NWMLS: Sales Edge Above ’08, Median Up 5% MOM, Down 12% YOY

Let’s take a look at June market statistics from the NWMLS. Here’s the NWMLS press release: “Aware and prepared buyers” help boost Western Washington home sales during June

Here’s your King County SFH summary, with helpful arrows to show whether the direction of each indicator is positive or negative news for buyers and sellers:

June 2009 Number MOM YOY Buyers Sellers
Active Listings 9,655 -2.0%
Closed Sales 1,655 +26.1% +4.0%
SAAS (?) 2.06 -11.3% -15.5%
Pending Sales 2,447 +8.9%
Months of Supply 3.95 -10.0%
Median Price* $395,000 +5.3% -12.2%

Note that due to the change in definitions, year-over-year comparisons of pending sales, active listings, and months of supply will not be valid until July data.

Closed sales posted another strong month-to-month increase, and actually turned positive year-over-year.

King County SFH Closed Sales

Looks like my prediction that sales would “eventually flatten out and maybe even show YOY gains” in 2009 turned out to be correct after all. Apparently absurdly low interest rates combined with the $8,000 tax credit were enough incentive to draw out a decent spring rush of knife-catchers.

Here is the updated Seattle Bubble Spreadsheet, and here’s a copy in Excel 2003 format. Click below for the graphs and the rest of the post.

Here’s the graph of inventory with each year overlaid on the same chart.

King County SFH Inventory

Note that the current data is still not comparable with pre-July 2008 data.

Here’s the supply/demand YOY graph. In place of the now-unreliable measure of pending sales, the “demand” in the following two charts is now represented by closed sales, which have had a consistent definition throughout the decade.

King County Supply vs Demand % Change YOY

That’s quite the sharp bump up there in June. Of course, sales closing in June are (mostly) all the result of deals that were agreed upon in the prime spring months of April and May. With interest rates back over 5% and the deadline for school district-related moves passed, will the sales spike be sustained, or merely a springtime flash in the pan?

Here’s the chart of supply and demand raw numbers:

King County Supply vs Demand

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

I have no doubt that the $20k one-month bump in the median price will be the primary focus of most mainstream media reports about this data. Surprisingly, even with that large of a spike in the always-noisy median statistic, year-over-year price declines are still in double-digit territory. FYI, in order to get a better picture of what might be going on with the apparent price spike, I’ll be working on a couple of additional price measures in the coming week or two.

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994.

King County SFH Prices

That little bump put us back into 2006 territory. (Warning: Sarcasm Ahead) Oh no, anyone who didn’t buy in March has missed the bottom and will surely be price out forever!

I’ll update this post with news blurbs from the Times and P-I when they become available. As usual, check back tomorrow for the full reporting roundup.

[Update]
Seattle Times: Home sales climb in June in King County; median price drops from year ago to $395,000
Seattle P-I: House sales up in King County

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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.

178 comments:

  1. 1
    The Tim says:

    Interestingly, the year-to-date performance in the King Co. SFH median price as of June is very similar to last year’s.

    % rise from January
    Month | 2008 | 2009
    Jan | 0.0% | 0.0%
    Feb | -1.2% | -2.0%
    Mar | +1.1% | -4.9%
    Apr | +3.1% | -0.7%
    May | +1.1% | -2.0%
    Jun | +3.4% | +3.3%

    Graphically:
    King County SFH Median Price YTD Comparison: 2008 & 2009

  2. 2
    DrShort says:

    I think a lot of the bump in June was a result of the jumbo loan market opening up a couple of months ago. The rates for conforming high balance (417K to 560K+) became much more in line with regular loan rates and I’m sure this helped move some of higher priced homes.

    If you look at the King County breakout, a lot of the higher priced areas had big increases in closed sales YOY. And, for some reason, SE King County closed sales are down 13% YOY. I though the under 400K market was red hot? Must all be short sales not closing.

  3. 3
    Kary L. Krismer says:

    The 8k tax credit is clearly having an effect. Not only is it better than the 7.5 tax credit, but more people know about it. Almost no one knew about the 7.5 program.

  4. 4
    jon says:

    How does an 8K tax credit cause the median price to go from $363K to $395K in just three months?

    And where is the pent up supply?

  5. 5
    The Tim says:

    RE: jon @ 4 – I’m certainly not attributing the noise in the median price metric to the $8k tax credit. I contend that most of the change is seasonal, with the items mentioned by DrShort @ 2 probably contributing somewhat as well.

    I only claimed that the spike in closed sales volume is likely being driven by the $8k tax credit (as well as 4% interest rates).

  6. 6
    ray pepper says:

    “8k tax credit clearly having an effect”

    Yes, kind of like a butter fly bandage on a compound fracture.

    http://arthritis-symptom.com/images/compound-fracture.jpg

    2010 we better bring in the tourniquets, traction, and REAL surgery!

  7. 7
    jon says:

    By The Tim @ 5:

    RE: jon @ 4 – I’m certainly not attributing the noise in the median price metric to the $8k tax credit. I contend that most of the change is seasonal, with the items mentioned by DrShort @ 2 probably contributing somewhat as well.

    The strength of the prices in the face of the massive loss of jobs over the last few months is more than just noise and seasonality.

  8. 8
    DrShort says:

    The strength of the prices in the face of the massive loss of jobs over the last few months is more than just noise and seasonality.

    ——————————————-

    I would contend that things weren’t as bad as the monthly numbers indicated in Jan/Feb. And things aren’t as good as the monthly numbers say in May/June. But the year over year feels about right.

  9. 9
    Tom N. says:

    I’m a statistic!

    My wife and I bought a house in Bellevue, closing on June 26th, so we’re part of the June stats, I guess. It was a mostly annoying process, and now that it’s over my wife has declared that the only way we’d move out of this house is if we don’t have to apply for a mortgage again. :-)

    We were NOT eligible for the $8k tax credit due to income, nor did we get any first time home buyer specials, for the same reason. The price we settled on was way below what the sellers had been asking for, but a little higher than I’d wanted to spend. My wife took the long term view, however, and said that fighting with sellers over 1% or less of the total price for something we want to be in for a decade or more, after all the time we’d spent in negotiations etc. etc., was not worthwhile.

    I’m still afraid that our 20% down “equity” will evaporate in the next couple of years, and I’m just hoping we don’t have any family financial crises that would force us to sell. If we’re able to keep paying the mortgage and staying in the house for 10-20 years, I’m hopeful that the fiscal outcome of having purchased the house will wind up as a wash.

    As I’m constantly reminded, in any case, buying this house is more than a financial transaction. It is a place where we can raise our kids and not worry about getting kicked out at a landlord’s whim.

  10. 10
    Kary L. Krismer says:

    By jon @ 4:

    How does an 8K tax credit cause the median price to go from $363K to $395K in just three months?

    And where is the pent up supply?

    As to the first question, a small increase in demand can cause a large increase in price. Gasoline prices are an example of that. But I’d agree with Tim that the tax credit mainly affects volume. It could also affect price indirectly as move-up buyers are able to sell, but I doubt there are many first time buyers buying over $363,000, which is what would be required for them to affect the median.

