February Neighborhood Inventory Update

Here’s an update to the King County single-family neighborhood inventory growth charts I first posted last month.

The data that makes up these charts is publicly available from the NWMLS, and can be found in the NWMLS King County Breakout pdfs. Keep in mind that what’s being plotted here is total percent growth since January 2007. If it would be more helpful to present the data in a different way, I’m open to suggestions. Each graph still has the same scale on the vertical axis, for easy comparison. The King County aggregate figure is plotted in red with circles marking the data points.

For a description of which neighborhoods each area encompasses, as well as a map of the areas and a link to the source data, visit this page.

KC SFH Inventory Growth: SW King
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KC SFH Inventory Growth: SE King
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Note: Area 701 (Downtown Seattle) started the year with zero listings, then went up to 1 in June and 2 in January ’08, which would techincally have been an infinite percentage increase. On this chart it is displayed as a flat line.

KC SFH Inventory Growth: Seattle
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KC SFH Inventory Growth: N King
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KC SFH Inventory Growth: Eastside
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The most extreme action last month seemed to be over on the Eastside, where the inventory in areas 510, 520, and 530 (Mercer Island, Bellevue, and Redmond) is just exploding. Area 520 (West Bellevue) earned the distinction of having already exceeded 2007’s peak inventory as of February. Over in Seattle, area 390 (Capitol Hill) almost joined that club as well, exactly matching last year’s October peak inventory of 305.

The areas with the least inventory growth between January and February were areas 300 (Enumclaw), 360 (Skyway), and 385 (Beacon Hill), which all actually had between 1% and 4% less inventory at the end of February than a month prior.

The areas with the most inventory growth last month were areas 600 (Juanita / Woodinville / Duvall – +16.4% MOM), 700 (Queen Anne / Magnolia – +16.7% MOM), and 510 (Mercer Island) with an incredible 22% spike in inventory in just one month.

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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.

70 comments:

  1. 1

    Although it’s a rule violation, too many agents put their listings in areas they are not in, or put them in more than one area, to make them appear more attractive or to get more attention.
    Also, while are 390 includes Capitol Hill, it’s much broader than that: roughly I-5 to Lake Washington, between I-90 and 520, so it includes the Central District, Montlake, Madrona, Madison Park, and other areas that don’t necessarily behave like Capitol Hill.

  2. 2
    deejayoh says:

    Just guessing here – but I’m betting that the higher the median priced areas have inventory growing faster than the lower priced areas. The glut seems to be at the top.

    Ardell showed a breakdown by price that seemed to support this as well.

    2+ years of &gt $1mm priced home inventory, last time I checked.

  3. 3
    jon says:

    Looking at percentages in terms of the fraction of all houses that are on the market might be more interesting. The east side may have simply been a tighter market a year ago, so the percentages look higher now.

    I’ve been watching http://www.housingtracker.net/, which lists the market median for 55 markets nationwide. This past week, 20 of the markets increased in asking price. That number has been trending upwards gradually. A lot of markets seem to be doing well now. Dallas for example, although listed as negative this week, is positive overall. I think there are a lot of problems with the data on that website, but the trend has been one of recovery.

  4. 4

    THE SUNNY WARMER WEATHER’S BACK AND SALES INVENTORY IS BACK ON THE RISE AGAIN

    Just like Tim predicted.

  5. 5
    EconE says:

    Tim…Why don’t you just use condos for 701?

    You could still put a disclaimer at the bottom.

  6. 6
    Moe Ronn - Realitor® says:

    With rising inventory and lower sales numbers, I wonder if people really understand what’s going on. The percentage rise in inventory is easy enough to digest, but I don’t think people REALLY understand the lower sales percentages. That number is based on the previous inventory numbers, not the current numbers. So, with inventory nearly double and sales down by nearly half, that means there are almost 4 times as many properties from which to choose now than before. As an example; instead of 1,000 houses on the market, there’s almost 2,000. And, instead of almost 1,000 houses selling, only about 600 are selling. So, there’s a glut of about 1,400 houses still on the market.

  7. 7
    Ubersalad says:

    There is a common thought that Spring will sell homes…regardless of current situation.

  8. 8
    AMS says:

    It’s quite common to use January 2007 = 100 rather than zero. I was originally trying to figure out what the 20% was a percent of, but its 20% more than January 2007, so it should be 120%, or just 120.

  9. 9
    AMS says:

    “There is a common thought that Spring will sell homes…regardless of current situation.”

    Sales have not stopped.

