Anemic Second Quarter Home Sales

A reader suggested that a good way to visualize the current state of the local housing market would be to look at quarterly home sales. Here’s a chart of the total closed SFH sales in King County for every quarter we have data for from the NWMLS, back through 2000:

King Co. SFH Sales per Quarter
Click to enlarge

Note that the second quarter of 2008 was the fourth-lowest quarter on record, beaten only by 2000:Q1, 2007:Q4, and 2008:Q1. It is by far the worst of the spring and summer quarters, coming in over 25% lower than the previous slowest spring or summer quarter, 2000:Q2.

Also worth noting is the fact that the Q1 to Q2 increase in sales in 2008 was the smallest on record. Q1 to Q2 increases in 2000-2007 ranged from 28% to 51%, and averaged 37%. The increase in 2008 was 26.8%.

Was the first quarter of 2008 the bottom of the local housing downturn? Doesn’t look like it. Will the second quarter be the bottom? I doubt it, but time will tell.

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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.

76 comments:

  1. 1
    victorchai says:

    We sure missed the last “quarter bottom”,…..but…..the next is coming,buyers ready?….go….

  2. 2

    Here’s some evidence that Seattle (or at least the eastside, 98033, south Kirkland) is quite far from the bottom. My wife and I just moved from Concord, the far east bay in the San Francisco area. Our 1300sf 3br home there topped out at $600K in bubble money in early 2006. We listed it for $479K in early March, the house across the street went on the market four days later (as a short sale) for $449K, we dropped our price to $439K the next day, we got an offer for $425K two days later, we accepted it, and we closed four weeks after that. So we dropped our price by $54K in six days in order to sell.

    And we are GLAD WE DID. This image compares the Zillow price history for the area we left (94518) and the area we’re now renting in (98033). Pardon the gnarly URL, this comments system doesn’t seem to allow any HTML:

    http://i48.photobucket.com/albums/f207/RepoManQt3/94518_vs_98033.png?t=1216747808

    Looking at this, it’s amazing how similar the curves are, except as we all know the 98033 curve is about 12 to 15 months behind the 94518 curve. Especially remarkable is that the 98033 price inflation was even steeper than the 94518 price inflation — 98033 prices were around $400K in early 2005, spiking to $600K in mid-2007, a 50% jump in two and a half years! Whereas 94518 took over three years to go from $400K to $600K. Now 94518 is almost back down to $400K and still dropping fast — that’s why we’re glad we got out now even though we lost so much bubble money.

    If you believe — as most of us do — that the same macroeconomic forces are at work in WA as in CA, and that there’s no fundamental reason other than the bubble for prices to have jumped so much here in only two and a half years, then it’s likely that prices in 98033 will drop back to 2005 levels or below over the next year or two. That will be about a 30% drop from current prices — $600K back down to $400K. Get ready for a rocky ride.

  3. 3
    Bits_of_Real_Panther says:

    If prices in that neighborhood drop to $400k the last thing you will be worried about is whether or not to buy a house, IMO

  4. 4
    JP says:

    While I always love a good “the curves look the same” argument, is Concord, CA really that similar to Kirkland? I don’t know anything about the Bay Area, but looking at a map Concord seems to bit a more out of the way than Kirkland.

  5. 5
    deejayoh says:

    ooh cool. I like the flyout graphics

    Seattle boomed with California back in the early 90’s, but never busted – mostly because we had huge income growth while they were basically in a recession. I mean – 8-12% a year income growth – much of it driven by Microsoft stock ownership.. I don’t think we will be so fortunate this time. Vista is not Windows 95

  6. 6
    b says:

    Bits –
    Was that neighborhood completely different in 2005 or something? I don’t understand why $400k houses in neighborhoods which sold for $400k in 2005 is any huge deal personally.

  7. 7
    deejayoh says:

    JP –
    If you don’t like Concord, try Walnut Creek. The town next door, but more wealthy. I lived down there for a few years. I would say it is not so dissimilar. No lakeside real estate, but that’s about it. Wealthy, white, suburban commuter town. Very little employment base to speak of. Both are on the BART line, so they are not so remote as they might appear on a map. 30 or 40 mins to SF on the train

    http://www.zillow.com/real-estate/CA-Walnut-Creek-affordability

    Not a perfect comparison but it is interesting.