    We have some clients in exactly that situation where selling their old home allowed them to buy a new home, and their buyers are first time buyers getting the credit.

    As to the second question, the news just hit today! I wouldn’t be surprised to see a slight bump in listings.

    Finally, I’d note that the spread between the mean and median is again increasing, indicating more sales of higher priced properties. That possibly might be due to changes in financing, as mentioned by someone else.

  11. 11
    jon says:

    By DrShort @ 8:

    I would contend that things weren’t as bad as the monthly numbers indicated in Jan/Feb. And things aren’t as good as the monthly numbers say in May/June. But the year over year feels about right.

    Even so, last fall we nearly had an international financial meltdown last fall and now we have historically significant rate of unemployment, and yet prices are down only 12% YOY.

    Going forward, we have the remaining 95% of the stimulus bill, and the Fed is still monetizing away mortgage debt.

  12. 12
    Kary L. Krismer says:

    By Tom N. @ 9:

    IAs I’m constantly reminded, in any case, buying this house is more than a financial transaction. It is a place where we can raise our kids and not worry about getting kicked out at a landlord’s whim.

    Of a landlord’s foreclosure–reference the Seattle Times article today.

    From what you wrote I’d guess you bought in at least a moderately high price range. On such properties you probably generally get a bigger discount from peak than what the median numbers would suggest.

  13. 13
    Ryan says:

    RE: Tom N. @ 9

    According to most on this board, you made a huge mistake. As they sit in their apartments counting all of the cash they are supposedly saving, they are laughing at you.

  14. 14
    Kary L. Krismer says:

    RE: Ryan @ 13 – I bet living in Tom’s house is a bit nicer than almost any apartment, and most rental houses.

  15. 15
    Sniglet says:

    they are laughing at you

    I am not laughing. I am just aching at the thought of how much pain those buying Seattle area homes today are going to be hurting when prices have dropped 50% or so from where they are now in the next few years.

  16. 16
    Acerun says:

    I’m confused…Should I buy now?

  17. 17
    deejayoh says:

    If you look at the $/Sqft market trends on Redfin I think you can get a more accurate view of price behavior. Median is too subject to mix changes.

    For Seattle proper – Redfin shows the average as of 6/30/2008 was $323/sqft. As of 6/29 it was $283. That’s a YoY drop of 12.3% – about the same as the median. But sold prices appear to have been rising since March. They bottomed out at $266 so that’s an increase of 6.4% in the last 3 months.

    so based on that, it’s not a mix issue. People appear to be indeed paying more. Whether or not it lasts is another issue all together.

    Data for King County only goes back about 2 months so you can’t replicate this at a larger scale.

    http://www.redfin.com/city/16163/WA/Seattle

  18. 18
    Soon2bBuyer says:

    RE: Ryan @ 13

    Why are you so sarcastic? Are you jealous that we renters don’t have to worry about paying mortgages? You don’t think the market has bottomed, do you?

  19. 19
    Sniglet says:

    I’m confused…Should I buy now?

    It all depends. If you can financially afford to have a home you buy today drop 50% (or more) in value over the next few years (and staying at that depressed place for some 10 years), then go ahead and buy today. Money isn’t everything, and you’de might as well get enjoyment out of a home you like even if prices are dropping.

    On the other hand, if a significant drop in values will have a major negative impact on you (financially, emotionally, or whatever), then you shouldn’t be buying today.

  20. 20
    The Tim says:

    By DrShort @ 2:

    I think a lot of the bump in June was a result of the jumbo loan market opening up a couple of months ago. The rates for conforming high balance (417K to 560K+) became much more in line with regular loan rates and I’m sure this helped move some of higher priced homes.

    If you look at the King County breakout, a lot of the higher priced areas had big increases in closed sales YOY. And, for some reason, SE King County closed sales are down 13% YOY. I though the under 400K market was red hot? Must all be short sales not closing.

    A few statistics related to the above claims. Excluding downtown Seattle (area 701) which had no SFH sales, there are 29 NWMLS-defined “areas” in King County.

    12 areas had a median SFH price above the county-wide median. Of those 12, only 3 had declining closed sales volume YOY. As a whole, closed sales in the 12 higher-priced areas were up 8.6% YOY.

    17 areas had a median SFH price below the county-wide median. Of those 17, 8 had declining closed sales volume YOY. As a whole, closed sales in the 17 lower-priced areas were down 1.5% YOY.

    Sales volume is clearly decreasing in the cheaper parts of the county, and increasing in the more expensive parts. This will obviously lead to a skewing of the county-wide median toward the higher end.

  21. 21
    deejayoh says:

    RE: Ryan @ 13 – I am laughing mostly at my landlord. She keeps asking me if I want to buy the place. I politely decline.

  22. 22
    Acerun says:

    RE: Sniglet @ 19
    I am an emotional wreck already, I think i will wait! :)

  23. 23
    DrShort says:

    By deejayoh @ 17:

    If you look at the $/Sqft market trends on Redfin I think you can get a more accurate view of price behavior. Median is too subject to mix changes.

    For Seattle proper – Redfin shows the average as of 6/30/2008 was $323/sqft. As of 6/29 it was $283. That’s a YoY drop of 12.3% – about the same as the median. But sold prices appear to have been rising since March. They bottomed out at $266 so that’s an increase of 6.4% in the last 3 months.

    so based on that, it’s not a mix issue. People appear to be indeed paying more. Whether or not it lasts is another issue all together.

    Data for King County only goes back about 2 months so you can’t replicate this at a larger scale.

    http://www.redfin.com/city/16163/WA/Seattle

    I still think it’s a mix issue. The houses that were on the market last Nov, Dec, Jan were C R A P. I would go weeks without finding a single nice house to put on my favorites list. There are simply much higher quality houses sold in the March – July time frame than other times of year. Since Redfin numbers are 90 day averages, you tend to see prices “rise” in March. What you are actually seeing is the distressed sales from Dec/Jan rolling off the average with a larger mix of nicer houses in the data coming on.

  24. 24
    deejayoh says:

    By The Tim @ 20:

    Sales volume is clearly increasing in the cheaper parts of the county, and increasing in the more expensive parts. This will obviously lead to a skewing of the county-wide median toward the higher end.

    I think you meant clearly decreasing in the cheaper parts of the county, didn’t you?

    edit: nevermind, I see you fixed :^)

  25. 25
    The Tim says:

    RE: deejayoh @ 17 – The Redfin data definitely supports the seasonality of prices. I note that last year in Seattle proper the spring bounce in terms of $/sqft was roughly +3%. This year it’s about +5%. As I noted @ 20 however, I think there’s some sales mix factors at play here as well.

  26. 26
    Ryan says:

    RE: Soon2bBuyer @ 18

    I don’t know if the market has bottomed; nor do I really care. I am certainly not opposed to renting, I rented for many years. What is slightly annoying is the know it all attitude of many on this board and the general attitude of wishing for gloom and doom.