  10. 10
    AndySeattle says:

    “There is a common thought that Spring will sell homes…regardless of current situation.”

    That’s on account of the Pink Ponies and the direct ratio of Friskiness to Realtor blind optimism.

  11. 11
    Buceri says:

    Correct Andy; oil hit $108, the Fed tosses another $200billion into the banking system, and so on.

    No doubt; the pink ponies factor has to be at full swing!

  12. 12
    Olaf says:

    Okay, Bubbleheads… today I backed out of a deal to buy our dreamhouse because other buyers were going to start a bidding war. (Starting price $580 K, on a 2010 sq footer in Wedgewood.) I have now promised my wife we’ll stop house-hunting for another six months or so… to give this Seattle market a chance to deflate.

    So it better deflate. If it doesn’t, we’ll have to start a new thread about how to find a good divorce lawyer.

    Which is another way of saying, YOU GUYS BETTER BE RIGHT ABOUT ALL THIS!!!!!

  13. 13
    EconE says:

    Why do I doubt these tales of “bidding wars”?

    I don’t see any house in Wedgewood currently for sale that matches the description in Olafs post.

    Funny how nobody ever posts MLS numbers of these houses for reference.

  14. 14
    blueskitten says:

    Maybe it’s because they don’t want the internet universe to have the address of their future home. As one who falls into that category, I’m just sayin’…

  15. 15
    Olaf says:

    Why would I make this up? I have no interest in this Bubble — I WANT it to pop. But facts are facts. We were going to offer them their asking price, and they said, “Don’t bother — we have three people making offers with escalators — and pre-inspecting, too.” I wish it weren’t true, because I really don’t think this house is worth this much, but there are still plenty of people in Seattle who think it is.

    Here’s the house:

    http://tiny.cc/M4C7I

    or MLS # 28040289

    Maybe this is just pent-up demand for moderately-priced houses (or what SEEMS to be moderately priced, in the Seattle context). Once those people have found their houses, things might deflate here in the in-city. But they haven’t, yet — not for nicer houses priced below $600 K.

  16. 16
    olaf says:

    Oops. Sorry, that tinyurl is wrong. This is the link to the house: http://redfin.com/stingray/do/printable-listing?listing-id=1539289

  17. 17
    b says:

    Olaf –

    Waiting 6 months isn’t going to help you that much, that will probably be right around the point when people just begin to lower their prices after not selling all summer long. Wait a year or two, the bubble is going to take a LONG time to deflate.

    And on a second note, if you wife is going to divorce you for not buying a house now-now-now when everything is blinking a big red “FINANCIAL SUICIDE”, then you are probably better off! Money troubles cause the majority of divorces, so I’d hate to see what happens if you run into difficulties any time down the road.

  18. 18

    Things have deflated in certain parts of the city…parts of the Central Area, parts of west Seattle, Rainier Beach, Lake City, parts of Beacon Hill.
    You done good, Olaf. Don’t get into a bidding war. I looked up that house on the MLS and it looks nice and all, and in a nice area, but just the last couple of weeks I’ve been seeing a lot of new listings, and there will be many more to come. Good things come to those who wait. Click your heels three times and say to yourself ” I will not get into a bidding war.”

  19. 19
    olaf says:

    b —

    She’s not. I exaggerate for comic effect. She’s actually been very patient, considering the fact that for the past three years, I’ve been saying, sit tight, let’s wait for the big collapse… it’s any day now… I think I see prices coming down… just wait a leeetle bit longer….

    Hell, there are days I wish I could divorce MYSELF. :)

  20. 20
    John says:

    Olaf, look at those pictures, professional lighting and staging. Maybe it is better to go for the listings that aren’t well done. That’s what I do on ebay to find bargains.

  21. 21
    b says:

    olaf –

    You are not alone. The housing bubble pretty much screwed over everyone except for flippers and boomers cashing out. either you got in and bought too high and will be underwater, or you couldn’t/didn’t want to get in. The worst part is that now we will all have to pay for it a second time in bailouts and recession. Not much you can do about it except curse wanting to own a home during the wrong five year timeframe.

  22. 22
    EconE says:

    Thanks for the link Olaf….I searched Wedgewood and not Bryant on Redfin.

    Blueskitten…I can completely understand someone not wanting to post a listing regarding a house that they may potentially buy…however… if they have already backed out and are not going to purchase the home, it would be interesting to see what homes are getting the “bidding wars”.

  23. 23

    I’m thinking we’ll see some price drops within a few months, rather than a few years…We may not see prices pick up again for a few years, but I think this spring is gonna be the big squeeze.

