Looking back to look forward: Snohomish Co.

I want to talk about Snohomish Co., not that there’s anything wrong with King Co. (hey, I grew up on 23rd and Prospect on Capitol Hill, so I know the area). Not everyone in Snohomish Co. drives Ford trucks, has big hair/mullet and listens to Cinderella or Quiet Riot. Yeah, cheap shot. Moving on…

The question most interesting to me is that of “who understood the path we were on during the last three years or so and who did not? And, why? What shaped their perceptions?” I’m an amateur enthusiast of the markets with a small wrinkle, so you can take what I discuss with a grain of salt if you wish. The wrinkle is that I have no credentials whatsoever other than being on the front lines, per se. I have no interest in a slowing market, as it translates into lower revenue, but I do have in interest in assisting readers in garnering sensible market knowledge. And I’m very keen on strategies to keep money in consumers pockets, but that is for another day and another blog.

In escrow you see what the majority of those outside can’t and to a scale (conservatively) of roughly 50:1— meaning that your average allied real estate professional is closing one transaction for every 50+ in a busy escrow office. It is an interesting perch to be on, looking at the frenzy below like an Eagle in wait. The simple graph below show steady price increases in Snohomish Co. in 2006 up from 2004 and 2005 levels. During 2007 you can see that the market bounced around and was “trying to find its legs.”

In late 2006, something very interesting occurred. Agents started to see very small downward pricing adjustments appear in the NWMLS. Why did it catch my interest? Because downward price adjustments were virtually non-existent during all of 2005 and much of 2006. As we moved along into the 4th quarter of 2006 and beyond, the downward price adjustments for listed property picked up a steam and continued in earnest throughout 2007. As inventory began to increase, houses taking longer to sell, other characteristics started to come into play as well. Sales incentives started showing up— in commissions paid to agents and in other forms such as cars, trips or upgrades in new construction. These distinctive signs were the beginning of the “winds of change.”

Today, the one common denominator everyone can agree on is that the market has changed. One of the changes I’ve noticed is the pool of entrants into the market are meaningfully healthier, at least in closings our office has performed. For example, the credit worthiness and down payments of recent clients are of higher caliber. Also, casual interactions (with people who don’t know I’m in the business) over the past month or so lead me to believe that housing is really on the forefront of minds, perhaps superseding that of our election year festivities. There are not many places you can frequent without somebody discussing housing. Much of this is attributed to news and the mortgage and credit market dysfunction that came to a head in August, just a few months ago.

I thought I would tap a few of my resources to find out how 2007 ended the year compared to the market of 2006 in Snohomish County. My interest is in single family home data, so the simple chart below exclude condominiums. The focus on single family homes really is two-fold in my mind. First, the majority of housing inventory is single family homes, both resale and new construction. Second, I am of the belief that the inventory of resale homes is a bellwether for the general sales activity of the market and is most easily understood as it impacts and triggers sales activity of other segments of the market.

As 2007 came to a close and I had some time to look through files and reflect over the differences of 2006 and 2007 transactions, I came away with a few things:

  • the transactions our company closed in the 2nd half of 2007 involved more price negotiations
  • there were more inspection related work orders (just about non-existent in 2005-06.)
  • more commission credit being allocated to a buyer or seller from agents
  • started to see more repeat clients in the refinance arena
  • started seeing distress sales and distress refinance transactions (must refi or must sell)
  • anecdotal pricing confusion was evident as the market tried to get it “legs” back. Seller confusion about the direction of the market started to become noticeable in wide pricing swings.
  • some sellers today are probably still unrealistic about what the market will bear in today’s credit environment and are not necessarily prepared for expectations of buyers who believe they are now in the drivers seat.

In Snohomish County, we have gone from a median single family home (SFH) price of about $382,500 in March of 2007 to close out the year at $358,000, a meaningful adjustment. Sales of SFH’s finished the year in December 2007 at 570 units sold vs. 950 in December of 2006 (excluding the for sale by owner market). To give you a scale of price increase the county experienced since Jan of 2004 to the median price peak in 2007: the median price in January 2004 was $232,433 and at the peak in March of 2007 it reached $382,500.

Looking back, there is absolutely no question in my mind that one of the largest triggers of the price increases was due to the type of financing available: 100% loans with sellers increasing prices over and above the list price to offset buyer closing costs paid by the seller to fulfill that type of loan program. It was artificial appreciation at its core, not based upon traditional fundamentals. And that is the biggest story nobody covers. Today, the removal of many of these products (or heavily pared down with many strings attached such as low LTV, large down payment, can afford the loan and 700+ FICO scores), has led to the opposite market movement.

Snohomish SFH Prices
Click to enlarge

My best assessment of the market moving forward is that we will see sustained inventory, probably increasing, (after one week of 2008, we are already off to a swift start) which will lead to further price pressure even in the realm of what I would consider exceptionally good interest rates on mortgages. As of today, a few resources have indicated that 30 yr fixed rates have been as low as 5.375 paying 1/8th of a point to 5.5 at par. For those that have decided that buying is right for them, it is hard to argue against locking in 30 yr rates at these levels. Just a few weeks ago they were over 6%. In light of the recent drop in 30 yr fixed rates, I expect to see a tick up in mortgage refinance activity and perhaps some sales as well. Overall, I’m bearish on the market in aggregate. I hope I’m mistaken.

Once again, thanks for those that have supported our small business during 2007 and have corresponded with me during the last couple years or so.


“Debt is real, equity is a matter of opinion.”

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About S-Crow

"S-Crow" (Tim Kane) is co-owner (with spouse Lynlee, LPO-Designated escrow Officer) of Legacy Escrow Service, Inc., an authentic independent escrow firm closing residential purchase/sale and refinance transactions.