    What I find amusing is the person renting an apartment while driving the flashy car and preaching about what a savvy person they are when it comes to real estate and all things financial (i am sure there is at least 1 of you here).

    Even funnier is Sniglet’s comment at 15 about prices falling another 50%.

  27. 27
    b says:

    Ryan –

    Falling home prices are only doom and gloom for people with little or no equity in their homes, or who run a bank. For everyone else they are a good thing: there are more buyers, those buyers can price into a better home, there is much less risk of foreclosure for those buyers, sellers can still trade up without any loss and for everyone staying put their taxes are cheaper. How is that doom and gloom?

  28. 28
    DrShort says:

    By Ryan @ 26:

    RE: Soon2bBuyer @ 18

    Even funnier is Sniglet’s comment at 15 about prices falling another 50%.

    I dunno. I used to think that type of claim was nuts too. But I’ve been looking at properties around the county and it’s amazing how expensive Seattle is compared to other parts of the US. Nice parts too. I dont think down 50% will happen, but I don’t think it can be dismissed outright.

    Seattle housing has been powered for the past 20 years by Microsoft $$, dot com $$, biotech $$ and buyers from California with lots of equity money. Well, that CA equity is mostly gone. If those high paying jobs go away, then down 50% isn’t out of the question.

  29. 29
    The Tim says:

    By Ryan @ 26:

    What is slightly annoying is the know it all attitude of many on this board and the general attitude of wishing for gloom and doom.

    What I find annoying is the presumption of many that falling prices somehow equates to “gloom and doom.”

    I wish there were a catchy rhyming phrase that meant the opposite of “doom and gloom,” because that’s how I see falling prices. Maybe “win and fun” or “neat and treats”? Anyway, the point is that better home affordability is a good thing, not “doom and gloom.”

  30. 30
    NoMoreWork says:

    RE: The Tim @ 29 – Ahhh, reading that I almost expect to see Pistol Pete back on these boards. Comment 32 from the Dec 2007 article reference by The Tim:

    “Wow. Look at all these predictions, sounds like a short seller trying to talk a stock down so they can close their position. Really folks, anything more than 10% decline is a fantasy of the non property owner. ”

    I enjoy my fantasy renters world. This is a seasonal increase on steroids and is merely fed on $8k tax credits, stock market recovery in April-May and all the rosey good feelings that were swept up in that by first time buyers itching to “jump in”.

    I think they lept too soon. Spring time is over, job losses are mounting and stocks are falling. That only leaves rosey feelings left over from this latest up tick. How long can the spin sustain prices without fundamentals? We’re about to find out.

  31. 31
    Sniglet says:

    I almost expect to see Pistol Pete back on these boards.

    Pete would have had an anurism if I had been on that thread, going on about my predictions of an 80% decline from peak prices (over 5 to 10 years). The prognosticators on that discussion were pretty tame compared to Eulea (wherever he is these days), and myself. To my knowledge, the two of us (i.e. Eulea and I) have firmly staked out the ultra bearish view on SeattleBubble.

    I dare anyone to make an argument for an even greater than 80% price declines in the Seattle area! :)

  32. 32
    Ryan says:

    RE: The Tim @ 29

    Better home affordability is a good thing, I would agree. The general tone is that house prices are going to fall and only an idiot should purchase right now which I disagree with. The tone of your comment in the original post about “absurdly” low interest rates and knife catchers makes me think that you are looking for negative news while quickly dismissing anything that might say otherwise.

    Maybe I am misreading things but I have followed this board for a while now and am impressed with the analysis done by most. Personally, I feel that the logic falls by the wayside though when it is delivered with so much sarcasm and disdain for current buyers.

    Just my 2 cents.

  33. 33
    Sniglet says:

    I feel that the logic falls by the wayside though when it is delivered with so much sarcasm and disdain for current buyers.

    Is it “disdainful” to current buyers to have people (like myself) suggesting that much larger price declines are in store? I always try to be very civil in my discussions on these boards, and have NEVER told someone they made a mistake. In fact, I usually tell people it is fine to buy immediately, so long as they are in sound financial shape (i.e. and can easily weather a massive price drop).

    Do you feel that this advice of mine is somehow condescending or cruel?

  34. 34
    waitingforseattletocool says:

    RE: Ryan @ 26

    You haven’t seen the previous postings that predict 80% off, have you?

  35. 35
    Soon2bBuyer says:

    Ryan,

    Why do you find it amusing that renters drive nice cars? So now only “homebuyers” could afford nice cars? My significant other drives a nice flashy car but he paid cash and he loves car, what can I say. We also have cash ready for downpayment but we are not buying yet, not because we can’t afford, we just don’t like to overpay. Although I’m secrely hoping/praying that one day we might be able to pick up one on cash.

    What I find truly amusing is, homeowners who bought at 0% down using interest-only loans and then went on to declare that they were so glad that they no longer “throw money away by renting”, lol. True story, I saw this on HGTV just last year.

  36. 36
    NoMoreWork says:

    RE: Soon2bBuyer @ 35 – I can’t decide if HGTV is housing porn or housing horror stories… I guess it depends on what side of the fence you’re on, i.e. if you’re Ryan or Sniglet. ;)

    I wish I could get statistics on the % of “My First Home” buyers that are in foreclosure now.

  37. 37
    treaty says:

    RE: NoMoreWork @ 36

    Oh man, HGTV = definite cheerleader. I can barley sit through 15 minutes of any given show on that channel now a days: “HGTV is the real villain of the economic meltdown.”

  38. 38
    Matsayswhat says:

    By Sniglet @ 31:

    I almost expect to see Pistol Pete back on these boards.

    Pete would have had an anurism if I had been on that thread, going on about my predictions of an 80% decline from peak prices (over 5 to 10 years). The prognosticators on that discussion were pretty tame compared to Eulea (wherever he is these days), and myself. To my knowledge, the two of us (i.e. Eulea and I) have firmly staked out the ultra bearish view on SeattleBubble.

    I dare anyone to make an argument for an even greater than 80% price declines in the Seattle area! :)

    I predict that within the next two to three years:
    1. Cans previously used for food will become “the rage” of the hatwear industry.
    2. Housing in Seattle will decline by 84.5%
    3. Sniglet will form a power buying squad of former renters (Sniglet LLC), buy up tons of property and become nothing short of a real estate magnate.

    Sniglet, you so crazy ;)

  39. 39
    Kary L. Krismer says:

    By Soon2bBuyer @ 35:

    Why do you find it amusing that renters drive nice cars? So now only “homebuyers” could afford nice cars?

    I’d guess because it’s a depreciating asset, and one of the worst purchases you can make. It’s about as close to a consumption purchase as you can get while still buying an asset.

    I know your friend bought with cash, but if people here took the same position with cars that they took with houses, the typical car buyer should walk away from their car because they owe more than it’s worth and it will depreciate further.