  24. 24
    AMS says:

    Olaf-

    You already know that the market is going down…

    But a good list of divorce attorneys is a good idea–for those who buy today.

  25. 25
    Moe Ronn - Realitor® says:

    “I wish it weren’t true, because I really don’t think this house is worth this much, but there are still plenty of people in Seattle who think it is.”

    And you can find references to quite a few people in past listings on this blog that denied we’d see even the slightest problem with pricing and inventory going forward. Maybe you never heard of Meshguy…

    Point is, just becasue someone else is willing to pay that much doesn’t really mean it’s WORTH that much. Our financtial institutions are nearly insolvent and they’re being held together by hundreds of billions in foreign capital. Most of it is probably in the hopes of stabilizing our economy so they don’t lose their entire asses in the MBS markets. Forclosures are up everywhere, and it’s starting here, too. Hold out and rent for now and save the balance for your down.

  26. 26
    Jess says:

    Wow, Olaf, I saw that house yesterday, it’s a cutie with every inch of its potential footage finished and maxed out (it was originally a small 2/1 house a block from Assumption). I thought they did a nice job with the kitchen. I’m sorry to hear about your luck now!

    I was out looking at open houses yesterday to do some backwards view comparing with the house we just got (finally!). I didn’t see anything that was a better deal than what we got (Olaf’s house maybe came close, but it felt too small and the yard is mini). What I learned yesterday is that all the new inventory that came on in the last week is crap — tiny, dirty, beat up, and requiring lots and lots and lots of sweat equity and cash to fix. And the kicker? Every open I sent to was crawling with people– people with their agents, not looky-loos. I only went around NE Seattle.

    Olaf’s house is the LAST open house I will go to for hopefully many many years (knocking on wood that our current deal doesn’t fall through).

    EconE- here’s the house I fell in love with but lost in a bidding war — they had FIVE offers to choose from, and as I understand it, the winners waived financing and inspection contingencies: http://www.zillow.com/HomeDetails.htm?zprop=48990030

    Here is the Magnolia house that we were in the process of writing an offer on when they called to say they received other offers already. I wasn’t too crazy about it, but it would have worked in a pinch at the price we were going to offer. This one had been on the market a while and they finally lowered the price enough to get bites (it got our attention): http://www.zillow.com/HomeDetails.htm?zprop=48824613

  27. 27
    Moe Ronn - Realitor® says:

    And let’s not forget that the FED’s Benny Boy has recenlty suggested that banks forgive some principle on the mortgages they hold so that the “buyers” can get some equity, aka, “skin in the game”. So, how often in your life have you seen a bank give away money because it’s in their best interests? I’m just sayin, the future doesn’t look that bright to me for our economy. The guy I’m listening to is Peter Schiff. Hell, even Warren Buffet has sold off his US real estate holdings.

    http://www.europac.net

  28. 28
    dizzy says:

    Man,

    How can people afford home prices like that..

    We have a two state jobs. Are you getting a fixed 30 year loans on this?

    Wow….

  29. 29
    Greg Perry says:

    The Tim in your post you say, “The most extreme action last month seemed to be over on the Eastside, where the inventory in areas 510, 520, and 530 (Mercer Island, Bellevue, and Redmond) is just exploding. ”

    But is it?

    What if Redmond (and others are absorbing?)

    You’ll find the balance of my thoughts over on SREP blog
    http://blog.seattlepi.nwsource.com/realestate/archives/133957.asp#comments

  30. 30
    magnolia44 says:

    nothing to see here move along..lol

    No but seriously homes are selling here, and i posted in another thread nothing has yet to stop the 600k + townhomes that people buy over here in magnolia, its a joke but they are moving along.

    New roof installed… check
    Gas Line installation…check (in process it may take 3-4 months)
    Tree removal and landscape fixing ..check guy coming wed.
    Pressure washing…. check

    Come join the fun guys, you wont regret it. BTW who says 500k+ fixer uppers cant be fun. Until next time

  31. 31
    magnolia44 says:

    Jess,

    If you are looking in Magnolia i suggest coming from 28th and up. The homes on the east slope just dont have the same feel as the ones on this end. Lots of stuff going on on those streets…

  32. 32
    Jess says:

    Thanks, Magnolia44 – our offer/counter/counter-counter was finally signed off yesterday for a N. Seattle house we love. We used to live in Magnolia 12 years ago, right behind Albertsons (all of the windows in the back of the house looked on to the store’s back brick wall), and 15 years ago (wonderful house that overlooked the terminal and train yard – loved that location!). I do need to stop reading SB now before I go mad. Maybe my checking in will decrease with time… ;-)

  33. 33
    magnolia44 says:

    Grats on the new purchase i didnt read the post all the way. Welcome to the club…its not bad over here as long as you bought smart.