  8. 8
    Bits_of_Real_Panther says:

    I believe it was great value then, slightly over-priced now. It’s a pretty nice area, if real estate tanks there it will be because we’re in a serious recession and real estate will be tanking everywhere in the PNW. If you’re sitting on a pile of cash maybe that’s not such a bad thing but for the rest of us it will be

  9. 9
    JP says:

    DJO –
    Thanks for the info. Being on a train line would presumably make a big difference. 40 minutes on a train is a pretty reasonable commute by many people’s standards. I imagine it takes at least that long to drive from Kirkland to Seattle…

  10. 10
    biliruben says:

    Kirkland is in for a very, very large drop. A 3rd-tier suburb of a 2nd tier city cannot sustain million dollar valuations.

  11. 11
    Bits_of_Real_Panther says:

    “Kirkland is in for a very, very large drop”

    Good luck with that

  12. 12
    biliruben says:

    Hey. No skin off my back. I wouldn’t live in that backwater if you paid me.

  13. 13
    LeftOverpricedSeattle says:

    I grew up in 98033. It’s not worth the money people were putting into it during the bubble or even before.

    But MOST of 98033 is crappy 60’s and 70’s Split Levels and really bad Tudor Revivals from the 70’s, or zero lot line new homes on lots where a single story post war home once stood.

    Many Seattle area homeowners are going to wish they never saw that For Sale sign before all of this shakes out.

  14. 14
    Scotsman says:

    Two more listings pulled on my street without selling. One new listing, priced pretty aggressively, must have been the final straw. You can’t sell them if they aren’t listed though, so I doubt we’ll being seeing an increase in sales anytime soon.

    Anyone for a Thanksgiving Desperation Bounce?

  15. 15

    NOW’S THE TIME TO BUY?

    They say sellers are coming down in price to unload homes, yet Tim’s charts indicate sales rates trending downward anyway. Perhaps sellers need to step up to the plate and lower their prices more in Seattle to get higher sales rates?

    I’m no fan of statistics, especially if its the RE wolf guarding the chicken house, so many questions come to mind reading Tim’s RE charts that Seattle Bubble has brought to light in the past:

    How many of the alleged sales were subsequently canceled by the bank because the buyer didn’t qualify [like new homes have a history of doing per Dr. Roubini]?

    Hence, how many sales were “re-sales” after a qualification anomaly cancellation?

    Is the answer, “Lord only knows?”

  16. 16
    victorchai says:

    LeftOverpricedSeattle // Jul 23, 2008 at 2:03 pm

    I grew up in 98033. It’s not worth the money people were putting into it during the bubble or even before.

    But MOST of 98033 is crappy 60’s and 70’s Split Levels and really bad Tudor Revivals from the 70’s, or zero lot line new homes on lots where a single story post war home once stood.

    Many Seattle area homeowners are going to wish they never saw that For Sale sign before all of this shakes out.
    ————————————————
    Not in Seattle , so they say…we are different….
    Thanks for the insider info

  17. 17
    biliruben says:

    Just did a quick check on how the market’s holding up over in the Land ‘o Cap’n Kirk.

    Dropped the redfin map on it, and I see 300+ houses for sale, less than 60 being sold in the last 3 months of prime selling season.

    Looking at 1m+, even more dire: 90+ for sale, only 10 sold in the last 3 months. That anemic level of sales is just not going to sustain prices.

    I did that same thing with the map over Laurelhurst – 16 for sale, 19 sold over the last 3 months.

    Itsa gonna be a bloodbath. “I’m a Realtor not a magician, Jim! Beam me outta here and into someplace someone wants to buy!”

  18. 18
  19. 19
    victorchai says:

    Just wanna let u guys know, the house just passed the Bill ,and Bush is signing it…
    looks like this might be the bottom after all…

  20. 20
    biliruben says:

    Thanks, Johny. I was struggling to calculate how many months of inventory that was for Kirkland, but you beat me too it!