  40. 40
    b says:

    RE: Soon2bBuyer @ 35 – Expensive car money is much better spent giving it as interest payments to a large, government-backed banking institution to bolster their bonuses this year. You see, for every dime you spend on something other than your enormous mortgage on a home that you purchased for far more than its value, you are depriving poor banks of that same money. Won’t you think of the banks? Taking out a smaller mortgage is a sin, it says so in the bible. Spending your excess income on a nice car because you rent an apartment and did not buy a $600k studio goes against everything that Jesus and JP Morgan taught us.

  41. 41
    waitingforseattletocool says:

    RE: The Tim @ 5

    Just curious, where did / does one find 4% interest rates?

    From what I can see at bankrate.com, the interest rates on a 30 year fixed conforming loan have ranged from 4.8% to 5.7% +/-, currently at 5.3% +/-.

  42. 42
    Ross Jordan says:

    RE: Kary L. Krismer @ 39 – Frankly, I look at cars and homes as the same class of asset: consumption. Both should be thought of as expenses: transportation expense and living expense. Thinking of a home as an investment is exactly why we’re in this mess.

  43. 43
    Ron says:

    Kary L. Krismer –
    I notice your comments…. everything is so Much bent towards twisting it in the Direction of someone that works in the Industry.. problem is when you get a paycheck from the industry “it does create a Biased Opinion. Personally you from almost the first couple of your writings months ago You seemed so Obviously in the industry. Even when you try to talk out of the other side of your mouth it comes out like a Salesman thats not sincere. I and many others I feel much rather do business with someone that takes more a position that shows there true position. Nothing like walking into some business and having someone paying you lip service that really doesn’t mean what there saying.

    I would have to say the one thing I up to this Point “Miscalculated”- Was Just how much Government Intervention Can Prop things up. The Interest Rates really are the amazing part the tax Credit is the simple part. I Couldn’t personally imagine lending money at these rates to almost anybody on a 30 year fixed.
    I would really like to see understand how/who/what is exactly happening to as I see it “artificially keep/make these rates go this low.

    My thoughts are interest rates should be in the 7-8% range reflecting the True Risk.. I know people are buying based on a payment. What if the Fed looses control of those interest rates at some point?

    Are todays buyings Going to Become Tomorrows Foreclosures????

  44. 44
    Sniglet says:

    I for one value having Kary’s participation on SeattleBubble. He brings a healthy counterpoint to the discussions. Further, Kary is always polite and actually provides useful information. He is not at all like the few Trolls we’ve had over the years who just dismiss Bubbleites as cranks.

  45. 45
    Mikal says:

    RE: Sniglet @ 44 – They are not all cranks.

  46. 46
    Ron says:

    Ross Jodan- I will agree with you.. ****Kary L. Krismer – Real Estate Sales People take some of the Worst investing courses. I Used to work in the Real Estate industry, Overall they made some of the worst investors- Im not saying all of them, Because out of the roughly 60 Sales agents there was a Couple of fantastic investors. Mostly as a group they go around flaunting money they don’t have- Buying Liabilities that are supposed to impress there Clients into doing business with them. Overall- They generally are Flamboyant Personalities that are busy floating between big Paydays with little savings to weather the Storm.

  47. 47
    Soon2bBuyer says:

    RE: b @ 40

    LOL, so true, guilty as charged. I’ve not been contributing to the “bankers economy” by not having a mortgage or a car loan. Heck, I don’t even carry a balance on my credit card. I guess nowadays being prudent made me a public enemy!

    Kiddings aside, many people have this impression that renters can’t afford a home. So renters who drive nice cars are losers without financial sense. This, however, might not be so true anymore given that the huge increase in home prices in the last decade has put off buying for many folks with good financial sense. I believe there are many SB folks here who are renters actually have healthy income and could have bought if they wanted to. Case in point, Tim and Deejayoh.

  48. 48
    Tom N. says:

    RE: Kary L. Krismer @ 12

    Hard to tell if we got a good discount or not. We paid somewhere around $203/sf for a large-ish house in the middle of Bellevue, which is not out of line with what Redfin was listing for sold (NOT listed) prices.

    To others who talk about the foolhardiness of buying (e.g.,Ryan@ 13):
    I’m the one who posted in the comments a couple of months back about having been kicked out of rental houses twice in the last four years for reasons unrelated to us – in both cases, the landlords had other plans for the property. Given that moving expenses and the hassle of searching for new housing while we have two small kids were taking their toll on us, we decided it was worthwhile to buy now, even if prices are going to keep going down for a year or two or three more, rather than risk having to move YET AGAIN in another year or two. And see my comment above about buying a house not being solely a financial decision. I’ve been focused for the last 5+ years on the (then coming) collapse in the housing market and when we moved to Seattle from Boston (where we’d owned a house), I convinced my wife to rent rather than buy again because of my concern over housing prices. I also have no love for the real estate industry. But at this time in our lives, buying is what made sense.

  49. 49
    anony says:

    By Ryan @ 32:

    RE: The Tim @ 29

    Personally, I feel that the logic falls by the wayside though when it is delivered with so much sarcasm and disdain.

    Just my 2 cents.

    Don’t suppose you’ve read comments 13 and 26 have you? No offense, but the hypocrisy kind of takes away from your point in 32.

  50. 50
    Ron says:

    I Will then have to say Maybe Im Being Unfair in some regards..
    I worked in the Real Estate industry back in 93-97 and my experiences with many of the Real Estate agents wasn’t all that great. Then again I was working during the recession in real estate.

  51. 51
    Ron says:

    Sniglet- if Im correct on the Persons writings the Past.. 50%+ Greater Price reductions might not be that far fetched given Sniglet’s belief “on the Economy.

    Sniglet is in the Belief that were going into a major Depression… the Crazy part about people in my experience are very deep into financial Learning, seem to many or a great deal of the Time believe that we are heading for major depression.

    Point being think about the Most Financially Educated people on this Board… There’s about 3 off the top of my head that all are in the belief that were in for some very bad times… I tend to be in this camp as well- Maybe i’m Not thinking maybe not as far as they do though.

    Im thinking possibly another 20-35% off by 2012

    A lot is Riding on Rents holding up in the future~!! Because Rents are The Price To Earnings Ratio of Real Estate.

  52. 52
    Racket says:

    By Sniglet @ 44:

    I for one value having Kary’s participation on SeattleBubble. He brings a healthy counterpoint to the discussions. Further, Kary is always polite and actually provides useful information. He is not at all like the few Trolls we’ve had over the years who just dismiss Bubbleites as cranks.

    Didn’t You once say that the housing bubble was all Kary’s fault?

    I do agree w/ Sniglet that housing values still have some drop in them, but I don’t believe as much as 80%. I bet will be able to buy a POS forclosure for 80% off but those will be rare properties, but I dont believe that the mean will fall to that level.

    I will agree with Ray Pepper, when he says, I will have to paraphrase “Be patient and wait for the gems” because if you buy a good house fore significantly under market you have hedged your bet a little bit. I certainly wouldn’t buy anything at market now.

