July Neighborhoods Months of Supply Update

Here’s the latest update on months of supply, or “absorption rates” for the 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. Don’t forget you can view a map of these areas here.

Remember: Over 6 MOS is a buyer’s market, which gives buyers more negotiating power, but doesn’t mean homes are priced attractively for buyers or that it’s a good time to buy. Before this year, the longest that King County as a whole has sustained a MOS above 6 was 4-5 months in the winter of 1994-1995. July MOS for King County came in at 6.62 (compared to 4.06 for July 2007), bringing the current run to eleven months.

In the graphs below, you’re looking at the MOS for the “Res Only” data from the NWMLS King County Breakout pdfs for the one-year period of August 2007 through July 2008. The bar graph is centered vertically on 6.0 MOS, so that it is easier to visually tell the difference between a seller’s and buyer’s market (i.e. – shorter bars mean a more balanced market). Each graph again has the same scale on the vertical axis and has the King County aggregate figure plotted in red on the far right, so they can be easily compared.

Note: Area 100 MOS was over 21 in January, and has been clipped.

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Note: For Area 701 (Downtown Seattle) we’re using condo data.

KC SFH MOS: Seattle
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Note: Area 520 MOS was over 19 in July, and has been clipped.

KC SFH MOS: Eastside
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Not a single neighborhood outside the Seattle city limits was a seller’s market in July. The city of Seattle seems to be the last holdout of home sellers in King County, with only two areas in the city coming in as buyer’s markets, 700 (Queen Anne / Magnolia) and 701 (Downtown Condos).

The cumulative MOS for Seattle proper increased from 4.6 in June to 5.1 in July, up from 3.0 in July 2007. The Eastside as a whole shot up to just under 8.0 MOS, nearly double July 2007’s 4.2.

Here’s the bonus graph, which lets you directly compare each area’s MOS to its value one year ago. July 2007 is in red, and 2008 is in blue.

KC SFH MOS: Eastside
Click to enlarge

Every area was more of a buyer’s market in July than it was at this time last year.

The three toughest markets for sellers were Medina / Clyde Hill / W. Bellevue (520) at 19.47 (yikes!), Enumclaw (300) at 12.31, and Vashon Island (800) at 12.27. 520 is now just one month away from a one-year streak of 10+ MOS.

The three best markets for sellers as of last month were Ballard/Greenlake/Greenwood (705) at 3.91, North Seattle (710) at 4.20, and West Seattle (140) at 4.83. Seeing West Seattle on that list is a particular surprise, given the number of flops we’ve seen in that neighborhood in recent months.

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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


    Imagine what 2009 will be like.

    Tighter lending practices should get worse too, accelerating more glut down the road [lack of qualified buyers], in my estimate. It seems Freddie and Fannie need more government bailouts and have collapsed the stock market today:

    See the proof:


  2. 2
    vboring says:

    almost 4 hours later and no comments?

    sounds like the blog may have proven it’s theme, leaving little interesting discussion possible in the comments.

    interestingly, i recently tried to convince a coworker not to buy a condo, but he was unable to give up on the “real estate always goes up” mantra. so, while there may be no reasonable discussion left as to which direction markets are going for the next few years, there are plenty of people out there who somehow have no idea what is going on or how bad it is likely to get here.

  3. 3
    Everett_Tom says:

    I blame the weekend heat wave…

    Did anyone else see the interesting exchange between Greg and Ardell over on rain city guide a few days ago? It had to do with trying to calculate what Months of supply really meant. ( you can see it here.. http://www.raincityguide.com/2008/08/12/seattle-real-estate-market-king-county/ )

    Instead of doing the usual sales / listings to get months of supply, Ardell used yearly number to try an answer the question “How long will a house on on the market (or going on the market) will take to sell.

    I think this post sums it up (post 62 in the thread above):

    Greg, let’s talk about what Aborption Rate actually is. It is the length of time you expect it to take to sell the current inventory. Current Inventory is at least, by anyone’s definition, 7 – 8 months. Everyone knows for SURE that December and January sales are never EVER equal to the number sold in July or August. So saying 7 months based on July rate of sale is misleading…no?