    You will still come by these sites like you did when house hunting, not as much though.

  34. 34
    Scotsman says:

    I’m sorry, but anyone who would pay $600k for a tiny old House like that is nuts. Just saying, IMO…. I don’t care how fresh the paint is.

    Prices will fall faster than expected, because the real issue is not so much the recent run up in housing, but the underlying rot in the world economies. We are all living in an economic house of cards, where everyone pretends all is well while knowing in their hearts that disaster looms. But no one wants to be the first to run for the exit and start the stampede. I’ve never seen such a total disconnect between underlying fundamentals and market action. The dollar’s falling like a rock, oil at $107, commodity prices doubling, Ford, GM, Citibank, etc. on the edge of bankrupcy, and that’s just a beginning. The Pink Ponies are indeed out in full force.

    The collapse will come sooner, and be more complete than most can imagine.

  35. 35
    Tony S says:

    “We are all living in an economic house of cards, where everyone pretends all is well while knowing in their hearts that disaster looms. But no one wants to be the first to run for the exit and start the stampede. I’ve never seen such a total disconnect between underlying fundamentals and market action.”

    I think your post sums the current economic situation perfectly Scotsman. It amazes me just how many nieve people there are among us. People actually believe this economy is bullet proof or something.

  36. 36
    John says:

    Scotsman, some people just can’t wait to lose money. They are like those who bought WaMu at $30. Who cares if my home loses 30% of its value as long as I can tell Uncle Bob I am a proud homeowner?

  37. 37
    olaf says:

    Jess —

    Let me get this straight: you’ve finally bought a house, and you’re still going to open houses on Sunday afternoons? I think you need some kind of twelve-step program! ;)

    (Then again, I may find the habit hard to break, too, if and when we finally find ours.)

    Every now and then, I get the urge to declare a moratorium on real estate conversations. For one week, nobody is allowed to talk about housing, especially at parties. (And here I am, posting to a comment to a real estate blog. Maybe we all need some help….)

  38. 38
    magnolia44 says:

    Scotsman,

    Good luck on the doomsday prophecy. Areas in demand are in demand, and carry a premium for a reason. Let me know when you find that beautiful home in Magnolia, Queen Anne or Greenlake for the $350 – $400k when everything collapses. Bottom line is there will be a floor in those areas, and with some of the properties i see that have gone recently the floor is pretty high. If you are telling me that it will take another 2 years good luck and hope you are right.

  39. 39
    jess says:

    Yeah, I’ve got a problem, Olaf. Actually I was going through some doubts this weekend as we waited for them to either sign or dare to give us yet another counter-offer — and mainly my doubts were along the lines of “but what if an even better deal has come on the market in the last 6 days while we screwed around with these people.” So I did what every good addict does and I fed the monkey on my back. Last time, I swear. This coming weekend I plan to go bike riding with the kid and hit the executive course at Jackson (I think I’ll need to warm up and get back in the game again with the short course — spent too many weekends looking at houses for, gee, how long?). Good luck, Olaf!

  40. 40
    b says:

    magnolia44,

    The floor for housing is approximately what people with cash will pay out of pocket for the home. If you are expecting people to pay $400k in cash for a shitbox in those areas, good luck with that. The credit markets have stalled and are currently spiraling downwards to the ground. This problem is far greater than overpriced condos in Bellevue.

  41. 41
    AndyMiami says:

    WAMU dropped to $10 and Citibank went to under $20. Fannie Mae and company are insolvent…capital is flowing our of this country…our currency is collapsing and oil is at 108…that’s right 108….I know Seattle is a bit slow to recognize the BIG PICTURE, but no one should make any leveraged financial purchases…next will be commodities falling including oil in a deflationary and healthy correction of all asset classes…led by housing…which started two years ago in the first bubble cities. I still do not understand why Seattle folks believe that we are insulated…really just do not understand PLEASE TELL ME WHY

  42. 42
    The Tim says:

    Congratulations, Jess. I hope you enjoy your house, and we don’t see you around here anymore.

    I mean that in a totally non-combative, friendly way :^)

  43. 43
    olaf says:

    Best of luck, Jess! I hope that house feels homey right away. And don’t forget your Bubbley friends!