    Ever since we as a population moved out of shacks that we built with our bare hands, and house has been considered an investment. I like all of these naysayers that think we are wrong now because of a correction we had, but for the last 70 years a house has kept up or beat inflation, and historically has had very little risk. Why do we allow the exception to be the rule?

    Housing has kind of been a backdoor retirement plan, which I like because how many of these people would be able to save the money that will cover their rent, past their productive working years?

  53. 53
    Racket says:

    Sorry about the typos stupid iPhone

  54. 54
    Soon2bBuyer says:

    RE: Tom N. @ 48

    I hope you’re not referring to me, I don’t think you’re foolish for buying now. Everyone has a unique situation and I totally understand your point. I just went to a friend’s apartment over the weekend and they still have many boxes in the living room, yet to be unpacked from their recent move. Hardly a good way to live, boxes in the living room. I think the general consensus here is to buy with your eyes wide opened, knowing what you’re buying into. No one said all buyers are foolish, especially if you can well afford your purchase. Truthfully, I’ve been yearning for a house ever since we moved here 2 yrs ago. I’ve stopped watching HGTV and realized I don’t actually need a bigger house, I can live just as well now. Many people live in much smaller houses in the past and they did fine.

    Btw, I think the knifecatchers comments are referring to buyers who thought they are going to make big bucks buying up foreclosures or short-sales now, thinking they could sell when the market picks up in the near future.

  55. 55
    Racket says:

    “Btw, I think the knifecatchers comments are referring to buyers who thought they are going to make big bucks buying up foreclosures or short-sales now, thinking they could sell when the market picks up in the near future. ”

    If you are buying them right you can make money off them now.

  56. 56
    Greg Perry says:

    So how are we doing on the prediction game (The Tim’s May 17th post)?

    2008 best closing month was 1592

    May 2009 closings were 1312
    June 2009 closings were 1655

    74% of those who voted felt closings would not hit 1500

    I’m still holding out for 2000 (need 345 more in July)

    Of course we all remember what Kary predicted ;)

    So how are you doing? Fess up time.

  57. 57
    The Tim says:

    RE: Greg Perry @ 56 – Pulled from my poll log. Only have records for people who voted while logged into their account.

    Answer 1: 1,250 or less
    Bellevue_Dad
    Boyflux
    melonrightcoast
    Johnny
    Dave0
    Gary
    Grelker
    Everett Renter (Used to be Buyer)
    Scotsman
    Ira Sacharoff
    Dave Lincoln
    jdc98119

    Answer 2: 1,251 – 1500
    Plastic Bags
    kfhoz
    Cheap South
    what goes up must come down
    seattlerenter
    Jonness
    Your Friendly Realtor(tm)
    Herman
    Everett_Tom

    Answer 3: 1501 – 1,750
    DavidB
    Alan
    waitingforseattletocool
    Bellevue Resident
    jon

    Answer 4: 1,750 – 2000
    deejayoh
    PeoplenamedHarleyLeverareLosers
    WaileaKid
    What The Heck
    The Tim
    98115_Renter

    Answer 5: 2000 – 2,250
    Steve Tytler
    Fran Tarkenton

    Answer 6: 2,251 or more
    [none]

  58. 58
    waitingforseattletocool says:

    RE: Greg Perry @ 56

    The ratio of closed sales in June to pending sales in May went up to 0.73

    The same ratio next month would result in about 1800 sales.

    To reach 2000 closed sales next month, the ratio would have to go to 0.82 based on 2447 pending sales.

  59. 59
    deejayoh says:

    Link to the poll is here for those who want to check their guesses

    and I’m doing just fine. I’ll stick with my 1750-2000

  60. 60
    patient says:

    RE: Greg Perry @ 56 – I see that you conviniently missed to mention that you predicted 2000+ in June. Yes, you changed it to July when you saw from the closings at the beginning of the month that it wouldn’t make it, we can all play that NAR game of bullish predictions and the revise prior to the actual result but I don’t find that meaningful if it’s not a totally new poll we all enter.

  61. 61
    DrShort says:

    Do we have any idea how many REO properties sold in June? Somewhere between 250 and 350 properties are being trustee deeded per month and I’m curious if that many are being sold. I expect trustee deeds to grow substantially in the next few months. This should impact what the inventory looks like in Oct – Dec when normal sellers have taken their homes off the market.

  62. 62
    patient says:

    RE: patient @ 60 – Btw I have no problem declaring that I was wrong with my 1450 peak for July. The month could be right but it was month and volume so I was clearly wrong since 1450 was surpassed already in June.

  63. 63
    deejayoh says:

    RE: patient @ 60 – um, you had 1,450 closings peaking in July.

    By the way, there are no prizes available for this contest. except maybe the “most courteous” award

  64. 64
    patient says:

    RE: deejayoh @ 63 – Huh? That was what I said, no? Read my comment again.

    ” Btw I have no problem declaring that I was wrong with my 1450 peak for July”

  65. 65
    patient says:

    RE: deejayoh @ 63

    “By the way, there are no prizes available for this contest. except maybe the “most courteous” award ”

    That would be wrong, there is a huge award that many here seeks, the award of credability. Something that commenters like Eleua have earned and that gives weight to his comments which is pretty valuable imo.

  66. 66
    Mikal says:

    RE: The Tim @ 57 – Wow…., Scotsmen, David Lincoln, and Softwareengineer are spot on as always.

  67. 67
    The Tim says:

    Related to @ 2 and @ 20 above, here is a sneak preview of the updated area-breakdown chart that I originally concocted in August 2007 for the post Median Price Not Telling the Whole Truth. I’ll be writing up a full post regarding this sometime later this week.

    % of Total King Co. SFH Sales by NWMLS Area

    Since the beginning of the year the mid-range (red) has been climbing somewhat steadily, while the low-range (blue) and high-range (green) have pretty much swapped places.

  68. 68
    deejayoh says:

    RE: patient @ 65 – don’t worry, you didn’t win either prize

  69. 69
    Greg Perry says:

    By patient @ 60:

    RE: Greg Perry @ 56 – I see that you conviniently missed to mention that you predicted 2000+ in June. Yes, you changed it to July when you saw from the closings at the beginning of the month that it wouldn’t make it, we can all play that NAR game of bullish predictions and the revise prior to the actual result but I don’t find that meaningful if it’s not a totally new poll we all enter.

    Yes I proclaimed my change from June to July on June 4, and gave my reasons. Still think 2000.

    1450 really???

  70. 70
    patient says:

    RE: deejayoh @ 68 – I’m not worried I just don’t get what you where referring to? What I do remember though is that you said it was simple maths that we would close +2000. Is that correct?

  71. 71
    deejayoh says:

    RE: patient @ 70 – I said 1750-2000. June or July. I expect it probably will happen next month, but who knows.

  72. 72
    DrShort says:

    By The Tim @ 67:

    Related to @ 2 and @ 20 above, here is a sneak preview of the updated area-breakdown chart that I originally concocted in August 2007 for the post Median Price Not Telling the Whole Truth

    Looks like the MOM price change tracks pretty closely with the inverse of the percent change of SFH sales for South King County. South King County goes up as a percent of the total, the median goes down that month.