    To say it will take Sept., Oct, and Nov. (3 months) to sell off current inventory, you have to do that at the expected rate of sale of those months, to be accurate.

    So at the time I wrote this post, there were 12,403 Residential properties on market. Then we look at the level I expect things to close in the first chart above.

    -1,425 for August 08
    -1,350 for September 08
    -1,275 for October 08
    -1,175 for November 08
    -1,075 for December 08
    – 800 for January 09
    -1,000 for February 09
    -1,200 for March 09
    -1,300 for April 09
    -1,400 for May 09

    10 months takes us to 400 properties, but a 5% variance is within a normal margin for “error”. Hoping to have 7,500 in inventory by December 31st of 2008 leaves room for inventory to come on market by 1,400 more properties than leave market during that same period. 7,500 may move us from buyer’s market to seller’s market. I’d have to calculate that based on facts available when and if inventory every drops to that level.

    To say 7 months based on June or July when you know that January never equals July, paints a more optimistic picture than the facts suggest. No agent expects January sales to equal July sales…do they?

    (Greg and Ardell, feel free to correct any thing missed, I have to tell you I found the exchange really interesting.).

  4. 4
    WestSideBilly says:

    Tim, I’m not sure I’d be surprised at West Seattle being in the list with low MoS. The West Seattle market seems more accepting of price cuts than some of the other areas. I don’t have any statistical basis for that, just that I see a lot more reasonably priced homes around that area.

    vboring: The debate has largely ended amongst those of us inclined to statistics. Those who rely solely on RE cheer leading, MSM articles, or anecdotes from friends will steadfastly hold on to their beliefs until they find out the hard way.

  5. 5
    EconE says:

    Thanks for using the condo data for downtown Tim.

    I still think that there is more than double what is shown due to the fact that the numbers are derived from MLS data and doesn’t include the ungodly amount of units that are under construction but need to be sold…or turned into rentals after the flippers bail out, realizing that the loss of their deposit would be much less than the carrying costs while trying to get their overpriced “faux luxury” box in the sky sold.

    I’d say that holds true for condos most anywhere in the city as far as I am concerned.

  6. 6
    david losh says:

    Condo projects or large town home tracs only list a couple of units at a time. Once the buyer goes there they can see the rest of the units.

    Yes I read the ruin cuty giude absorbtion debate, with 45 comments by Ardell and 41 comments by Larry.

  7. 7
    Everett_Tom says:


    regardless of issues with what to call it, what do you think of that technique for determining how long it’ll take the average place to sell?

  8. 8
    david losh says:

    There are no averages. People are scared. The same panic to buy is driving a panic to sell.
    Many people paid way too much for properties. Others financed the properties to the hilt. If they sell, today, they will save the holding cost of the property.
    The problem is that people need to sell for high prices or short sale the property.
    That’s much different than a normal buyer or seller market place. Who’s going to over pay for a property today?
    Those high priced properties, in a declining market, are just wishful thinking. In a shrinking buyer pool the real inventory of properties, or choices a buyer has, is much smaller.
    Calling absorbation rate is assuming all things are equal, there not, or we wouldn’t be here.

  9. 9

    We’re just getting started with foreclosures here in WA State. REOs haven’t even started to really effect inventory yet.

  10. 10
    Alan says:

    Preview of this month’s foreclosure numbers:
    8/1/2007-8/14/2007: 139
    8/1/2008-8/14/2008: 243

    7/1/2008-7/14/2008: 280

  11. 11
    mikal says:

    David is right. I appreciate when you write long posts. They make more sense. Ignore the fools.

  12. 12
    jonness says:

    I recall a short time ago when I first came to the bubble that some people argued that Seattle would not depreciate but instead slowly appreciate or hold flat. Others astutely argued that once the foreclosures started, it would cause a feeding cycle, and put even more downward pressure on prices.

    Now we are seeing foreclosures happening in Seattle, and prices are coming down. WA doesn’t have nearly the subprime and Alt-a exposure as CA, but it is still fairly exposed. Furthermore, we are heading into winter, and a large number of Seattlites are late on their mortgage payments. The problem, as David Losh points out, is when you add in Realtor fees for selling the house, many people are underwater or close to being so. Thus, listing prices remain high, even though people are hurting.