  44. 44
    b says:

    Andy –

    Its because most people believe this is a housing problem that is part of a normal real estate cycle and therefore prices will drop 10% for a couple years and we will be back to flipping granite in no time. If they took the time to read financial media daily, instead of KIRO nightly news, more people would grasp the dire credit market situation that is currently unfolding. Hedge funds are just beginning (like last week) to get margin calls forcing them to unload their paper and go bankrupt. This event is hugely significant and shows that things can get out of hand very quickly. 0% fed funds rate is not going to help, Bernanke just had to expand the TAF to keep some of the big banks from going insolvent. I give WM until the end of the year before being force-consolidated or just going bankrupt outright.

  45. 45
    matthew says:

    AndyMiami,

    Because most people are idiots and care more about Britney Spears checking in and out of rehab than they care about the credit crisis.

    People in Seattle won’t pay attention until the unraveling is in the middle innings, and we just aren’t there yet… But we will be.

  46. 46
    AndyMiami says:

    Tim,

    As far as the inventory numbers, I live on Mercer Island and I have seen lots of new listings just driving around..however, the new listings are coming at very high per sq ft prices..like $450 for a renovated rambler…I think the “educated” elite have come to the realization that the game is over and are selling at least one year to late…this is exactly what I experienced in Miami Beach in 2006…suddenly everyone, from the Flippers/investors, to the retired engineers, panicked and put their homes on the market at what their neighbor, friends, fellow flippers got last year..this is when inventory balloons with very high asking prices…it will take over a year for significant declines as demand has dropped and will drop further for lots of reasons..no more easy financing to and out right deep national recession…in two years that steroid rambler will go for less then $300/sq ft..back to normal historical price to rent ratios..Unlike the stock market, were WAMU has dropped by 60%, it will take a few years for this market to do the WAMU thing..yes WAMU is over exposed to the California and Florida markets, and their bankruptcy will come what all the Seattle/WA ARMS reset this year and into 2010…it’s going to be really bad. We will be telling our grandchildren how we were able to survive and I do hope I am so wrong…really do…

  47. 47
    matthew says:

    magnolia,

    Read the national headlines lately? The doomsday prophecy is rapidly coming true. Bank insolvency, mortgage rates moving the opposite direction of the FFT, GDP at nearly 0, oil at 108/barrel, negative jobs added, manufacturing down, Feds investigating CFC, Fannie May on the cover of Barons as possibly going under, massive nation wide foreclosures, consumer sentiment at all time lows, food prices at all time highs, household savings is negative, credit markets frozen, stock market rapidly falling off a cliff, baby boomers retiring putting a massive strain on government programs, no end in sight in Iraq costing us hundreds of billions (if not trillions)…..

    Tell me how this is not apocalyptic?

  48. 48
    Ray Pepper says:

    Matthew think of the good things:

    New 500 Realty office opening in Seattle.
    New 500 Realty shirts set to debut.
    New interactive lady to appear on our website to assist us in educating the masses. (wait till you see her)
    Hot Dogs for the Grand Opening(the good ones not the cheap turkey dogs!- we at 500 Realty splurge

    But, best of all …..Brace yourself…..**The 500 Realty Poker game!! ** Limited to 50 entries. 20.00 a head. 500 Realty collects the entree free. The winner gets a Free 500.00 Listing! Imagine that……

    Were just giving it all away in 2008!

    You see Matthew some of the best things in life are free or close to it. Enjoy them!

    http://www.500Realty.net

  49. 49
    magnolia44 says:

    matthew,

    i wake up to cnbc every morning, and Erin Burnett is not the only reason. Yes i know whats going on and yet people are still buying (August credti crisis blow up is several months behind us). Like i have said I still see $600k townhomes selling, int he last month or so there were plenty of sales in my neighborhood. It was like suddenly buyers came back out and were ready to nibble. Will prices decline, yes… i predict 15 % next 2 years but so far i have been wrong and if it stays that way i am happy. I am starting to think the high demand areas will be fine because people want to live here. Besides from the fact i plan on being in this house a very long time, there is a reason i picked out 6,000sf lot just 5 minutes outside of downtown… its becasue i know the demand for these areas will be the last place to decline, and will have somwhat of a floor.

    If you are right and prices decline 30% so be it, I will be making my same exact house payment (25% of income), enjoying my same house. I wont keel over and panic because the equity went down in my home that i have no intention of selling.