    You can also tell the mix is important because the YOY change for each major MLS area (except N King County with only 54 sales) has a greater decline than the county as a whole. The only way that’s mathematically possible is with a mix shift.

    KC total – 12%
    SW King County -16%
    SE King County -15%
    Seattle -14%
    Eastside -14%
    N King County – 2%
    Vashon -42%

  73. 73
    Racket says:

    “The end is near. Wylie E. Coyote is off the cliff, and just becoming aware of his predicament.

    1500 max. 1300 wouldn’t surprise me. As Einstien said, only two things are infinite- the universe and human stupidity… and he admitted he wasn’t sure about the universe. ”

    Swing and a miss.

  74. 74
    Greg Perry says:

    By patient @ 65:

    RE: deejayoh @ 63

    “By the way, there are no prizes available for this contest. except maybe the â��most courteousâ�� award ”

    That would be wrong, there is a huge award that many here seeks, the award of credability. Something that commenters like Eleua have earned and that gives weight to his comments which is pretty valuable imo.

    Can you feel the pressure? If the number lands on 1999, dejayoh and TheTtim will win the credibility award! I’ll be the big loser.

  75. 75
    Greg Perry says:

    By The Tim @ 67:

    Related to @ 2 and @ 20 above, here is a sneak preview of the updated area-breakdown chart that I originally concocted in August 2007 for the post Median Price Not Telling the Whole Truth. I’ll be writing up a full post regarding this sometime later this week.

    Since the beginning of the year the mid-range (red) has been climbing somewhat steadily, while the low-range (blue) and high-range (green) have pretty much swapped places.

    I’m very interested to see what you have come up with!

  76. 76
    Alan says:

    RE: jon @ 4

    How does an 8K tax credit cause the median price to go from $363K to $395K in just three months?

    By leveraging $8k at 20% down, $40k more home can be purchased.

  77. 77
    Snigliastic says:

    By patient @ 65:

    RE: deejayoh @ 63
    That would be wrong, there is a huge award that many here seeks, the award of credability. Something that commenters like Eleua have earned and that gives weight to his comments which is pretty valuable imo.

    RE: patient @ 65
    “credability?” you just lost all yours.

  78. 78
    deejayoh says:

    RE: Greg Perry @ 74 – I could tell you were nervous. I if I win, I’m sharing none of my pie with “PeoplenamedHarleyLeverareLosers”

  79. 79
    Racket says:

    I was scanning some recent sales, and it seems like a lot of the short sale houses I was looking at have closed.

    IMO the people who bought them didn’t negotiate the price that well.

  80. 80
    WaileaKid says:

    RE: The Tim @ 67

    Is it pending that you are tracking in this chart or closed?

  81. 81
    patient says:

    RE: Snigliastic @ 77 – I didn’t know I had any with you so thanks I guess.

  82. 82
    patient says:

    RE: patient @ 80 – Unfortunately I can’t return the compliment since you never had any :-)

  83. 83
    Snigliastic says:

    By patient @ 81:

    RE: patient @ 80 – Unfortunately I can’t return the compliment since you never had any :-)

    snap.

  84. 84
    Kary L. Krismer says:

    By Ross Jordan @ 42:

    RE: Kary L. Krismer @ 39 – Frankly, I look at cars and homes as the same class of asset: consumption. Both should be thought of as expenses: transportation expense and living expense. Thinking of a home as an investment is exactly why we’re in this mess.

    The difference being, if you keep a house 30 years and pay it off, you not only can live in it, but also most likely draw money out via a reverse mortgage. For the car to have any value it would have to be a very rare collectors’ item.

  85. 85
    Kary L. Krismer says:

    RE: Ron @ 51 – If there were a systemic collapse of the economy, 50 or 80% off wouldn’t be all that unlikely. There could also be a number of other scenarios that could lead to similar results, such as say a major pandemic or a nuclear explosion, etc. None of us have lived through any such thing (unless maybe we’re Japanese).

    Those of us who are older have lived through significant inflation. So for many of us, inflation seems like a more realistic possibility. If that occurs, those 5.5% 30 year mortgages are going to seem sweet!

  86. 86
    cutienoua says:

    RE: Ryan @ 13RE: Ryan @ 26
    Yes,Ryan .Imagine how bad it is to rent a nice apartment and drive a nicer car.But even worse,I see my coworkers driving junk cars and being foreclosed upon.

  87. 87
    Kary L. Krismer says:

    By Racket @ 52:

    Didn’t You once say that the housing bubble was all Kary’s fault?

    Housing has kind of been a backdoor retirement plan, which I like because how many of these people would be able to save the money that will cover their rent, past their productive working years?

    Yep, all my fault! :-D

    I’d have a different take on the retirement fund. I think it was more so a long time ago, and then people thought they could rely on SS, 401k funds, etc., so they changed their goal from having the house paid off in 30 years. So it’s less of a retirement fund now than before.

  88. 88

    […] NWMLS: Sales Edge Above ‘08, Median Up 5% MOM, Down 12% YOY (Seattle Bubble) […]

  89. 89
    Kary L. Krismer says:

    By DrShort @ 61:

    Do we have any idea how many REO properties sold in June? Somewhere between 250 and 350 properties are being trustee deeded per month and I’m curious if that many are being sold. I expect trustee deeds to grow substantially in the next few months. This should impact what the inventory looks like in Oct – Dec when normal sellers have taken their homes off the market.

    About 135+, but keep in mind that residential and condo, and not all foreclosed properties fit in that category. Also, not all agents have been properly selecting the box when the property sells.

  90. 90
    patient says:

    RE: Greg Perry @ 74

    “Can you feel the pressure? If the number lands on 1999, dejayoh and TheTtim will win the credibility award! I’ll be the big loser”

    Nah, it doesn’t work like that. Every time you make a good prediction you add some credability and when you make a bad one you loose some. If we had 1999 in June yours would be good and add creds. 1650 is a bit far from 2000 so that’s pretty bad, sorry. I don’t count your revised prediction since you are the only one who made one.

  91. 91
    Kary L. Krismer says:

    I’ll be telling you all “I told you so” when we hit 3000 in August, after the banks release a flood of short sale approvals in July. ;-)

    But of course if that does happen, the median that month would be about $325,000.

  92. 92
    Greg Perry says:

    By patient @ 88:

    RE: Greg Perry @ 74

    “Can you feel the pressure? If the number lands on 1999, dejayoh and TheTtim will win the credibility award! Iâ��ll be the big loser”

    Nah, it doesn’t work like that. Every time you make a good prediction you add some credability and when you make a bad one you loose some. If we had 1999 in June yours would be good and add creds. 1650 is a bit far from 2000 so that’s pretty bad, sorry. I don’t count your revised prediction since you are the only one who made one.

    Oh, the humanity……

    I don’t have any credibility with patient. Woe is me.

