Does Record Inventory == Larger Selection?

I received a question recently from a reader that can basically be boiled down to “does record-high inventory really equate to the ‘larger selection’ that real estate agents have been touting recently?” Here is their reasoning for asking:

Let’s say (just making numbers up here) that during the boom years 10 houses with your parameters come on the market every week and stay there for two weeks before becoming pending sales. On average there are 20 houses available at any given time. Now let’s say during the pop sellers don’t like what they are seeing and decide now isn’t such a great time to upgrade after all. Now, only 5 houses with your parameters are coming on the market every week and they just sit there. Suddenly, the average number on the market sky rockets.

After a month, your 20 house baseline has doubled. But do you really have a better selection? Sure, you will get less competition if you want to make an offer. And, if you fly out to visit and have to buy this weekend, there is more to choose from. But, if you are taking your time and have a span of months over which to shop – fewer houses have come on the market so you actually have a poorer selection.

In order to investigate this, I went back to the inventory analysis methods that Deejayoh pioneered in his February post “What happens to listings?

First, let’s look at the boom years of 2005 and 2006:

King County SFH Monthly Listings Breakdown
Click to enlarge

The dashed lines represent three-month rolling averages. You can see that during 2005 and 2006, the number of new listings averaged between 2,500 and 4,000 per month, while the number of stale listings averaged around 1,500 to 3,500 each month. 2005 had an average of 3,471 new listings a month compared to 2,019 stale. In 2006 the averages were 3,246 new and 3,034 stale.

In other words, in 2005 and 2006 there was generally more new stuff on the market each month than old, which I think most people would equate with having a good selection.

Now let’s look at 2007-Present:

King County SFH Monthly Listings Breakdown
Click to enlarge

During 2007 and 2008 (so far), the number of new listings has averaged between about 2,500 and 4,000 a month, which is pretty similar to 2005-2006. The average for 2007 was 3,416 new listings a month, and the average for 2008 so far has been 3,729.

The big difference between 07-08 and 05-06 is the number of stale listings, which since the second half of 2007 have shot up to between 5,000 and 7,500 a month. 2007 had an average of 5,322 stale listings a month, and January through May of this year, the average has skyrocketed to 6,958, over 3.5 times as many as the same periods in 2005 or 2006.

For those that are interested, I also generated graphs of this data for 2001-2002 and 2003-2004.

So to answer the reader’s question, I would say that while there is technically a larger selection of homes on the market right now, it is also true that the amount of new listings coming on the market each month is essentially unchanged, meaning that those that are taking their time and have already ruled out the existing inventory have no more (or less) selection than they would have in 2005 or 2006.

While I’m not making judgements about the quality of the selection, the bottom line is that during the “boom years” people were buying just about anything, as evidenced by the low number of “stale listings” each month. Now that the easy money has dried up and market psychology is beginning to shift, stuff that would have easily sold in 2005 or 2006 is just sitting. For those that are out there shopping for a home right now, I can see how the ever-increasing number of stale listings does not look much like a “better selection.”

Data Source: NWMLS

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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
    Joel says:

    Heck it’s probably even worse than that because more than in the boom years stale listings are getting pulled and then relisted with a slightly different price. This will get counted as new even though its really stale.

  2. 2
    Tozour says:

    The question also assumed there was some sort of organized management by realtors in the housing market….ahem.

  3. 3
    PB says:

    What is more amazing is the empty, stale listings that need tremendous amounts of work to be similar to comparables. Yet the sellers are unwilling to drop thier price. In a way, I envy thier willingness to pay the mortage on an empty house for 5+ months while it sits on the market. But I am also amazed at thier stupidity at the same time.

  4. 4
    Garth says:

    If you are only monitoring data from the internet, I think it can give you a strange picture of the market based mostly on medians and averages and without an understanding of the complete mechanics of some of the transactions.

    We looked for about 6 months only on the internet, driving by places and going to a couple of open houses before we engaged an agent. After we started actually looking at places based on new MLS items it was like there was a whole different set of listings that sold quickly that never made it to any websites until the listing had sold.

  5. 5
    biliruben says:

    I consider stale listings falling into my price-range with price-drops as new to me!

    Apparently NWMLS is going to be allowing the websites to post the true, cumulative days on the market (CDOM) the the Realtor’s see, though I have yet to see it (Estately has said they will provide it, and I’d be surprised if Redfin doesn’t follow suit). That will improve our data immensely.