  1. 1
    TJ_98370 says:

    Hey, what’s wrong with having a monster truck / mullet and listening to Quiet Riot (actually Twisted Sister is better).

    Great post S-Crow. I, for one, appreciate your insightful perspectives. You’ve provided support for my belief that many home buyers do not care what the purchase price is, just so long as they can make the monthly payment. Creative financing generated unrealistic / unsustainable expectations.

  2. 2
    disbelief says:

    That’s quite an increase from 04 to 07! S-Crow, I’m curious to know what your gut feeling is about the percentage of buyers who, during this time, were able to purchase homes which would previously (before easy financing) have been outside of their means?
    Also, I’m wondering if, and what kind of a % increase in business, your company may have experienced during this time, as compared to the previous three or four year period, for example – to me, this could be revealing as to the degree this area is effected by the sub-prime crisis, and/or easy lending in general.

  3. 3
    Angie says:

    As of today, a few resources have indicated that 30 yr fixed rates have been as low as 5.375 paying 1/8th of a point to 5.5 at par.

    Holy moly!

  4. 4
    S-Crow says:

    Angie- pretty amazing rates, huh. 5.5% 30 yr fixed–not too shabby.


    With the number of resets approaching for a lot of people in ARM’s this year (purchasers or refinance folks in 2005-06 with two year or three year recast dates approaching) are going to find it tough to re-qualify. Some will probably have to sell. Many people would not qualify under today’s lender tightening.

    As far as our work: the extremes are obvious when you have bouts of working until 2am in the morning during 2004, 2005 and parts of 2006. Today, our family can actually have dinner with everyone present.

  5. 5
    Denny Retrograde says:

    A great post as always. Your “23rd & Prospect” disclosure lit up a light bulb. I remember your family’s alley carport had the coolest cars I’d ever seen, an original Land Cruiser and a Rover sedan. Glad to see you became a gentleman of high character, as your posts and comments here show clearly. A lot of us from the neighborhood were quite rascally.

  6. 6
    Alan says:

    At 5.5%, I could buy a $170k condo at 20% down with the rent I am paying right now (assuming $250/month HOA dues). Does anyone know of any 2/2 condos with approximately 1200 square feet that cost close to $170k?

  7. 7
    Buceri says:

    Yeap; interest rates have come down a lot in the 30yr term; but with new qualification requirements it won’t make much of a difference.

  8. 8
    MrRational says:


    Thanks for the wonderful article! What are your thoughts about new construction these days? Still seeing significant discounts off list prices?

  9. 9
    S-Crow says:


    Carport: 1967 British Rover TC2000, dark forest green,yes. Sweetest car I ever saw as a kid, but I didn’t know much at the time. The leather in that car was unreal. Helped my dad change the oil, remember starting the car and revving it up. My dad took that brand new car with the salesman through Interlaken Blvd from Stevens School to Seattle Prep in no time. Told me he gave the salesman white knuckles.

    Land Cruiser? Folks never owned one.

  10. 10
    S-Crow says:

    Mr Rational-

    Yes, there are price reductions going on. I was just thumbing through a recent Real Estate Book Guide last night and one builder was advertising something like $125,000 off original list price (up in Mill Creek area I think) of a near million dollar ask price.

  11. 11
    Buceri says:

    Alan – wait at least another year and that condo will be $150K; in that year you’ll save enough for 30% down, and you can go for 15yr term regardless of the interest rate.

  12. 12
    Bits_of_Real_Panther says:

    MLS# 27188813 is close, 3/2 for $180k in Everett

    There are a bunch that fit that description in the Tacoma area

  13. 13
    michael says:

    Burn Baby Burn!!!

    We had a discussion a few weeks ago about some short sells on Real Estate and we talked about SRS (Ultrashort Real Estate) and SKF (Ultrashort Financials). Check out the prices on the ultra short ETFs. These are not perfect investment vehicles but they do diversity the risk of one or two real estate of financial companies booming.

    If anyone has a legit way to sell short residential real estate I would love to know about it! Especially something that diversities risk a little better than just shorting individual companies.s

    P.S. Please don’t write about pumping or trashing stocks on boards. Those are not penny stocks but exchange traded funds that short entire indexes

  14. 14
    Erik says:

    5.5% is quite low. Got to be enticing for buyers in it for the long haul. The thing I don’t like about the idea of buying at 5.5%? There’s pretty much only one way for rates to go – up (pushing demand down). Better be damn sure you won’t want/have to move.

  15. 15
    NolaGuy says:

    That 5.5% rate is for conforming loans, right?

    What’s the rate for jumbo? I think it’s much higher, like 6.5% for amounts greater than $415k (and requires 20% down)

    Refi is going to hurt some folks…

  16. 16
    laxtosnoco says:

    Thanks for the update S-crow. As a proud Sno-Co resident I will blast some AC/DC in your honor on the way home.

    I was intrigued by your reference to the agent rebates as well. That’s a key sign that agents are starting to feel some pain.

  17. 17
    mike mcconnachie says:

    S-Crow, good article. A market adjusting is a market with plenty of opportunity. All good.

  18. 18

    I suppose that owning a “For Those About to Rock We Salute You” concert t-shirt outs me as a snoco resident. At least my 14 year old thinks it’s cool.

  19. 19
    S-Crow says:


    I believe you are right. Patience pays. And patience with cash could be lucrative.


  20. 20
    The Bruce says:

    Dumped my ’04 Tahoe LT for a ’97 Land Cruiser and have never been happier with a car or truck. Built to last forever. WIsh I had the cojones to buy one of the older LCs, but they aren’t quite as practical for long trips.

  21. 21

    […] and public relations, and one of the tools I use is seattlebubble.com.  “The Tim” (and contributors) writes from the heart, sometimes from the fist, but he also writes from a perspective of […]

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