    The economy is going to he$$ in a hand-basket, and things are looking very bleak for Seattle real estate. Now is not a good time to buy. Don’t take my word for it. Go to realtytrac and view a map of the foreclosures in your neighborhood. Keep in mind that the foreclosure rate is increasing across our state.


    (click on the map above, and it gives you a map of every foreclosure in your neighborhood)

    David Losh claims “people are scared.” I have a pretty good job, and I’m too scared to buy a house because I know in an economic downturn, there is an outside chance I could lose my job. Just knowing there is a “chance” I could lose my job, and for certain house prices are going lower, affects me psychologically and makes it impossible to pull the trigger on a house purchase. I guarantee that I’m not the only one psychologically affected by this. I’d venture a guess that it is an increasingly common condition in today’s economic climate.

    Recently, the U.S. hit record levels of home ownership. This is something President Bush bragged about being one of his administration’s great acheivements. But the bitter truth is the record level of home ownership was caused by insane lending practices. Now that lending practices are going back to sane standards, home ownership is headed back to normal levels.

    Some people fail to understand the simplest of economic truths. Lending practices had an affect on Seattle house prices. Add in the fact that (jobless) Longview out-appreciated Seattle and is now facing a similar level of decline, and one begins to realize that Seattle is not so special after all. The fact is, people can only afford to pay so much of their income for a house. In a speculative market, people will pay more because they believe they can make a profit. But the flip side is, once homes start to depreciate, nobody wants to pay more than the home is worth anymore. What we are witnessing is the simplest of economic fundamental principles–the “fear” end of the greed-fear cycle. And if you are fearful now, just wait and see. The fear aspect typically drives markets to temporarily over-correct. Thus, it’s highly possible that the bottom will be a lot uglier than many of us realize.

    Some people argue that a home is not an investment; it’s a place to live. Others argue that a home is first and foremost an investment. My opinion is that an owner occupied home should be both an investment and a place to live. Balance is key. When things get out of balance, you end up in bubble markets that eventually crash back to earth.

    It is well-known that house prices stabilize AFTER foreclosures and supply stabilize. My advice to myself is to not even consider buying a house until supply begins to stabilize and foreclosures reach normal levels. At this point, the market will most likely start heading sideways allowing me plenty of opportunity to get in. YMMV

  13. 13
    jonness says:

    My bad. You have to click the “view map” button after you click on the map I linked above or it will only give you a list.

  14. 14

    Ooo Alan, thanks. I’m your number one fan.

  15. 15
    david losh says:

    OK, now it’s foreclosures or Real Estate Owned Properties. These properties are controlled by lenders. These properties don’t owe mortgage payments. The money is already invested. In most cases the loans were bought sold and traded over the years at discounts in the range of twenty per cent, by now maybe more.
    Clearly a buyer of a Note secured by a Deed of Trust will pay no more than eighty per cent of face value.
    The investor who sold the Note reinvested the money to make more money. These housing units are now inventory that can be “absorbed” different ways; lease, rent, sold on contract, borrowed against, held as assets, sold to people who are hyped about buying foreclosures.
    These properties are just slowing the market from correction. It’s a sad shadow land of those same people who bought at the top or borrowed more than the property was worth.
    The only way to factor an absorbtion rate is by comparing fair market value with the consumers ability to purchase.
    Adding more over priced inventory won’t increase the consumers ability to buy. Even if a buyer could buy why would they when a pricing correction is under way? The supply and demand theory, or absorbtion, isn’t a part of this equation.

  16. 16
    TJ_98370 says:

    Months of supply is an inventory to sales ratio. According to Vladimir Klyuev, an International Money Fund economist, the inventory to sales ratio is “…the most important driver of changes in property values in the short run….”

    U.S. house prices overvalued by up to 20 percent: IMF paper

  17. 17
    Michael says:

    Hey Tim, I have a couple of ideas for the blog.