  21. 21
    david losh says:

    Every morning I run a Hot Sheet for the Seattle area from down town to 145th. It shows New Listings, Pendings, Solds, and Expireds.
    I’ve come to the opinion that Pending and Sold listings are fifty per cent over valued, inflated pricing. There again, as in any market, there are between ten to twenty per cent that I think are fair prices for the times.
    I do think people are sold properties by technique rather than value. Some agents are sales people, not all, but some. Some sales people have no soul or morals and they, like in any profession, have a tendency to do well.
    I think it would be unrealistic to expect every one to stop buying Real Estate today. It took several years to run up the prices so it will take some time for buyers and sellers to come to grips with today’s reality that Real Estate prices were manipulated out of control to generate bogus paper profits.
    As Bush said today “Wall Street was drunk and now they have a hang over.”
    As another side of the issue there were many agents who were stunned by the run up in pricing and did caution thier clients. People don’t really want to hear the truth as this blog points out all the time. Most of the best Real Estate professionals do have multiple sources of income, whether rental property or not. I know many agents lost business when they didn’t agree to list for way too much money or sell an over priced piece of poop.
    The only point I’d like to make is that yes pricing is clearly headed to much more realistic territory, but not every Real Estate agent was involved in the price gouging. There have always been ten to twenty percent of the market place that in my opinion played fair for both buyers and sellers.

  22. 22
    Bits_of_Real_Panther says:

    “I wouldn’t live in that backwater if you paid me”

    I can’t stand that place either – I like the city and the country, everything in between could disappear tomorrow and I wouldn’t care – but objectively thinking it should hold up comparitively well IMO, the same people who have flocked there over the last three years will still want to live there. If you wanted to buy a place there but decided to wait until 2005 prices you will wait forever unless the recession is a big one, and if it is a big one unless you’ve got a pile of cash to take advantage of the situation it won’t matter

  23. 23
    patient says:

    I run through Kirkland almost daily covering most areas. The number of “sold by” signs I’ve seen this year can be counted on one hand. Many signs have however been taken down without a “sold by” sign ever coming up. No wonder since the price they list for is redicolous, most of these sellers seem to be clueless or in strong denial, especially for newer construction. As a comparison I visited some friends in the remote areas of Sammamish last weekend and I saw more “sold by” signs in one day than for the whole year in Kirkland. It seems Sammamish sellers are quicker to adapt to the tougher market with lower prices and do attract some of the ever fewer qualified and motivated buyers out there by doing that. I think like Biliruben that Kirkland is in for a very rough ride for a long time.

  24. 24
    biliruben says:

    We’re already seeing 2005 prices just a bit north of there. I figure we’ll see 2004 prices in Kirkland by 2010, if not before.

  25. 25

    We are in fact sitting on a pile of cash (well, $90K, enough for 20% down on top of a $417K maximum conforming loan). We sold just in time to get that much equity out of our Concord house.

    That’s why we’re hoping for 2005 prices in Kirkland, since that would bring a $700K Kirkland house down to around $500K, exactly in our ballpark.

    (Why do we want to live in the backwater? Because it’s 15 minutes from Microsoft — where I work — even at rush hour; it’s 5 minutes from 520 so easy to get to Seattle in the evenings for fun; it’s close to our daughter’s Montessori school in Bothell; and there are LOTS of young families in the area. When you’re coming from a 1950s three-bedroom rancher in the Diablo Valley where it’s 100+ degrees for much of the summer, a 1970s Kirkland four-bedroom split-level looks miiiighty good.)

  26. 26
    mukoh says:

    Rob, get ready for tons of flames on “How dare you buy a house at this time we still have 100% more to drop according to my bubble watch.”

  27. 27
    biliruben says:

    Show me even one post like that on this whole site, Mukoh.