  6. 6
    Fred says:

    At the risk of being slammed by many of the posters here, I just closed on a home this Monday, I purchased the home for 14.2% less than it’s prior purchase made last year in May 2007. I felt this depreciation coupled with 6.125% fixed mortgage rate made this a good time to purchase for my family.

    The reason I’m bringing this up now is due to the length of our transaction. We went through a “short sale” and made the final bid the first week of February. It took 4 months for the lender (Countrywide) to accept our amount offered and a couple more weeks to dot the i(s) and cross the t(s). The home stayed on the market all that time and just came off. This “stale” house was on the market 140+ days but only had action on it for the first two to three months while the rest of the time it was sitting around and waiting for CW to make a decision (it was NOT placed in “pending” because the sellers were afraid of us leaving the deal at midpoint). What I’m trying to get at is that there may be a bunch of short sales on the market that take time to complete which are unavailable to purchase because a deal is in the works yet show up on the inventory as active. I don’t know the percentage of “short sales” out there currently but given the financial situation of some home owners which have purchased within the past few years, I imagine this number is significant enough to artificially influence the home inventory levels. Like I mentioned, CW took 4 months to make a decision on an offer during a non-peak period of the market, how long will it take for acceptance on an offer made in May or June? My money is on “more than 5 months.” We waited and stayed with our transaction due to the percentage less we were obtaining the house for.

    Don’t get me wrong, there are a ton of people out there that are clueless which can’t (or won’t) lower their asking price which are also extending the length of stale homes on the inventory as well.

    Fear in the economy, slow lender responses on short sales, tighter credit requirements to purchase, unrealistic home owners overvaluing their homes and interest rates slightly rising makes a recipe of slow home sales and increased inventory in my opinion.

  7. 7
    Ubersalad, Ph.D says:

    The house has already been closed, why bother finding out if you made the right decision or not? Just move on…you won’t like what you hear either way.

  8. 8
    singliac says:


    I don’t think you’ll be slammed too hard. It sounds like it might be a good deal, as long as you can afford the payments and are planning to stay for a long time. You WILL get slammed if you become another Magnolia44 (bashing people hear to justify your purchase). Enjoy your home.

  9. 9
    singliac says:

    here, I mean

  10. 10
    Ubersalad, Ph.D says:

    I can say stuffs like Summer of 2007 is the peak of pricing point, therefore you may NOT have gotten such a good deal after all. But without actual address, none of us can really say whether or not it was worth the price. For all we know the house had the highest price in the neighborhood and the owner overpaid it by 10%.

  11. 11
    Lake Hills Renter says:

    If you bought a house you like at a price you are willing to pay and are willing to weather the possibility that the value may go down for a while, then good for you. I wish I could find such a thing myself. I hope you enjoy it.

  12. 12
    alex says:

    Have you considered marketing your charting strategies and analysis methods to other parts of the nation?,, Or perhaps even selling articles to the NAR? Or to the NWMLS and its counterparts?

  13. 13
    vboring says:

    alex, that is a good point.

    there seems to be a lack of fact-based RE market analysis worldwide. the market should be wide open.

    the only question is who is willing to pay for it and how do you sell to them.

  14. 14
    biliruben says:

    We are fortunate to have reasonable decent and comprehensive data to analyze here in Washington. Portland is a virtual wasteland. The won’t even let you see addresses, and I couldn’t find any historical MLS data.

  15. 15
    The Tim says:

    Yeah, I’ve tried to find MLS data from some other markets in the past for the purpose of comparison. I was quite disappointed to find that pretty much every MLS I looked at was completely closed off with their data.

    As much as I mock their ever-sunny press releases, and despite their heavy-handed member rules, I’m quite grateful for the openness of the NWMLS.

  16. 16


    Just pulled this news off Roubini’s blog web comments page, be thankful you’re in America, at least our stocks settled down a bit today [you folks with Chinese stock lost a bunch today]:


    Shanghai down another 6.5% (equal to 780 Dow points). Shanghai is down about 25% (equal to about 3000 Dow points over the last 3 months) and now well more than 50% from its peak. It is inconceivable that this ongoing meltdown does not reflect an underlying crisis in the Chinese economy, regardless of what statistics show. The market apologists regularly point out that emerging market economies will keep the developed economies out of recession. When these folks realize that the rug has been pulled out from under them it is not going to be a pretty sight.

