gains, I think this is largely due to the jumbo loan tightening. Keep the previously-discussed shortcomings in mind when looking at the median. Of course, it seems likely that the media will latch on to the median and headline their stories with it.

Here’s an added bonus. The Seattle Bubble Spreadsheet is now in Excel 2007 format, with new pretty colors on many of the graphs, and additional customization options. Those of you with older versions of Excel should still be able to open it using the free converter provided by Microsoft. However, if you still want the old 2003 format, shoot me an email.

Here’s the supply/demand YOY graph:

King County Supply vs Demand % Change YOY
Click to enlarge

Wow, that’s a steep drop at the end of the red line…

Here’s the chart of supply and demand raw numbers (note that I had to adjust the right-side vertical axis for the record-high MOS):

King County Supply vs Demand
Click to enlarge

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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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.


  1. 1
    magnolia44 says:

    Its finally starting to come around. I am enjoying watching some of these over priced homes in Magnolia sitting around…some @ 100 days + with minimal reductions. Some people…..

  2. 2
    rentfornow says:

    But real estate never goes down.

  3. 3
    mike2 says:

    It’s times like these that I really miss the shugster.

    Who would have guessed he’d stop posting when the market hit a wall?

  4. 4
    britebuy says:

    good houses at good school district won’t drop. Period!

  5. 5
    Jason says:

    That eliminates Seattle then doesn’t it?

  6. 6
    James says:

    We broke right through the magic threashold of 6 mos of supply and we still have 3 mos ’til January. I’d say the game is on. Either way it goes, I think the spring will be more than interesting. If the trend continues and we don’t see prices drop (as in case-shiller), then I’ll be checking craigslist for my very own pink pony.

  7. 7
    rose-colored-coolaid says:

    I’m as much a bear as anyone, but I would caution a little speculation with the median. Tim mentioned this, but I’ll elaborate a little bit.

    Speculation on this site was growing for months that some portion of median growth came from a lower number of low end purchases with constant activity at the high end. August was when the JUMBO loans suddenly became unobtanium. Since then we’ve seen median decreases MOM. It’s possible that the opposite effect (low end purchases are possible and those above $500k are slowing) is driving the median down and not an actual decline in price per sq ft.

    With that out of the way, cheers. Seattle is becoming less special every month.

  8. 8
    laxtosnoco says:

    Rose colored makes a good point. You can’t pick and choose whether or not median price is useful because it is trending in the direction that you want. Leave the selective use of data to the professionals…I mean to the realtors.

  9. 9
    CKT says:

    My guess is they “forgot” to update the recaps. I doubt we’ll see them until Monday. Bet there is some ugliness to behold in there. According to the Tacoma News Tribune, Pierce Co SFH + condos declined -2.4% in Sept YOY. Yet the NWMLS press release says SFH declined only -1% YOY. How much you wanna bet that Pierce Co condos are some kind of ugly, especially since condos make up a much smaller part of the market?

  10. 10
    The Tim says:

    How much you wanna bet that Pierce Co condos are some kind of ugly…

    Pierce County condos: 2006 2007 YOY
    Active Listings 480 994 +107%
    Pending Sales 116 93 -20%
    Closed Sales 85 96 +13%
    Median Price (closed) $225,000 $215,000 -4.4%

    I’m not at liberty to disclose where I obtained this information.

    Addendum: Oh yeah, for reference, there were 818 total Res+Condo closed sales in Pierce Co. last month, so condos sales made up ~12% of the market.

  11. 11
    AndyMiami says:

    Good morning..Seattle PI headline “Seattle home price slips from last year”…Aubrey Cohen does his best to paint a calm picture, but fails miserably…this is the start of a long and painful decline in Seattle prices. The pending sales stats are very revealing..the holidays should be quite joy-less, and job-less for real estate professionals.

  12. 12
    AnonAgain says:

    How/where can i get this good date for Seattle condos only; the Excel sheet only has price info on condos, not the really important # listings, etc

  13. 13
    TheMightyQuinn says:

    it looks like your dog or cat peed on the lower right hand corner of your charts. Is that an excel 2007 feature?

  14. 14
    deejayoh says:

    Hey Tim,
    I notice that – at least for KingCo – the 3rd source you have for inventory (furthest right) seems to track the NWMLS numbers the best out of the three. It was within a few units for both Condo and SFH after the early morning 10/1 reset. What site is that from?

  15. 15
    rose-colored-coolaid says:

    Addendum to my previous post:

    I still prefer to see falling median if only because it will help create a more realistic market psychology than the previous “Seattle is special” song and dance. But let’s just wait 6-9 months to see what’s really happening.

    This is how I’ll know we are truly in a collapsing market. When the Seattle radio FCOC (foreclosure commercial to other commercial) score moves from 0 to 0.25. In other words, when you can turn on the radio and 1 out of every 4 commercials regard help with foreclosures.

  16. 16
    The Tim says:

    Column 1: Winderemere
    Column 2: John L. Scott
    Column 3: TheMLSOnline.com

    Good observation. TheMLSOnline figures seem to be closer to the official NWMLS stats each of the last three months, varying by 32 (this month) at the most. Perhaps I’ll change the displayed number to be from them instead of from Windermere.