  28. 28

    […] was another slumpy quarter for single-family home sales in Seattle, reports Seattle Bubble. Check the chart, which tracks all King County closings since 2000, as reported by […]

  29. 29
    John says:

    “If you wanted to buy a place there but decided to wait until 2005 prices you will wait forever unless the recession is a big one, and if it is a big one unless you’ve got a pile of cash to take advantage of the situation it won’t matter.”

    That’s what they thought in many parts of the country. We are only finishing up the 1st inning.

  30. 30
    Not Blind says:

    Was the first quarter of 2008 the bottom of the local housing downturn?

    ARE YOU BLIND GUYS? This is just a beginning.

  31. 31
    Lake Hills Renter says:

    The new bailout bill has $3.9 billion for local communities to buy and refurbish foreclosed properties. Interesting that municipalities will be getting in the flipping business, paid for by you and I.

  32. 32
    Garth says:

    The new bailout bill has $3.9 billion for local communities to buy and refurbish foreclosed properties. Interesting that municipalities will be getting in the flipping business, paid for by you and I.

    I think the CDBG’s that are the 3.9 billion part of the bill are usually for HUD related activity and are generally more involved than flipping individual houses. These grants were cut pretty heavily if not completely in the last couple of years.

  33. 33
    gill says:

    just fyi — amazon profits doubled in Q2 and they’re predicting the same in Q3.

    Gates foundation opening soon in Seattle as well…

  34. 34
    gill says:

    oh, and per a post here the other day they’re predicting cheaper retail rental prices downtown — sounds like growth to me.

  35. 35
    Scotsman says:

    From a recent Harvard study- a child in America is more likley to live in a family dealing with bankrupcy than divorce. Welcome to 2008.

  36. 36
    S. Marty Pantz says:

    I too love the graph at the top. What software did you use to create it? I’m a newbie at this, and I could use graphics like that in a report that is due in a couple of months.

  37. 37
    LeftOverpricedSeattle says:

    Whatever happened to Ardell’s home in Kirkland? I remember she was going to list it for just under a million wasn’t she?

    Did she ever list it or did she decide to sit tight for a while?

    I think there are some neat homes in Kirkland, but most of the stuff just isn’t worth considering unless it was dirt cheap, at least for me.

    My old violin teacher lived out off of Waverly Way. If I could get a home there for a reasonable amount I would do it.

    I think her home is part of the reason I love pre-war homes.

  38. 38
    hzg says:

    what does….. “coming in over 25% lower” …..mean anyway?

  39. 39
    what goes up comes down says:

    hey gill get a clue, just because amazon profits doubled what the hell does that have to do with retail space — you are one thick brick.

  40. 40
    hzg says:

    I’m missing something. Please explain where my mistake is:

    “Note that the second quarter of 2008 was the fourth-lowest quarter on record, beaten only by 2000:Q1, 2007:Q4, and 2008:Q1.”

    I guess I don’t know what “beaten” means in this context. I look at the graph and all of the bars are bigger than 2008Q2. If the referenced three quarters had smaller bars I would presume that “beaten” means “performed more poorly” but I can’t presume that because I can’t see the referenced pattern at all.

    Do I believe the graph or the text or neither?

  41. 41
    hzg says:

    Upon further inspection, I think I see the features that were described. I might have used different words, but no worries. Carry on.

  42. 42
    deejayoh says:

    AMZN’s P/E ratio is 60. They’d better double their profits every quarter if they want to keep up their share price.

  43. 43
    deejayoh says:

    and it appears that somehow there is a $17mm FX gain and $53mm gain on sale of European DVD business in the mix driving profits. Will be interesting to see a good analyst’s take on this.

  44. 44
    faster says:

    “it’s 5 minutes from 520 so easy to get to Seattle in the evenings for fun;”

    Everyone looks on a map and thinks they’re close to Seattle, but the reality is that with 520, being close isn’t enough. Go ahead and take that easy 10 mile drive from Kirkland into the city one evening around 6:00. To be safe, make sure your dinner reservations are for 7:00

  45. 45
    Buceri says:

    From the PI article on WAMU (posted at 8pm last evening) –

    Gotta love these two:

    “Shares closed down $1.17 at $4.65, gaining 19 cents in after-hours trading. The stock has fallen 66 percent this year.