    Written by Gloomy on 2008-06-19 06:25:37

  17. 17
    Greg Perry says:

    “So to answer the reader’s question, I would say that while there is technically a larger selection of homes on the market right now, it is also true that the amount of new listings coming on the market each month is essentially unchanged, meaning that those that are taking their time and have already ruled out the existing inventory have no more (or less) selection than they would have in 2005 or 2006.”

    Which bears what I’m seeing when I compare monthly AR’s. Inventory growth from a supply/demand point of view has been relatively flat — to slight improvement (in a few areas).

    In Eastside core area medians are flat to -6%, yet sellers original list prices are starting 4-6% above last years original list prices. They’re trying, but not getting an increase. We’re seeing 3-5% price reductions to get in range, then because of market time build, buyers are negotiating another 3%!.

    There is a difference in being “on the market” and being “in the market.”

    Sellers who are preparing their homes AND pricing correctly for market conditions are being successful — especially in price ranges under $800k.

    Inventory is building in the Eastside upper end.

  18. 18
    david losh says:

    The days on the market coupled with price reductions makes for a poor picture of what has value. Many agents have an old idea that new on the market is better inventory. Even in 2005, 2006, 2007 if it was on the market for over two weeks it was old news. Many properties fell through the cracks.
    The same is very true today. Buyers and agents exclude properties as being over priced without making offers. I see $100K price drops with no effect. Once the property is on the market for a month no one is interested. They saw the pictures a couple o weeks ago and assume something is wrong with it.
    If properties are in fact taking $100K price reductions why aren’t more buyers making lower offers? The answer is the very old mind set of there must be something wrong or some one else would have bought it.
    Another fact is that there are fewer buyers in the market. Say at the first of June when a hundred or so new listings came on the market there were only so many buyers for that rush. Many houses that maybe were priced a little too aggressively are now sitting there awaiting the next price reduction.
    What I see is a lot of high quality inventory at ever decreasing prices, or those waiting for, or desperate for, offers who don’t want to appear desperate.

  19. 19
    magnolia44 says:

    So i am a basher because i tout that the 30 – 50% off group is ridiculous? Lol… funny you guys need to grow some skin. I have been touting 12 – 15% decline for a while, i just find the 30 – 50% off crowd to be grasping at nothing but air, at least in the neighborhoods i care about.

    Godd luck with that.

  20. 20
    Matthew says:


    Wait until the FED starts raising rates to combat inflation. 30-50 percent is not ridiculous if the 30yr fixed goes above 10%.

  21. 21
    b says:

    magnolia44 –

    What are rentals in your neighborhood going for on Craigslist? If you are in the magnolia area, such as your name, then your house will very likely fall 50% in value, although non-inflation adjusted it might just drop 10-15% over the next 5 years. I am looking at rentals there right now, buying the same home would cost a minimum of twice as much per month and thats just for a mortgage with 10% down.

  22. 22
    b says:

    magnolia44 –

    here is a good cap rate calculator. plug in your purchase price as the “sell price”, and the amount of rent you can probably get from looking at craigslist. Standard houses around the Mag/QA/Fremont/Ballard area go for $1800-2300 depending on how updated they are, from what I have seen in the last few weeks. Those same houses are around the $500-600k range. They are around double what their rental value suggests they should cost.

  23. 23
    Garth says:


    Considering that a rental to ownership comparison for housing is already an imperfect comparison, comparing a purchase with a 30 year obligation to a quick sample of vague craigslist postings has never seemed valid to me.

  24. 24
    b says:

    Garth –

    I am comparing the price you can expect to get in rent for the same property to ownership. This is the way real RE investors would value a property and provides a better snapshot of the “intrinsic value” of a house compared to bubble prices. An ownership premium of 1-2x additional rent is so far out of whack with norms it provides an easy way to see how overvalues a bubble price is.

  25. 25
    magnolia44 says:

    i give your rental example credit, its very true the rentals are going pretty low. A home just closed on 28th $670k, very next day its renting for $2400. Some people can add a property to their portfolio like that and some cant. I have seen numerous $550 – $600k homes renting for $2100 – $2500. Its pretty close to what my payment is after tax deductions no sleep lost there really.

  26. 26

    […] when I did because even though it’s a “buyer’s market” the search is not any easier. Seattle Bubble has a great post that inspired me to write this one, since I really thought I was the pickiest person on the planet […]

  27. 27
    magnolia44 says:


    How does your theory work if its my “home” not a rental property? The intrinsic value goes up in my book fmore than it can just rent for.