  93. 93
    sid says:

    By Ryan @ 26:

    RE: Soon2bBuyer @ 18 What is slightly annoying is the know it all attitude of many on this board and the general attitude of wishing for gloom and doom.

    Don’t let that get to you. Just monitor what the vast majority of the people feel and take a contrarian view. What you have to realize is that in 2005, it was the buyers who had the annoying attitude. One should not worry about these things in order to make sound investment decisions. We definitely need to have folks who are bearish on housing right now. There needs to be a “wall of worry” in order to have a sustained upturn.

    Even funnier is Sniglet’s comment at 15 about prices falling another 50%.

    So what. Anyone can make predictions. Robert Prechter predicts the Dow to go below 1000. And people pay to get advice from Robert Prechter.

  94. 94
    jon says:

    By Sniglet @ 15:

    they are laughing at you

    I am not laughing. I am just aching at the thought of how much pain those buying Seattle area homes today are going to be hurting when prices have dropped 50% or so from where they are now in the next few years.

    Then you definitely won’t be laughing at the beginning of November when YOY goes positive.

  95. 95
    Joel says:

    Take a guess and make it good because if you’re wrong, everybody will hate you.

  96. 96
    The Tim says:

    RE: WaileaKid @ 80 – Closed, since that’s what determines the reported median price.

  97. 97
    Racket says:

    By Joel @ 95:

    Take a guess and make it good because if you’re wrong, everybody will hate you.

    It takes 10 right predictions to offset 1 wrong one.

  98. 98
    Sniglet says:

    you definitely won’t be laughing at the beginning of November when YOY goes positive.

    Actually, bear markets are notorious for seeing the most violent rallies. Even Japan experienced some pretty big rallies (in both stocks and real-estate) over the last two decades, which could last a year or so. Ironically, the very presence of a major rally is pretty strong evidence that the worst is yet to come. When markets really do bottom, it takes YEARS to recover, and things kind of drag along the bottom for a long time.

    Since early this year I’ve been saying that we would see a major rally in the spring/summer (in stocks, real-estate, commodities, etc), that could even last until early 2010. Then the bear market will grip the world again, driving everything to much lower lows.

  99. 99
    voight-kampff says:

    RE: patient @ 80

    I could be wrong , but I think he was just referring to your mis-spelling of credibility.

    as far as credibility ( and this is a little off topic), If you consistently/constantly have the same belief throughout your lifetime, you get to be right now and then. Does that make you credible?
    I have an 87 year old, very educated, very intelligent relative who has believed in eminent financial collapse his entire life, he has been “right” several times over time in his life ( you should hear him gloat currently), I dont believe this lends him any particular credibility.

    I am not trying to take away from anyones predictions here, I am just commenting on something I always wonder about. There are incredibly bright people on this blog ( which I read daily ) they know way more about economics than I’ll ever know, however I feel there has to be some ( and only some ) who forever subscribe to the constant belief that things are collapsing. I am incredibly curious how long people have carried the beliefs they express on this blog? 2 years, 5 years , 25 years? To me that is a critical factor in determining your credibility.

    I only wonder this because of the several people I have personally known that have ALWAYS believed in “collapse” of one form or another, currently they are expressing a chocolate ton of ” i told you so”. Right now they seem like nostradamus, but trust me, these are not credible people.

  100. 100
    Sniglet says:

    I am incredibly curious how long people have carried the beliefs they express on this blog? 2 years, 5 years , 25 years? To me that is a critical factor in determining your credibility.

    I didn’t start believing in the possibility of a major deflationary depression until about 2003, when I saw the extent to which policymakers were willing to open the credit spigots in order to avoid any serious pain from the .COM bust. I was sort stocks in 2000, but not because I believed in a “collapse”, just because I felt the stock-market was over-heated.

    I sold my (Bellevue) house in 2003 when I saw how swiftly things were appreciating. In two years our home had appreciated 20%! This kind of price run-up scared me silly, and when I started seeing people getting interst-only and pay-option loans, I knew this was all going to end VERY badly.

    That said, I am not predicting an end to American civilization. As I am sure eveyrone on this blog has heard me say before, I expect this deflationary depression to be similar to what Japan has experienced over the last 20 years. Japan has been seeing prices drop for MANY years, yet their society hasn’t collapsed, and people aren’t going around with guns.

    Just because I believe real estate prices will drop some 80% from peak doesn’t mean I think we will be living in some mad-max type world. I completely agree with Tim’s assertion that lower prices are NOT a bad thing. This depression will merely purge the global economy of all the mal-investments (and non-performing loans), allowing the entire world to move on to even bigger in better things in the century ahead.

    I am actually very bullish on America, and think it will be one of the best places to live both during the depression and after it. Hey, I am one of those grubby job-sucking immigrants after all. :)

  101. 101
    David Losh says:

    RE: Sniglet @ 100

    Real Estate is a highly predictive, rational, market.

    Housing unit prices have been tied to rentable income. Rents and mortgage payments have been neck and neck until this last infusion of investment dollars. Many investors who are unfamiliar with Real Estate bought properties, Notes, and securities backed by over priced assets.

    Over priced means they exceed the value of the property. The NWMLS has become a sales organization. Again thousands of people who know nothing about Real Estate entered the business and began talking up the “investment” aspects. Of course you can make money in the Real Estate business. You need to know what you are doing. You need to know when to buy and sell, hold, or walk away.

    We are in a time of walking away. The party is over for those who hold over priced assets. Your only recourse is to pay them off. The banks have shown they are the very people I’m talking about.

    Real Estate will go back to a normal market, but banks will not recover.

    Unlike the stock market with it’s thousands of products to offer Real Estate is a one note investment. You can buy, fix, build, borrow, or sell. That’s it. The only equity you can count on is the equity you create by buying well.

    Real Estate takes work. It is an individual effort.

    I will guess billions of dollars are stuck in Real Estate with no way out. If an investor holds even a discounted Note they will have to sell for face value, or less. Even the interest income is being whittled away by declining asset prices. If we look at commercial Real Estate it is another blood bath. Commercial Real estate is a cash market place. Cash is being lost along with the equity.

    Here’s my prediction: The people losing all these billions of dollars will be looking at commodities to make up losses. We will all be asked to pay more for everything. I’m talking about real dollars rather than inflation. This will be the deflationary pain. You will have to make more in order to pay more.

    The end result will be a stronger global economy and maybe some cooperation. We’ll see.

  102. 102
    what goes up must come down says:

    jon who have to be a RE agent. that or you are smoking some serious weed, “Then you definitely won’t be laughing at the beginning of November when YOY goes positive. ” why wait until nov. why not pick sept?

  103. 103
    shawn says:

    RE: voight-kampff @ 99 – I look at it this way, it is easy to predict something might be wrong if it defies logic. As with the dot com bust and the real estate bubble, if it sounds too good to be true, then it is, or was.

    I did my homework, I read some books on buying a condo. Read how I needed to get their papers, read them, study them, investigate the association, etc. Got my money saved up. Went looking and found dirty condos, that needed painting and carpets. I was a bit shocked. So, like the naive guy I was, I asked about the association’s papers and was told that I had one day to make an offer and that within a week it would be gone. I said whoa. In a week it was gone.