    Piper Jaffray Cos. analyst Robert Napoli cut his rating to “sell” in a report because the lender’s balance sheet is “burdened with high-risk mortgage loans.” Napoli and analysts at Merrill Lynch & Co. and Friedman Billings Ramsey Group Inc. said Washington Mutual may need more capital.

    Merrill Lynch analyst Kenneth Bruce in San Francisco cut his rating to “underperform” today, citing the likelihood of $27 billion in cumulative losses through 2010 and a tangible equity ratio in 2011 that’s below a “self-imposed floor.””

    ___________________________________________

    Really Robert Napoli?? After a 66% collapse in 7 months, you really had enough and it’s time to sell??

    And you, Mr Bruce: you finally go from “market performer” to “underperform”?

    I would love to hear the phone conversations between these guys and their customers: “yeah, remember the $100K we put on WAMU last December because the worst was behind them? OK, let’s just say I want you to sell and now we have $34K to work with.”

    How could these guys allow their names to be public??

    Would you imagine a sport commentator waiting for week 15 in the past NFL season to say: “Yeah, I predict the 1-14 Miami Dolphins will not make the playoffs”

  46. 46

    THE ROSY BUSH ECONOMY

    Don’t get me wrong, the 2008 Q1 GDP of 0.6% was low enough to be called recessionary; but like any statistics is totally error prone. Its simply pumped up with inventory hoarding because of higher energy panic (i.e., people hoarding bags of rice from COSTCO)….so what is the Real GDP for 2008 Q1?

    Its definitely recessionary at approximately -0.6% when calculated sensibly.

    See the proof [just scroll down to the “Real GDP” chart from our government]:

    http://www.econedlink.org/lessons/index.cfm?lesson=EM775

    As far as the new housing bill passed by our government fixing bad loans from the last 5 years, forget it….it may help future loans by reorganizing Fannie/Freddie, but again, I’m skeptical…..is this bill just rearranging the chairs on the Titanic? Without good paying jobs and an industrial base in America again i don’t want to say its hopeless, but our credit ratings in America aren’t what they used to be. I hear both GM and Ford have a 50/50 chance of going bankrupt soon.

    I stilll believe by 2010 or 2011 we’ll know when we’re gonna hit bottom in this crisis. Til then, just hang tight and baton up the hatches.

  47. 47
    S. Marty Pantz says:

    According to CNN Money.com today: “The National Association of Realtors reported that sales by homeowners dipped in June to an annual pace of 4.86 million, down 2.6% from a pace of 4.99 million in May.

    The existing home sales rate – including single-family, townhomes, condominiums and co-ops – was 15.5% below the 5.75 million units sold in June 2007….

    The median price of a home sold during the month fell to $215,100, down 6.1% from $229,000 a year earlier. Prices are being pushed down by the growing number of existing homes on the market.

    Homes available for sale at the end of June rose 0.2% to 4.49 million, which represented an 11.1-month supply at the current sales pace, up from a 10.8-month supply in May.”

    And per a companion article: “The percentage of vacant homes available for sale remained relatively flat in the second quarter, but still hovered in record territory.

    Some 2.8% of homes, excluding rental properties, were empty and on the market from April through June, according to Census Bureau figures released Thursday. The vacancy rate hit a record high of 2.9% in the first quarter of 2008. It was 2.6% a year ago.

    “They are still not showing a downward trend,” said Christian Menegatti, U.S. lead analyst at RGEMonitor.com, an economic research and consulting group. “That’s the bad news. The numbers are telling us that prices have to fall more.'”

  48. 48
    gill says:

    “you are one thick brick”

    hmmm…

    i wasn’t saying the two things are related, just saying they are both in the news and represent positives for business growth for the corporate and local economies in seattle. i know quite a few local business owners in seattle foaming at the mouth for lower rents in downtown/belltown.

    its you that’s thick dude — reread the post.