    #1 How about a photo contest to see who can get the most for sale signs in one photo. I have a corner on Queen Anne that I think would win.
    #2 Maybe we can have a submit form for most overpriced/best priced. That would attract real estate agents with BS postings but it would create some interesting discussions about price.

  18. 18

    Hey Tim,

    Your blog may be a little depressing but that’s not your fault. i’d be ahrd pressed to find anyone who could spruce up those numbers.

  19. 19
    UpperQueenAnneRunner says:

    Area 700 – Queen Anne is interesting. We live in it so I follow it out of interest and over the past 2 – 3 months I have noticed virtually no sales. Sellers seem willing to drop the price by $100k or so if home listed at $1.2M or so and around $50k if listed for $800k-$900k but no more and then homes languish and/or are taken off the market. Clearly, Queen Anne is near the top of the market so only a smaller percentage of buyers can afford the area. It seems that sellers are either betting market will improve next year or are in no hurry to sell. Obviously, imbalance cannot last forever so I am intrigued to see what happens next.


  20. 20
    matthew says:

    Just follow what has been happening to the other markets to see what is in store for Seattle. We are following a near identical blueprint of what has been happening to the other west coast markets, only we are merely lagging behind. Foreclosures are going to continue to shoot upward, making the extra inventory impossible to absorb. As prices continue to decline, foreclosures are going to move up as more owners are going to be underwater.

  21. 21
    The Tim says:

    Michael @ 17,

    Fun ideas. I’ll probably steal them in the relatively near future.

  22. 22
  23. 23
    david losh says:


    U.S. house prices overvalued by up to 20 percent: IMF paper

    “Starts in foreclosures, which obviously add to inventory, seem to also exert additional downward pressure on prices,” he added.

    There is no inventory to sales ratio. We have declining home prices coupled with a shrinking buyer pool. Inventory can keep going up as long as people tell themselves there are no buyers or fewer buyers, the impact on home prices will remain unchanged.
    I hear all the time the market will be “coming back,” but it will be a different market place.
    The price declines we are seeing are really only superficial. I’ve heard prices appreciated 17% in Seattle in 2006. If that’s true the correction we are looking for, according to IMF assertions, will be far greater than 20%.
    Anyway inventory is a matter of perception. I think the inventory is way over priced competing for very few buyers so there are better indicators of value out there.

  24. 24
    Greg Perry says:

    TJ re:16

    As you probably know, I agree with this. Median price roll backs and hikes follow inventory absorption (sales ratios). In my opinion they are the most important stat to follow to really understand what is happening in a market. I hate to admit this, but the proper use and understanding of AR’s is one of the most underutilized tools and statistics used by the average agent. They just arent’ taught and talked about all that much in the agent community — or in agent training.

    Everett _Tom
    Thanks for the comment on the great absorption rate debate on the RCG. Occasionally Ardell and I hook up to thrash about a topic or idea. AR’s are a point we don’t agree on. I enjoy these debates when I have the time to engage. While we don’t always agree, I respect Ardell’s knowledge and passion for her ideas.

  25. 25
    Greg Perry says:

    DL “There is no inventory to sales ratio”


    shrinking buyer pool —– inventory rising—–

    “No inventory to sales ratio” ?????


    ” the impact on home prices will remain unchanged” ?????


    “Inventory a matter of perception”????


    So if we understand you correctly, the loss of buyers combined with the rise in inventory in last years 3rd quarter when sales ratios dropped steeply has not contributed to a softening of prices? Here’s a visual of what the 3rd quarter 2007 looked like:

  26. 26
    mikal says:

    Greg Perry,
    I understand DL’s point so don’t say we. You didn’t understand it. He is making a bigger point. People in this market don’t understand the depths of the problems. He’s right about the Greenlake area, although it should drop some as every thing is connected. He is saying that you should wait to buy. Why are you attacking one of you.

  27. 27
    Greg Perry says:

    Honestly, I don’t understand where DL’s mind is on that comment. To me, it is nonsensical. Yes there is a bigger point, and to me it is this — The sales ratios that he says do not exist — in fact do exist (and used by virtually every real estate researching entity) — and can in reality be broken down to region, area, city or zip code, neighborhood, price point and right down to a house style.