  50. 50
    AndyMiami says:

    Matthew,

    if you are paying 25% of you income to a mortgage, then you are right on. Prices will drop but they will recover and housing will come back to normal increases which for the last 100 years follow inflation rates. There is a chance that we may see high inflation for two years. I am in the deflationary camp…and I have lost five figures taking positions on oil in the last month (betting on decreases as demand for oil decreases as we enter recession. This happened in the early 80’s and 90’s with oil..so far I am wrong). It does pose the question that the US is creating hyperinflation to save housing asset values since so much of our net worth is in housing…anyway, you may be in a very good position in a hyper inflation economy as my short oil decreases my net worth…it’s really a zero sum game after all..got to love capitalism…or NOT

  51. 51
    John says:

    Citigroup is down 65%
    WaMu is down 78%
    AIG is down 43%
    B of A is down 33%

    Hundreds of billions have been lost in the market in the last few months. Add that to the real estate losses. Things are getting worse. I don’t see what’s the hurry in jumping into the market at the moment. It is like paying full price at the store when the big sale is right around the corner. But if it makes you happy, I guess that’s what counts.

  52. 52
    b says:

    magnolia44,

    getting your financial news from cnbc is like getting your political news from sean hannity. they are about as mindlessly bullish as you can get. I recommend reading some better journalism in the variety of on-line newspapers to get a better picture of what is actually going on. cnbc is good for day trading rumors to make some cash off a quick pop, but thats about it.

  53. 53
    bitterowner says:

    “Prices will drop but they will recover and housing will come back to normal increases which for the last 100 years follow inflation rates.”

    It sounds as if you are saying that house values will follow the historic pattern of tracking inflation. In the past several years however, they have deviated dramatically from this course. Why would they not fall way back to historic, inflation-based values before resuming their gradual upward course? Not sure how much prices would have to drop to get back to that mark, but I bet 50% isn’t too far off the mark (these graphs exist, for those less lazy than I who want to look it up). I guess I’m saying that I don’t think you can have it both ways – does the market return to historic levels or does it remain grossly hyper-inflated based on historic norms?

    As far as the current “hot” market – you guys are good for a laugh. As I’ve said previously, I could start a bidding war even in the worst market. It’s easy – just undercut everything else on the market and those (increasingly few) who are desperate enough to buy now will fight for your property because it is “priced right” (ie less than it would’ve been priced at last year and much more than it would have to be priced at a few years from now). Meanwhile record inventories sit untouched. Without bidding wars. Or offers. Open house traffic indeed. I’ll make sure to let my friends who haven’t sold their house in QA for a year know what a hot market they are missing out on.

    I especially like the “floor” theory. Magnolia is special – but only 28th and up (which would include Jess’ former house with view of Albertson’s).

  54. 54
    Scotsman says:

    Meanwhile, take a look at Tim’s graphs. The first two months of ’08 sure are headed up at a steeper rate than the same months in ’07. That’s supply, folks, coming on line at an ever increasing rate. What I’ve seen suggests sales aren’t exactly following the same path. It’s gonna be a banner year for something, but I don’t think rising median prices will be in the subject line much longer.

    The long term analysis I’ve done suggests prices need to drop back to 1997-1998 levels, adjusted for inflation, to be back on the long term trend line. They will, however, go lower than that because employment levels and average wages will begin deteriorating significantly by the end of this year. No customers, a lack of affordability, mixed with rising inventory always equals lower prices. If the government messes with it you can ad increased personal taxes– income and property, to insure the golden goose is dead.

    Momma told me not to buy…….
    It;s all just pie in the sky,,,,,
    Early morning check shows the dollar heading down again for Tuesday….Yee Haa!!
    Those crazy Asians- don’t they know about our Pink Ponies? Next best thing to a personal super-hero!

  55. 55
    aldreth says:

    Scotsman’s assessment is near identical to mine.

  56. 56
    Nolaguy says:

    ” Yes i know whats going on and yet people are still buying (August credti crisis blow up is several months behind us)”

    The credit crisis is alive and well, and I would argue, much bigger than you think.

    Example – Fed to Lend $200 Billion:

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a6LLuTru5Sio&refer=home

    Example2 – Fitch Cuts WAMU Rating:

    http://www.reuters.com/article/companyNews/idUSN0736629620080307

    Example 3 – Job Declines Biggest in 5 Years:

    http://www.nytimes.com/2008/03/09/business/09data.html?ref=business

  57. 57
    magnolia44 says:

    lol bitterowner

    The 28th on was my opinion, houses sell for $1 million+ even on the other side.