  49. 49
    Buceri says:

    MSN – MONEY

    “Market at bottom? Don’t believe it”

    “The recent updraft is probably an illusion. There’s no indication the bear market has ended and plenty of evidence it has a long way to fall yet.
    By Jon Markman

    Investors praying that the most inept federal government since the Hoover administration has engineered an end to the credit crisis with a plan to rescue Fannie Mae (FNM, news, msgs) and Freddie Mac (FRE, news, msgs) may be on track to see their delusions shattered.

    At the root of investors’ hopes in recent days has been a sharp jump in the shares of banks and brokerages even after the companies reported terrible second-quarter earnings and acknowledged that profits will likely be impaired for at least a year to come.”

  50. 50
    david losh says:

    There was a report today that said Real Estate sales are lower this year than last. Prices are lower. The report shows there is still a declining market, but it is like turning a cruise liner.
    How many people want to admit they bought badly? How many sellers want to admit they missed the market and have to sell for less in order to sell at all? How many buyers who want to make low offers are going to get help? They’re not.
    I did a property search yesterday for a client and over half of the properties I sent him were REO or short sales. I sent him a list of properties that made sense value wise. There were however at least twenty properties listed that were unrealistically priced, in my opinion.
    If you want to buy in Kirkland for $500K you should start shopping. Those properties aren’t going anywhere. I agree that $700K for a property in Kirkland should get you a palace with a view.
    Kirkland is the perfect example of hype. They have a marina, which is great, with bars, and young people. More and more strip mall type businesses add to the mix of contrived affluence. Once the housing boom fully hits and those boats are repossessed I think Kirkland will return to the boating community it started out to be.

  51. 51
    Lionel says:

    “i wasn’t saying the two things are related, just saying they are both in the news and represent positives for business growth for the corporate and local economies in seattle.”

    Office rentals dropping sounds more like a stagnant economy to me. What’s going to happen to rents when WAMU clears out? That’s a lot of open office space.

  52. 52

    Mukoh, don’t worry, we’re not planning to buy for at least 18 months and possibly more. We’re quite happy in our rental home and are definitely going to stay there until the curve flattens out at the bottom.

    faster, yes, I know 520 is a parking lot during rush hour. “Evenings” to me means 8 pm or later. AFAIK 520 westbound starts clearing up a bit around 7:30 pm. (True? Or am I fooling myself?)

  53. 53
    Buceri says:

    Rob –

    Do you know when prices will bottom out??

    When you and your fellow Californians move back!!!

    Just kidding (about the moving back – not about you guys being the reason behind the crazy pricing)

  54. 54
    Buceri says:

    Jim Jubak – MSN MONEY – on why we have to save Fannie and Freddy.

    http://articles.moneycentral.msn.com/Investing/JubaksJournal/TheHugeThreatToTheUSEconomy.aspx?page=all

    The U.S. Treasury and the Federal Reserve recognize that taxpayers will have to pay whatever it takes to keep these two players in the mortgage game. With $5 trillion in financial paper in the markets tied to these two companies, a failure at one or the other would panic the U.S. and every other financial market in the world.

    We wouldn’t have to wonder about whether the U.S. economy would slip into a recession because we’d be in one — and looking a depression straight in the eye.

    Fannie Mae and Freddie Mac are also just plain too big. It’s incredible that two companies could be so large that their troubles could threaten the U.S. and global economies.

    The U.S. government is caught in a terrible bind. On the one hand, if the government doesn’t stand behind Fannie Mae and Freddie Mac, many overseas investors will see it as equivalent to the U.S. government defaulting on its debt. If the U.S. government walks away from Fannie and Freddie, these overseas investors will worry that the U.S. government will walk away from the other U.S. debt they own and from the dollar itself. There’s already a suspicion among overseas investors that the U.S. government will try to solve its dual problems of a massive government debt and a massive trade deficit by letting the dollar tank. On the other hand, if the U.S. government does back Fannie Mae and Freddie Mac, it runs the danger that overseas investors will simply add Fannie and Freddie’s $5 trillion in mortgages and guarantees to the $9.5 trillion the U.S. government already owes. By that calculation, a bailout would increase the debt level of the U.S. by 53% overnight.