  17. 17
    CKT says:

    The Tim, thanks for the Pierce County condo numbers. I knew there would be bad news in that dept.

    I think the big story is that King Co SFH months of supply is now in what might be record territory. Perhaps the biggger story, though, is that this important fact is not being mentioned by any media outfit anywhere.

    Another really interesting fact with all of this that NWMLS has failed to release the recaps for Sept. I guess I’m not too surprised; after all, the only people that care about these data are the real estate professionals, their enablers in the media, and us. And the first two groups already get insider access to those numbers. They can spew the positive message and squelch the negative one by not releasing the numbers.

    I hope they just “forgot” to release the recaps on Friday, and that the situation will be fixed Monday morning. But if we don’t see the recaps posted by, let’s say by the middle of the week, I think only word will come to mind: shame….

  18. 18
    deejayoh says:

    In case you missed it, HBB is all about us this morning. Happy reading


  19. 19
    James says:

    What if, even in this market, a buyer (as in potentially me) puts down 50% down on a 800k property with a 30 yr fixed? Is it risky even if I plan to stay 10+ years? In my analysis, I assumed only an inflation rate of appreciation over the term of the loan and came out looking okay – Is this a bad assumption?

    My frame of mind: a home is not an investment, but a place to live and raise children. But I don’t want to get hurt financially either.

  20. 20
    topdog says:

    “TheMLSOnline figures seem to be closer to the official NWMLS stats each of the last three months, varying by 32 (this month) at the most. Perhaps I’ll change the displayed number to be from them instead of from Windermere.”

    I think this would be a great idea. Maybe you could also put the month over month change next to it? (i.e. current inventory minus last month’s inventory for the same day/time – don’t know how hard it would be…)

  21. 21
    SLTO says:


    If you have that much cash, you have 2 options…

    look for a home that is lising for about a million and bring it down to 800K

    or get that 800K home for 650…

    it may take a while but once the psychology breaks and the must sell sellers face up to reality prices will drop… it’s happening already in some areas… just a matter of time before it hits your zip code…

    100K haircuts are already happening on high end homes, only time will show where it ends…

  22. 22
    jon says:

    The seller who you want to buy from will probably become a buyer as soon as they sell. They don’t want to buy into a falling market either. The only difference is they don’t have to worry about a lease expiring or rent going up. That means you are limited to looking for distressed sellers, which there aren’t that many of in this area yet.

  23. 23
    Alan says:

    Hey! If I use the data in the third column then my prediction of 11600 for September’s peak turns into an underestimate. The third data set peaks out at 11790 for September!

    I win! Yea!

  24. 24
    James says:

    My thoughts exactly. One of the largest I’ve seen so far is an 800k that is now 650k.
    Thanks for the input.

  25. 25
    WestSideBilly says:

    James, from a financial standpoint, your $400k down/$400k loan is pretty risk heavy. In a bad (but plausible) scenario*, your home could end up worth less than $800k (in 2007 dollars) in 10 years, and be worth 20-40% less in real dollars. In a really bad scenario** which some here might say is more likely, you could end up losing half or more of your investment – the house ends up valued at $500-550k, which is $375-$425k in real dollars. 10 years of inflationary gains, from this point forward, seems to be an optimistic best-case scenario.

    You could mitigate the damage by putting $200k down on a $600k property, and invest the rest in something that might actually beat inflation over that time frame. Or you could ignore the finances of it and buy the property you want to spend the next 10 years in, realizing it’s not a good investment anyways, and hope nothing happens where you need to sell short of your 10+ year window. Ultimately, you should probably spend some time with Excel (or a financial adviser if you prefer) and look at how much you’re will to lose to buy a property.

    * 10% declines in 2008 and 2009, followed by sub-inflationary raises in the 2-3% range until sale.
    ** 10-15% declines through 2010, followed by stagnation or sub inflationary raises until prices revert to historical means.

  26. 26
    Jackson Wallace says:

    KIRO says median price up this afternoon and then the Seattle Times says median down. Looks like breaking point to me. Of course, I could tell it was brewing when I looked at Windermere’s website and saw all the homes for sale, albeit at jacked up prices. Looks like boomers are aware of their retirement. Funny thing is that someone thinking they’re first turns out they’re in a herd. HAHAHAHAHA. Screw all you cocktail party real estate analysts. Gonna need a new topic, now. Good thing there’s an election coming.
    Look at the weather in this dumpy spongetown the last six months. Maybe we’ll get good flooding in wondrous Snohomish and Skagit counties. So hilarious. Enjoy poverty in the rain, go move to Spanaway boomers. You can afford it down there in a mossy shack. People think Seattle was gold. Instead, all they got was a hunk of pumice. EAT IT.

  27. 27
    Dave says:

    Jackson Walace, dude, you need to chill out. It’s unhealthy.
    Really – look at the research. Years off your life.

  28. 28
    Jackson Wallace says:

    Umm, I’m just really good at sounding worked-up in media. It has more effect. I live a pretty relaxed life actually.
    However, I do really enjoy laughing in smug yuppie wannabe elitists faces. It is a lot of fun. Besides, from an investment standpoint, its always good to follow your instincts and tell the herd to shove it up its collective arse.

  29. 29
    TheDexter says:

    As my cat shared with me this morning about a so-called Seattle market crash…..mew mew mew.

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