    The fact is put prices aside, come over here on a nice spring day..people out with their families, runners and bikers traveling around the bluff…people enjoying discovery park…. yeah it is pretty special in my opinion beautiful place.

  58. 58
    Nolaguy says:

    Magnolia44,

    Magnolia is certainly a nice place to live. I owned a house on 44th for many years and really enjoyed it.

    If you found a home you enjoy, and can and afford, and will live in for a long time – congratulations. You might be ok in the long term.

    But ultimately, Magnolia is not imune from fundamentals.

  59. 59
    Buceri says:

    AndyMiami –

    An oil correction has to come soon (oil hit $109 this morning). But be careful betting against oil. We indeed should see a consumption decrease in the US; but this morning I heard 1000 new cars hit the roads in Beijing EVERY DAY (and my guess is that most Indian cities are not far behind).

    We tune our local ABC news affiliate at lunchtime in my office; in general, a trailer catches fire (daily event here in Tampa), shooting (same), and “guess who joins dancing with the stars”, more gossip, more gossip, a kid left home alone, more gossip. The economy??? Noooo, too boring. Healthcare??? Oh, pleeeeease….Just tell me what britney is wearing!!!

    Completely oblivious…obvious signs the recession has not hit the masses.

  60. 60
    Greg Perry says:

    Scottsman, “Meanwhile, take a look at Tim’s graphs. The first two months of ‘08 sure are headed up at a steeper rate than the same months in ‘07. That’s supply, folks, coming on line at an ever increasing rate. What I’ve seen suggests sales aren’t exactly following the same path. It’s gonna be a banner year for something, but I don’t think rising median prices will be in the subject line much longer.”

    Perhaps becuase you’re only looking at the supply side?

    What about the demand side?

    http://blog.seattlepi.nwsource.com/realestate/archives/133957.asp#comments

  61. 61
    NotaBull says:

    “WAMU dropped to $10 and Citibank went to under $20. Fannie Mae and company are insolvent…capital is flowing our of this country…our currency is collapsing and oil is at 108…that’s right 108….I know Seattle is a bit slow to recognize the BIG PICTURE, but no one should make any leveraged financial purchases…next will be commodities falling including oil in a deflationary and healthy correction of all asset classes…led by housing…which started two years ago in the first bubble cities. I still do not understand why Seattle folks believe that we are insulated…really just do not understand PLEASE TELL ME WHY”

    Yay, deflation! If the recession turns out to be pretty deflationary (they usually are!) then it seems to me that this will allow the fed to lower rates even more, which helps everyone’s HELOCs that they took out and are only paying interest on. And if inflation goes away, then this will lower the yields on the longer term fixed mortgages, which will increase affordability (decrease unaffordability!) too. It’s not going to fix housing, but it may cushion the fall somewhat.

    The dollar is indeed pretty screwed. Sucks for imports but it’s great for exports which is growing by a large amount right now. Check our Calculated Risk’s latest update on this:

    http://calculatedrisk.blogspot.com/2008/03/january-trade-deficit.html

    Essentially, the ex-petroleum deficit is falling rapidly due to the weakness of the dollar. Even with oil included, we’re about even. If (when!) oil prices go back down due to recessionary demand and the speculation component of the price is also removed, our trade deficit overall will plunge as exports will still be strong due to the weak dollar.

    Also consider that WA is the state with the highest percentage of exports as part of the gross state product. See: http://www.usatoday.com/money/economy/2008-03-04-local-differences_N.htm

    18% of gross state product is exports. This includes software, planes, etc. Unfortunately, we can’t export lakes. If we could, there would definitely be no recession in WA. ;)

    Draw your own conclusions from the data. My conclusion is that things will not be as bad as the worst prediction, and never as good as the best. Kinda like predicting that the sun will rise in the east, I suppose…

  62. 62
    Michal says:

    How hard would it be to do a months of inventory chart by MLS area? I think that would be a lot more meaningful than raw inventory level comparison, because Jan 2007 can be a rather arbitrary point that in some areas may have been lower than in others. I remember that Jan/Feb 2007 had pretty much no inventory on Mercer Island that would be worth looking at, so one would naturally expect a much higher level just to reach a “healthy” market.

  63. 63
    Buceri says:

    MSN money – Jim Jubak:

    “The federal funds futures market is now pricing in a big interest-rate cut when the Federal Reserve’s Open Market Committee meets March 18. How big? Here’s how the odds broke down after the disappointing jobs data came out March 7: a 50% chance of a 0.5-percentage-point cut, a 10% chance of a 0.75-point cut and a 30% chance of a 1-point cut.