  55. 55
  56. 56
    Bits_of_Real_Panther says:

    Hey I wouldn’t be surprised if 2005 prices can be found in the near future in certain areas – Juanita/Bothell/Woodinville maybe, parts of the city where speculation and building have gone crazy probably, Issaquah almost certainly, and areas south of the city are probably already there. I just don’t see it happening in Kirkland. We’ll see, demand in Bellevue/Kirkland/Redmond will be the last to fall IMO

  57. 57
    Mike2 says:

    Something is seriously wrong with the local market if home sales have dropped below the Q4 2001 level.

    Whatever it is, it’s worse than the dot com bust, 9/11 and the airline bust combined.

    My guess? Prices are too high.

  58. 58
    david losh says:

    I was killing some time today and building my own statistics for future listing presentations. I’m really stuck on the idea that we saw a huge spike in pricing between 2001 to 2007. I did an archived search of home prices between 1998 and 2001 then converted that to price per square foot. Then I did a straight 4% appreciation compounded yearly to find a very rough average of price per square foot for 1500 sq ft at $160 in 2001 up to $200 in 2008.
    Higher end homes surprised me for a 3100 square foot home going from about $230 per to $300.
    These are very rough numbers in the Seattle area that I could spend the day on, but it does look like we need a 20% correction in pricing for the average home in Seattle. Higher end homes, I’m guessing didn’t see the same run ups that the average family home size did. I attribute that to the ridiculous over valuation of the town homes which I deleted from my pricing. I only sought structures built before 2001.
    A simple solution would be for buyers to make thier offers accordingly.
    Of course your Real Estate professional can do these numbers in your price range to come up with a true value for that home purchase you may want to make. If you believe 1998 was the beginning of the run up you could use those numbers.
    As far as a government bail out of anything I still maintain that the government encouraged the housing market as a way to make the economy look good after 9/11. We needed to fund a couple of wars and housing was a cheap and easy way of creating tax dollars. I won’t forget Bush’s speach where he praised the number of new home owners as proof our economy was strong.

  59. 59
    Lake Hills Renter says:

    “We’ll see, demand in Bellevue/Kirkland/Redmond will be the last to fall IMO”

    My neighborhood in Bellevue has had demand fall through the floor. There are a large number (historically) of houses for sale in a several block radius, at asking prices 10%-15% below last year’s comps, that are not selling. I haven’t seen a “sold” sign in ages, but more and more houses come on the market. The whole place seems to have stagnated.

  60. 60
    deejayoh says:

    I’m really stuck on the idea that we saw a huge spike in pricing between 2001 to 2007.

    Wow. Perhaps someone should start a blog and call it “Seattle Bubble”! 8^P

  61. 61
    deejayoh says:

    You can see the disconnect between home prices and incomes that starts in 2001 quite clearly on this chart

  62. 62
    been there says:

    Rob @52
    I live in the city and oft times visit customers on the eastside. I have a standing rule with my wife when I call her on my way home she needs to remind me that 520 is never the right answer. It starts to clear at 7:30 but I can’t tell you the number of nights I’ve tried to sneak in 520 at 8:10 and hit enough traffic to make me pretty grumpy. Of course, I’m famous in my family for having bad traffic luck in general so your milage may vary.

  63. 63
    biliruben says:

    re. Ardell: I think she said she’ll get in on the market next month.

  64. 64
    Garth says:

    You can see the disconnect between home prices and incomes that starts in 2001 quite clearly on this chart

    Quite clearly if you think the per capita income number is the right choice for doing that kind of analysis. Property managers and apartment and housing research firms generally use the family income number for this type of analysis. Tim has said that the per capita number includes “the most people”, but with the majority of home buyers being married, and most other analysis using the family number I don’t think the per capita number is the right one to use. To me the point is to evaluate if the pool of potential homeowners can afford the available housing, not if everyone can afford to buy a house.

    For example a lot of apartment research firms use the Median Family income, Class A rents and the Median Home price to generate a monthly spread between renting and owning which is a lot more concrete than the “small premium” often discussed here.