  28. 28
    mikal says:

    Most rentals don’t pencil out for the first couple of years. It isn’t a straight even up investment. After a few years the rents go up while the payment only goes up a little.

  29. 29
    b says:

    mikal –

    Rents would have to double or sometimes triple to even make it even money. There is no way these rentals pencil out for a very long time and by that point you have sunk even more money into upkeep and taxes then you are ever going to make back. You could cash flow a property pretty easily with a standard investment 30% down back in 2002. Today that same house would take more like 60-70% down to even get the mortgage to break even, not including taxes, upkeep, vacancy and any return overall. The rental numbers are much more accurate gauge of real (non-credit bubble) market values and they clearly point that todays prices are incredibly unrealistic still.

    magnolia44 –

    If you think that renting from the bank is worth a 100-200% monthly premium, then today’s prices would be fine. However, history has shown that most people do not place that much of a premium on mortgaging a home over renting it. To each his own I suppose.

  30. 30
    devils cousin says:

    I’m a realtor from Vancouver BC. I guess I’d be like a cousin of the evil realtors you guys all hate. I’ve been checking out your site because a friend of mine working for MS has saved up enough $ to buy now and it’s burning a hole in her pocket. I agree that your current real estate market situation appears to have a lot of downward pressure and momentum and I think it is too early to buy there because the prices probably have a ways to go before the market bottoms out. I have so advised my friend.

    However, I must respectfully disagree with the thrust of this story, Tim. You are making some assumptions about the real estate market that are not correct.

    There is a reason why this type of market (MOS 6+) is called a buyers’ market. Any buyer shopping right now has many properties to choose from. If he chooses to make an offer on a property that appeals to him, chances are he will have little competition from other buyers, and will have all the time in the world to grind and haggle to his heart’s content. If the seller of this property is not willing to give it away, the buyer can move on to any of the many other properties that increasingly desperate sellers are trying to flog.

    In a hot market, however, such as you (and we) experienced for the last several years, the situation is dramatically different.

    When I am shopping on behalf of a buyer in a hot market, if I find 10 possibly suitable properties on MLS, when I call the listing realtors, 8, 9, or even all 10 of these properties will already have accepted offers on them that have not yet removed their “subject-to” clauses or have not yet been processed by the MLS.

    While you are correct that in a hot market many properties pass through the market, it can be almost impossible to actually buy anything worth having because when you find something, someone else has already had their offer accepted or you will find yourself competing with several other buyers, at least one of whom will probably outbid you with some ridiculous price.

    The selection is infinitely better now. (But I am still recommending to my friend that she not buy yet.)

  31. 31
    b says:

    magnolia44 –

    That kind of payment suggests you sunk something like $200k as a down payment on a 3/2 in magnolia. If thats the case then I don’t know what to tell you, obviously you value ownership a whole lot more than most people.

  32. 32
    Garth says:


    I don’t disagree with the metric in general, but don’t think it is valid when you use a small sample of craigslist data that has no historical component for half of the equation.

    Craigslist has one week of active listing information and no transactional or historical data available at all. The research companies that charge for their data at least know what places actually rented for.

  33. 33
    b says:

    Garth –

    Totally valid points. I am not trying to get an precise metric, more of just a general sense if things are close or not. They are so off base right now that the error in such data is minimized by the size of the gap. I would not use it for any kind of precision, but its easy to see there is very likely a pricing problem when $2100/mo rentals have neighbors trying to sell a similar 3/2 house for $600k (zillow is fun for this). Even if you take just the zestimates for a rental and subtract 20% for error, things still are not even close.

  34. 34
    what goes up comes down says:

    Garth, I guess the point is no one is will rent a house in the city for 4k a month you don’t need a whole lot of data to understand that, maybe just a little common sense.

  35. 35
    Jeff says:


    You realize Fred was using his recent personal experience to make a point related to the topic of this post, not looking for affirmation, don’t you?

  36. 36
    what goes up comes down says:

    Jeff and the point was what? Short sales show up after a long time? So that means what? The amount of inventory is not the actual number of houses for sale? Hey we all know there are more houses for sale this summer than in the last couple and we all know how supply and demand works.

    I guess I don’t understand what Fred’s actual point was for posting.

  37. 37
    mikal says:

    His point was that some of those for sale signs already have offers and are waiting for the bank to agree to it. It is a different ball game as some banks have to agree to accept a loss on their loans or the banks are being more careful now with some transactions. I guessing you still won’t understand.