    According to the futures market, there’s almost no chance the Fed will cut rates by just a quarter-point or leave rates at 3%. The futures market is also anticipating a further 0.5-point cut at the Fed’s April 30 meeting. Longer term, the futures market is pricing in a drop in the short-term rate to 1.75% by July. Interest rates would begin to climb again in the first quarter of 2009.”

  64. 64
    The Tim says:

    Michal said,

    How hard would it be to do a months of inventory chart by MLS area?

    Not hard at all. I did it last month, and will be posting the updated charts for this month soon.

  65. 65
    bitterowner says:

    Re: Magnolia44,
    “The fact is put prices aside, come over here on a nice spring day..people out with their families, runners and bikers traveling around the bluff…people enjoying discovery park…. yeah it is pretty special in my opinion beautiful place.”

    Maggie –
    Thanks for the visual but I see the real thing every day – I live there. But guess what? Magnolia had all that stuff 10 yrs ago when I bought my house at one-third of what it presumably would sell for today (okay, maybe last year). So I ask you, what has happened in the past 10 yrs to triple the value of a house in this same idyllic and pictoresque scene that you describe , other than easy lending, which has now disappeared, and the much smaller effect of inflation? Increased wages? Nope. Enormous population growth? Don’t think so. Not making any more land? ahhh…..

  66. 66
  67. 67
    what goes up comes down says:

    Okay so here is the deal,

    Jess bought and now guess what:

    ” was out looking at open houses yesterday to do some backwards view comparing with the house we just got (finally!). I didn’t see anything that was a better deal than what we got (Olaf’s house maybe came close, but it felt too small and the yard is mini). What I learned yesterday is that all the new inventory that came on in the last week is crap — tiny, dirty, beat up, and requiring lots and lots and lots of sweat equity and cash to fix. And the kicker? Every open I sent to was crawling with people– people with their agents, not looky-loos. I only went around NE Seattle.”

    Everything on the market now will be crap and the market will only go up. Hey Jess — GIVE ME A BREAK. Wait a year and then go out looking I am wondering how that Buyers Remorse will feel.

  68. 68
    Ed says:

    Based on these graphs, the unsold inventory for the Redmond/Bellevue area is very high, but rentals are almost non-existent. What do all of you think will be the short-term result on the rental market from all of this.

    We are currently renting from a flipper who has informed us that his ARMs on two homes are resetting at the end of this month – and that he is in trouble!

    Does this mean I need to make up a Landlord Qualifications Application to pass out when I’m looking for a place? “Excuse me, but before I agree to rent your house, I need you to fill out this application and credit-check approval form for me. We can’t be too careful these days can we?”

    Do you guys think the slow burn rate on homes for sale will turn into more rentals or only higher rents?

  69. 69
    Marc says:

    Ed,

    No comment on the eastside rentl market since I live in Magnolia, but I would suggest you double check that the landlord pur your rent deposit in a separate trust account as required by Washington law. Hate to see him squander that money paying the mortgage (or worse).

  70. 70
    rob says:

    really guys,it’s pretty obvious–moved from seattle 6 months ago (loved it lived there ten years want to come back etc etc etc)and sold a house just in time (nice 4 br in ballard with all the goodies) HUSTLED it on to the market last summer. no question it would sell for at least 10% less now and that’s generous. It would also take several months to sell it now if we were lucky. Drive around look at the signs—find out how many homes have just been delisted for the winter, You want inventory, just wait ’til this summer. Eastside appreciated more than seattle these past 3-4 years, but it’s still a suburb, it’s gonna get nailed(if it hasn’t already-i don’t follow that part of town) cause the prices are even more per sq ft than seattle. It’ll actually fall harder, it’s a car culture just like CA. It’s a bid/ask issue, the sellers have not realized it yet. Anybody who crows about RE coming back this year (even in previously immune seattle) is just fooling themselves. I’ve already seen craftsman homes in my old neighboorhood that would have gone for 100k more just a year or 2 ago. Inventory right now means nothing. Sellers are hunkered down and it’s just like the stock market, except more inefficient because it’s more emotional for the seller to take a haircut.
    Hey–it doubled in 5 or six years-whatta ya want? Nothing grows to the sky. it probably ain’t goin’ below mid nineties levels- sorry–but i think you can surely wait and get 20% at least off the peak prices. see ya at crystal mountain.

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