  65. 65
    Mike2 says:

    Property managers and apartment and housing research firms generally use the family income number

    Per capita isn’t a useful number.

    But family income in KC is still really low. $75K.

    Try raising a family on that with home prices at $400K.

    Family incomes don’t support the home prices. I actually had a RE agent try and tell me that median family income was irrelevant because a 2 income household was making double that!

  66. 66
    deejayoh says:

    Quite clearly if you think the per capita income number is the right choice for doing that kind of analysis. Property managers and apartment and housing research firms generally use the family income number for this type of analysis.

    True. But that suggests that family income moves differently than per capita income. That would mean either a) a change in family size or b) a change in the number of wage earners in a family. I don’t think these are changing all that fast. And even then, would the correlation would be better than the 99% correlation between per capita and house prices that held from 1985 – 2001?

  67. 67
    Garth says:

    Because it is a different number than is used in a lot of the other data analysis that is available I just never know what to make of it.

  68. 68
    Ric says:

    Is a 1900 sq ft house(3bed, 2.5 bath, 2 garage, built in 1996) in juanita (close to big finn hill park and denny park) for 500k a good buy now? thanks

  69. 69
    deejayoh says:

    I’ve actually never seen a time series for Family Income at the county level – but I’d bet if you point me to one it’s just about 1:1 correlated with per capita income.

  70. 70
    BanteringBear says:

    Bits_Of_Real_Panther posted:

    “I can’t stand that place either – I like the city and the country, everything in between could disappear tomorrow and I wouldn’t care – but objectively thinking it should hold up comparitively well IMO, the same people who have flocked there over the last three years will still want to live there. If you wanted to buy a place there but decided to wait until 2005 prices you will wait forever unless the recession is a big one, and if it is a big one unless you’ve got a pile of cash to take advantage of the situation it won’t matter.”

    You seem to be overlooking the most crucial fact. People CANNOT afford current prices. That simple. So, they will be going down, WAY down. There is quite simply no way around it.

  71. 71
    Garth says:

    Is the per capita data coming from the census and county projections?

  72. 72
    deejayoh says:

    I picked the per capita up from conway-pedersen economics – but I think it is BLS data. That’s the richest source of income data I have found. The only HH income I have seen is from the census and ACS

  73. 73
    david losh says:

    Don’t need to, somebody alread did.
    It doesn’t change the fact that if we go back to 1998 and add in 4% appreciation to date there is a pretty close housing price value that I think buyers could use. The correction by comparison to today’s prices means discounting about 20% of value. There again there are properties on the market that seem to be pretty realistic, today, in terms of my opinion of values.

  74. 74
    david losh says:

    Come to think of it what are you waiting for. Is everybody waiting for some one to tell you when the bottom is? Are you waiting for the the Board of REALTORS to tell you the bottom is here? Who’s going to tell you? What numbers are going to shine the light that every one will say AHA!
    I pick my numbers based on my research. If you don’t like my research hire some one else.

  75. 75
    Bits_of_Real_Panther says:

    “People CANNOT afford current prices. That simple”

    If it was that simple wouldn’t there be a consensus? Even on a blog titled Seattle Bubble there’s a pretty good mix of opinions from a bunch of people who are more well-informed than the average joe. My opinion is that it’s a bad idea to wait for a price in your comfort zone in your favorite neighborhood because it might not ever get there. In this case the person waiting for a 400k house in Kirkland might have to settle for Bothell, that’s life, unless they can handle a fixer. On the other hand I think it is a good idea to wait for the dust to settle in the financial markets if you can wait, and if the economy gets shitty enough and you are well-positioned for that then maybe you will get what you want

  76. 76
    Garth says:

    I did a project once where the employment classification codes, census and labor data were all used and it can be difficult to merge the census and labor data as the labor data basically a more frequent survey of a subset of the census data. At the time I think broadly it excluded people paid on commission and people who were self employed, and there are some other exclusions as well. I have no position on if it will move the line either way, I am just interested in the data.

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