  38. 38
    what goes up comes down says:

    hey Mikal,

    Do you think that is a big number or pretty much in the noise — i.e. a small number.

    I think the bigger point is there are MORE FOR SALE SIGNS.

  39. 39
    deejayoh says:

    Tim –

    Maybe someone has commented on this already – but I would bet you that part of the uptick in “new” listings that we are seeing so far this year is really just “stale” listings being relisted. I have seen plenty of houses disappear and then reappear as new listings.

    So in reality, the picture is probably even more skewed to “Stale” than it appears.

  40. 40
    David McManus says:

    deejayoh is on to something.

    One of the homes I was watching on Redfin transferred to another agent as a short sale and was relisted at 10K over what the last agent had it at. What are these guys thinking? So instead of 369 DOM, it now shows as 4. Hurry and grab it while you still can!!!

  41. 41
    david losh says:

    What I’d like to address is the rental payment to sales price. People are buying and renting dream homes to secure a good price for a home they may want in the next year or two.
    If I had my eye on a house I thought was a good deal and could buy it at a discount I would add it to my inventory of homes to be sold at a later date. It’s all about numbers and risk.
    Let’s say a flipper/ flopper has been working on houses to turn for a profit and has been putting in fifty thousand dollars in improvements. If he can buy a place that is already done for $500K, just for argument, rent it for $1500 while the payment is $4000 they can hold that property for almost two years.
    At the end of two years the flipper/flopper is into that property $560K. Selling costs are 10% which puts the property at $625K. Take a minute to play with the numbers because that’s what investors do. If you take into account a 5% appreciation, your holding costs are a wash.
    Your premise here is that people paid too much for properties, which is true. Investors don’t pay much for properties. It’s all numbers.

  42. 42
    Garth says:


    Have you had any involvement with rental properties?

    The 1:1 comparison that is always made on the tubes does not really match what I have seen. If you have one house and rent it out and try and make it pencil on the day you buy it will never work, nor should it. Run the numbers for 5 an 10 years out and the picture can change a little, but with one property it still not going to come out with a huge profit in a calculator.

    I think these tv shows have jaded people into believing that owning 1-3 properties using short term loans and constantly flipping one of them is the way to be a successful real estate investor. That method is risky and generates a lot of transactional and tax costs. In the real cases I have seen success in real estate comes from it being a long term investment that is part of a greater portfolio. The example that magnolia44 gave of a $670,000 house selling and then renting for $2400 makes no sense if it is the only rental you own. However if you have a larger portfolio of properties purchased over time with cash flow to deploy and profits to reduce it might make sense.

  43. 43
    Garth says:

    to deejayoh’s point, I have definitely noticed a couple of houses along my commute (710-705) mostly on large lots near where townhouses have been developed that have gone through a very long listed with an agent > listed with signs from fred meyer > listed on a redfin / fsbo type site > listed with signs from fred meyer > listed with an agent again type cycle that probably creates 2 or 3 “new listings” over the course of a year.

    These tend to be lots where I think the owners might not totally understand the value of development potential / land plunges much faster than housing in general.

  44. 44
    deejayoh says:

    These tend to be lots where I think the owners might not totally understand the value of development potential / land plunges much faster than housing in general.

    Unless they bought at the peak with plans to develop, and are now looking to unload. In that case, they are probably becoming educated very quickly!

    I highlighted seven Seattle properties in the forums less that 2 months ago. Only one listing has disappeared (sold?) and the other six are all showing significant price drops. Most are underwater vs. their purchase price.

    It’s worth clicking through and checking out. I am too busy to deal with all the links here.

  45. 45
    los says:

    In the month and a half we’ve been tracking the market, I’ve marked 49 properties as “of interest”. In that time, exactly *one* of them has sold. We’ve seen a number of these properties on open house tours, and the ones we’ve seen weren’t duds. In fact, several of them would never have been marked had we not seen the inside.

    So there’s all this “stale” inventory, much of which looks very attractive to me (once prices finish correcting). I’m just not seeing why it should be discounted as the rejects.

  46. 46
    Ouch says:

    My only comment to deejayoh’s forum spreadsheet is that when sales costs are considered (and they must be), only one of those sales would result in any profit (assuming a 6% commission and sales tax). The simple math doesn’t show the extent of the owners’ potential losses.

  47. 47
    deejayoh says:

    Ouch –
    I totally agree. add another 7.8% to the cost on the sales price. But since they’re not selling at current asking, I guess we have to wait to find that out!

  48. 48

    […] 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 […]

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