    I have AR charts for every KC NWMLS area broken down by price points computed on a weekly basis. I can tell you exactly what the Greenlake area is doing by –price point– every week. If you are a selling client, you’ll have correct information to make a good pricing decision. If you are a buyer, we’ll use these ratios in establishing our negotiation.

    As sales ratios rise and fall, prices rise and fall behind them.

    I’m glad you understood his point. I did not.

  28. 28
    TJ_98370 says:

    Reference # 16

    Dave –

    From my Webster’s New World Dictionary – ratio (ras’heo) 3. Math the quotient of one quantity divided by another …

    Total inventory divided by sales for a month (apparently you get to pick the month) is “months of supply” or MOS. This kind of metric is also known as a ratio. A quick glance at this ratio can indicate a trend in the health of the real estate market when compared month to month.
    The inventory- to-sales ratio certainly does exist as an abstract mathematical quantity. It’s kind of like electrons. I have never seen an electron, but people with the background of The Tim will insist on the existence of electrons. It really gets interesting when people like The Tim try to explain the flow of electrons. People like The Tim will try to tell you that current flow is actually electron holes. That is totally nuts in my opinion, but I digress…..

  29. 29
    mikal says:

    I think it gets really interesting when the people like the TJ9387 brown nose up and down their comments.

  30. 30
    TJ_98370 says:

    My post # 28 was actually referencing Mr. Losh’s post # 23 where he says’s “There is no inventory to sales ratio”. I sure miss the editing capability that is available in the Forum.
    mikal #29 – You are right. You caught me in the act. I was hoping The Tim would bestow upon me great privelages. I’ll try to tone it down from now on.

  31. 31
    jon says:

    I think DL is claiming that the absorption rate you get by dividing the reported inventory is not a useful number, because much of the inventory is not realistically priced. Those units are not really in the market. Earlier he said that other units that are not officially on the market can still be bought, so in that sense the inventory is under-reported. While it is true those sources of error are present, the published inventory number seems to be a useful and easily available way to evaluate the market.

    Other factors besides the AR are also important, such as net/gain loss in the job market at various income levels, as well as the skill level of the population, tax rates, and such statistics that predict how attractive the area is to future economic growth. Those are the areas where Seattle is very strong and explain why the RE market is doing better than other parts of the country.

  32. 32
    Matthew says:

    Mikal #29 – blatant antagonism toward TJ and a blatant violation of the new comment policy.

  33. 33
    mikal says:

    I disagree. No swearing. He agreed with my point.

  34. 34
    Matthew says:


    He didn’t agree with you, he was being sarcastic. And no swearing is rule #1, no antagonism is #3. Go back and brush up on the rules.

  35. 35
    didn't just fall off the turnip truck says:

    everett_tom @3
    Thanks for cross posting that link. It was a most interesting, informative, and useful discussion. I’ll certainly be checking back to see who was right. (of course I have my own opinions on that issue).

  36. 36
    Everett_Tom says:

    didn’t just fall off the turnip truck@35:

    Your welcome, I’m not sure if it’s so much right/wrong, or more of a disagreement on on what absorption rates are. While I agree with Greg that it’s defined as a set formula, and that shouldn’t be changed.

    However, Ardell’s point that when the rates get big, they don’t reflect what they are trying to measure makes sense to me. It seems that it no long answers the question behind the formula, mainly “How long will it take to sell all the houses on the market?” (or more likely “How long will it take to sell MY house”).


    I know your a big proponent of AR, and that you feel they are one of the best indicators for where things are going. With that caveat, what do you see as the problems with them? Do you agree with Ardell’s assertion that they may not be as useful when sales rate slows down?

  37. 37
    Greg Perry says:

    In all markets, good (8 months), there are listings that will not sell because they are overpriced. Part of the challenge in a changing market is overcoming Seller’s AND agents attitudes toward pricing. This is best done with facts.

    On January 21, I wrote a very short blog post on the PI that advised Sellers NOT to take their customary “spring markup”. http://blog.seattlepi.nwsource.com/realestate/archives/129941.asp
    My premise was DON’T DO IT! Why? the ratios showed us there were fewer buyers and more inventory. During the same week others were recommending that sellers price 5% above the current comps.

    Here is what my research is showing me pretty much across the board in most of KC: Sellers are asking about 5-6% above last year’s sold comps with their starting prices (Original List Price or OLP). The List Price (LP) at the time of sale is about even to 2% below last years sold comps. The difference between the List Price and the Sold Price is 2.5%-4%. Sellers are asking for 5-7.5% more in the beginning than they are getting (on average).

    So the question about the effectiveness of ratios. I think they are better information in slow markets than fast markets for the consumer and professional. Lets face it, in fast markets we don’t have to be that good. The market velocity compensates for many shortfalls. It’s in slow markets that we need ways to help sellers and buyers understand their true positioning within the marketplace. A good understanding of AR’s and effective ways to communicate them is critical information for agents while working with both buyers and sellers.

    The sales ratios area the RESULT of regional employment concerns and money availability (interest rates and loan programs). Median prices always follow these ratios (supply and demand) up, or down. The ratios tell us what the CURRENT rate of sale is.

    When working with both buyers and sellers, I have developed presentations ideas, graphics and language so my clients understand exactly what is happening in the marketplace to best position themselves for success. They can readily see if the market is progressing, or regressing. They can see for themselves that it makes no sense to continue to ask for appreciation gains in a declining market. I also use AR’s with listing agents and their sellers when presenting offers. We’ve had some big negotiation victories this year (and this month!).

    And finally, banks, real estate researchers and economists by and large feel that these ratios are the best indicator of the current market and to figure where the market is heading.

  38. 38
    david losh says:

    Did you really point people back to the Real Estate Professionals blog?
    I understand you have spent great effort on the Absorbtion Rate, but it only applies in a market place where you have a buyer pool that is willing to buy. I don’t think that’s the case today. Buyers are hampered by price, availablity of mortgage money, and fear of declining Real Estate values.
    My take on Real Estate is from a larger investment strategy that has had Real Estate as a stable commodity, a safe haven if you would. I think that the volitility we are seeing is out of the ordinary. It’s the result of large corporate dollars that invested in Real Estate backed securities, large scale development of both housing units and commercial spaces, and the durable goods that are associated with construction.
    It’s larger than “will buyers have the ability to gobble up the inventory in X number of months.” The inventory is going to continue to grow, The buyer pool will continue to be extremely cautious. These are not normal times.

  39. 39
    Everett_Tom says:

    Thanks for the answer Greg,

    out of curiosity, have you ever done a historical look at the correlation between AR and median price to see how closely it matches up?

  40. 40
    Greg Perry says:

    “I understand you have spent great effort on the Absorbtion Rate, but it only applies in a market place where you have a buyer pool that is willing to buy. I don’t think that’s the case today.”

    AR’s are a measure of the current buyer pool against the available inventory. There is, in fact a CURRENT buyer pool that is willing to buy. The current buyer pool is smaller than the pre-3rd 2007, but there are buyers out there making deals. David, you’ll find SELLER’s advantaged markets in sub $500, 000 price ranges in 705,710,720,140,380 and 390.

    One of the biggest mistakes people make is to measure the market on just sales, or just supply. The measurement must be a ratio between the two (supply/demand).

  41. 41
    Greg Perry says:

    Go to http://www.alanpope.com

    He has historical charts to the early 90’s. His charts are for combined SFH and Condos. He also breaks AR’s into subsets like new construction and high end sales.

    Remember the ratios can be broken down (and tracked) by price point, subsets like new construction, zip codes, neighborhoods and even house styles. This is where the rubber meets the road when working with a specific seller in a neighborhood.

  42. 42
    Greg Perry says:

    Whoops, I thought the Alan Pope charts had medians charted with them. I do have monthly charts for KC that tracks median along with AR’s. I also use a program called Trendgraphix that does the same. Yes, there is a correlation between medians and AR’s. Medians don’t correlate day to day, but actually follow the rise and fall of the AR’s.

  43. 43
    david losh says:

    Holy Cow, Alan Pope and Trends Graphix!!!
    Alan Pope is an appraiser whose data is directly tied to Comparable Market Analysis. Trend graphix is fun to look at.
    I agree people are buying today. I agree people are paying way too much for properties today. It’s because of this that the market is slow to correct.
    By looking at todays comparative sales you would think there is a 20% decline in pricing from a year ago, or two. The run up in pricing took much longer than that. If you believe the press releases of a couple of years ago Real Estate in this area had a 17% appreciation rate in one year, 2006 to 2007.
    Appraisers, lenders, and real estate agents are more than happy to keep the over inflated values we have seen for what I think is the past ten years. It’s in the best interest of the Real Estate industry to try to calm fears.
    This market is different. I saw 1970, 1980, 1990, and this is different.
    We have seen a construction driven economy since 2001, even before. Housing starts became the bell weather of how the economy was doing. It created jobs that in turn created demand for durable goods. The durable goods orders became a secondary indication of how well the economy was doing. It was in every one’s best interest to keep this economy growing.
    In the process pricing far outstripped values over the course of a decade. Today you can make the claim that everything will work itself out because it will. In the process we will be seeing absorbation rate measured in years rather than months. This is only the first year in a multiple year process.

  44. 44
    Everett_Tom says:

    Thanks! I’m still digesting the data over at Alan Pope.

  45. 45
    Greg Perry says:

    “By looking at today’s comparative sales you would think there is a 20% decline in pricing from a year ago”

    David, you and I are not seeing the same things. I run OLP, LP and SP comparisons for every listing presentation and am not coming close to your claim there. What do have to substantiate a 20% decline? In what geographic area?

    “Appraisers, lenders, and real estate agents are more than happy to keep the over inflated values we have seen for what I think is the past ten years.”

    I think you over estimate the role in these parties in pricing moves. I am a supply/demand believer. If supply outstrips demand and the buyer has choice and sellers get in a position they have to sell, prices fall. Conversely if large quantity of buyers are competing on few properties, competition drives the prices up. And, oh by the way, as market rise and fall, so does the real estate agent population. Tough markets run off the sub par agents and lenders.

    As for Trendgraphix, what more would you want in basic data?

    For Sale / Sold/ Pended / Months of inventory based on Closed/ Months of inventory based on Pended/ Average Active Price/ Average Sold Price/ Average Sq. Foot Price/ Sold to List % Difference/ Sold to OLP % difference/ Days on market/ Cumulative Days on Market and Median Price.

    All set up to see in a MOM basis. Trendgraphix data comes 2 weeks past the end of the month as they manually correct the obvious Pendings and Solds inputting errors.


    Trendgraphix gives me dozens and dozens of ways to order reports for analysis including zip codes, MLS zones, date ranges, property types and on and on and on and on.

    What numbers are YOU looking at track the region, MLS Zones, zip codes ,etc? At the very least, I send readers to my data points to see the numbers.

    And by the way, my data just starts here. I see every MLS zone’s AR broken out by price point — on a weekly basis. And of course complete CMA analysis for sellers and buyers at the time we bring on a listing or negotiate for a buyer..

    David, what I see you doing is arguing on an emotional basis, and criticising others information without a foundation of evidence or an offering of data to back your points.

  46. 46
    david losh says:

    You’re on a blog site called Seattle Bubble. Why?
    In my opinion it’s because this site gives detailed data, coupled with very real information about the current state of the local, national, and global economies. There’s discussion here about the difference between pricing and value.
    Your data is price based. At this rate of just looking at the marching decline of Comparative Market Analysis it will take years before we see true Real Estate property values. The same principle that drove prices up incrementally will be used for the pricing declines.
    It’s unsustainable. It’s an illusion. It’s lying with statistics. In the process people are being hurt.
    I can’t even begin to demonstrate how far out of whack the system is. There are just too many examples. When you look at your hotsheet, look at the price reductions, expireds, cancelled listings and days on the market. It’s staggering. $100K price reductions, and the property sits unsold or 300 days on the market with multiple price reductions. Then look at the expireds, or rentals, or foreclosures, and you are saying that the pricing declines are smaller than estimated.
    I went to look at a fixer today with foundation issues listed at $429K. It’s worth $350K, but you are absolutely correct that I would be hard pressed to find data to support that value, so that property will sit for another 200 days because time is on my side.

  47. 47
    Greg Perry says:

    “You’re on a blog site called Seattle Bubble. Why?”

    To have an expanded conversation on Absorption rates and sales ratios……..the original topic of The Tim’s post. I appreciate that The Tim includes this information to see the relative difference between areas in terms of inventory absorption and how absorption has changed since 3rd quarter 2007. I think this is good stuff.

    “In my opinion it’s because this site gives detailed data, coupled with very real information about the current state of the local, national, and global economies”

    Which includes detailed information on area real estate absorption rates.

    David, I didnt’ invent AR’s, but I have learned how to use them effectively. You can disagree until the cows come home, but again, bring relevant, supported data to the discussion and I’ll be more willing to listen to your point of view.

  48. 48
    david losh says:

    In the last six months areas 390, 700, 705, 710 have 1772 expireds and cancelleds residential listings. That’s a lot. There are 1782 Active listings, today.
    What I’m having difficulty with is the insistence on the Absorbtion Rate data. It stopped being legitimate months ago. Lot’s of people want to sell, but there isn’t a buyer pool to absorb those over priced listings. Lack of loan programs further denegrates the data. Loss of equity compromises the abitity to trade up.
    So many factors are impacting this Absorbtion Rate data that it makes no sense to me.

  49. 49
    Greg Perry says:

    Did you know in area 705, last year in June, there were 205 Pendings? This year there was 195. We were down 10 Pendings (this is the month before the liquidity collapse). The AR for June 07 was 2.0 months. The AR for June 08 was 3.9 months. The months of inventory almost doubled. Why? Actives (supply) went up from 402 to 651. Because we had more inventory buyers, had better selection.

    The area was off only 10 PENDINGS YOY in June!. Yes ,buyers did have better selection. Pressure on pricing should soften. 4.3 months, however, is a much healthier market than 2.0 months.

    Now here are the PENDINGS for 705 MOM starting with Feb, and ending with July:
    131,172,173,183,195,162. what you’ll observe is that Pendings went up every month until last month. Pendings virtually always fall starting in June in a seasonal cycle.

    Months of inventory based on Pendings in 705 starting in Feb. and ending with July: 4.3, 3.4, 3.9, 3.7, 3.3, 4.2

    Months of inventory based on Solds in 705 starting in Feb and ending with July: 4.3, 4.0, 4.5, 3.7, 3.9, 3.9

    OLP to SP% staring in Feb., and ending in July: 96%, 96%, 97%, 96%, 96%, 96% (last year was 99% and 98% across the board) –Yes it looks like sellers started too high!

    CDOM starting in Feb. and ending in July: 67,65, 53, 63, 49, 63

    Median price starting Feb. and ending in July: 435k, 435k, 460k, 475k, 468k, 462k

    390, 700, 705 and 710 are core areas and are holding up much, much better than outlying areas, but we are using them to make our points.

    You say that there were 1772 expires and cancelled. So what? A large percentage of them get re-listed. Those that don’t get re listed aren’t counted in the supply pool any longer.

    David, you say, “Lot’s of people want to sell, but there isn’t a buyer pool to absorb those over priced listings.”

    If there was no buyer pool, how did those PENDINGS happen?

    ” Lack of loan programs further degenerates the data.”

    AR data is computed from ACTIVES and PENDINGS (or SOLDS if you wish) and has nothing to do with loan programs.

    ” It stopped being legitimate months ago.”
    Why? Because the numbers changed in a way you don’t like?

    David, with all due respect, you do not understand sales ratios and absorption rates, and obviously don’t use them.

    I want to emphasize that 705 is a core area and holding up better than outlying areas. To see the AR data from the other areas, go to The Tim’s charts at the top.

    Statistics from Trendgraphix, taken from the NWMLS. Not verfied or published by the NWMLS.

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