    I had to think about it, am I going to be priced out forever or is this nuts? I started investigating, and decided that this did not make sense. Mainly I saw that the median income earner could not afford the median income home.

    To me this was an easy call. Doesn’t make me a master predictor, just a guy with common sense. So for me nothing to gloat about. Now I could buy today, but I think I am just a bit worried about this economy getting real bad. When I feel more secure, I am going to take the plunge.

  104. 104
    Scott Forcier says:

    I think the increase in prices has to do with higher quality of homes being sold REO. Look at what the median price buys you today compared to what the median price got you last year. People might be paying slightly higher prices, but it’s for substantially better homes. SO, has the median price actually gone up??

  105. 105
    jon says:

    By what goes up must come down @ 102:

    jon who have to be a RE agent. that or you are smoking some serious weed, “Then you definitely wonâ��t be laughing at the beginning of November when YOY goes positive. ” why wait until nov. why not pick sept?

    Looking at the recent pending numbers for King County SFH, it seems that the mix of closed sales will be shifting to higher priced markets over the next couple of months. Since there are not as many short sales in those markets, the pending sales are presumably more solid there.On the other hand, people are saying the number of NODs is increasing now, so maybe that will bring the mix back down.So I’m just calling it a wash, but yeah, I wouldn’t be too surprised by positive YOY in September numbers either.

  106. 106
    deejayoh says:

    By jon @ 104:

    Looking at the recent pending numbers for King County SFH, it seems that the mix of closed sales will be shifting to higher priced markets over the next couple of months. Since there are not as many short sales in those markets, the pending sales are presumably more solid there.On the other hand, people are saying the number of NODs is increasing now, so maybe that will bring the mix back down.So I’m just calling it a wash, but yeah, I wouldn’t be too surprised by positive YOY in September numbers either.

    2009 prices GT 2008 prices by November basically puts us back where the market was in 2005. So that is 1 year of flat performance, or 4 years of flat performance – depending on how you look at it.

  107. 107
    Sniggy says:

    RE: jon @ 104

    Looking at the recent pending numbers for King County SFH, it seems that the mix of closed sales will be shifting to higher priced markets over the next couple of months. Since there are not as many short sales in those markets, the pending sales are presumably more solid there..

    There are tons of short sales in higher priced markets, and many more regular listings converted to short sales.

  108. 108
    jon says:

    By Sniggy @ 106:

    RE: jon @ 104

    There are tons of short sales in higher priced markets, and many more regular listings converted to short sales.

    There are a lot, just not as many on a percentage basis as in lower priced areas. The closed sales on the Eastside track more closely to the pendings from 2 months previous than they do in south KC.

    So that is 1 year of flat performance, or 4 years of flat performance – depending on how you look at it.

    Flat is not the first word that comes to my mind to describe the last 4 years. The recent upturn in sales indicates that already some people have stopped viewing the market as deflationary. When YOY goes positive, I think even more people will do so and therefore sales will start to move back to the normal range. That isn’t going to affect the excess inventory of house very much, but it will help soften the impact of the alt-A wave here next year, which in any case is not going to be nearly as bad here as it will be in California.

  109. 109
    Scott Weitz says:

    I love how the bulls have jumped on this information.

    The fact remains that you can rent a nice place for about 1/3 of what it would cost to buy it, without the property taxes, upkeep, and the (very real) risk of property depreciation wiping out my down payment.

    And someone asked where the ‘shadow inventory’ is: its on the books of your local bank, and more is coming.

  110. 110
    Kary L. Krismer says:

    By what goes up must come down @ 102:

    jon who have to be a RE agent. that or you are smoking some serious weed, “Then you definitely wonâ��t be laughing at the beginning of November when YOY goes positive. ” why wait until nov. why not pick sept?

    The median was still well above 400k in September. That’s the month Paulson made his famous announcement, so prices were still unaffected at that time. The better question would be why not pick October, when it was 392,000, 3,000 below November.

  111. 111
    patient says:

    RE: voight-kampff @ 99 -I don’t agree, you loose credibility when you are wrong not when you stand by your belief if that belief turns out to be correct. If you always predict raising home prices and that is what happens you are credible until prices turns negative. The same goes for people who predict a negative economic and hosuing outlook, until they are wrong they are credible. This blog has been around for to short time to know if there are any constant “doom-sayers” here. Especially since things has gone worse than just about anyone predicted so far. I don’t hink even Eleua with his eerily accurate predictions included the full extent of the collapse we’ve seen. We seen many commenters come a go that tried to put the “even a broken clock is right once a day” stamp on Seattlebubble and it’s commenters. When perceptual pessimism turns out to be realism it’s not doom and gloom is it? And again, to much risk management is not what caused the problem we have, so a little bit of overweight in the cautious side in evaluating the health of the economy and housing market this time is probably preferable in comparison to the obsessive cheerleeding.

  112. 112
    patient says:

    RE: Joel @ 95

    “Take a guess and make it good because if you’re wrong, everybody will hate you. ”

    That would depend. If you are in the position to guide people into making a decision based and your guess and it turns out to be spectaculary wrong. ( Someone guiding a buyer to buy property in 2007 as a good investment for example ) I can see that you could be the target for some hard feelings. If you make a guess on the number of closed sales on a blog in June and you are wrong you loose some credibility but it’s not hate. I don’t give my 4 year old much credibility in predicting the direction of the housing market but I love her infinitely, I just wouldn’t take her advice on that subject.

  113. 113
    Kary L. Krismer says:

    Very strange site. Credible is somehow synonymous with lucky here. And not even that lucky. This isn’t like roulette, there are only three choices, up, down or flat.

    And as to predictions regarding sales volume, I was giving updates periodically through the month, and indicated that the sales were back loaded. At one point I indicated also that what you’re predicting is how slow agents are entering their data. I just don’t see how being right on that poll makes you somehow credible. Realistically there were only three choices to that poll that made any sense at all.

  114. 114
    patient says:

    RE: Kary L. Krismer @ 113 – If you make good predictions your future predictions will be more credible. And the real estate industry is full of predictions so it’s good to get an idea of whose predictions you should consider as being of value. Is that so strange?

  115. 115
    what goes up must come down says:

    Is John L. Scott credible hmmm…….

  116. 116
    DrShort says:

    By patient @ 114:

    RE: Kary L. Krismer @ 113 – If you make good predictions your future predictions will be more credible. And the real estate industry is full of predictions so it’s good to get an idea of whose predictions you should consider as being of value. Is that so strange?

    Credibility should be based on sound reasoning, lack of bias, and an ability to effectively integrate a wide variety of information sources. Having the right “guess” says nothing about credibility.

  117. 117
  118. 118
    Kary L. Krismer says:

    I just received an email from someone asking if I didn’t find the site credible. That’s not what I’m saying at all. I responded that this was one of the best sites out there.

    I’m just saying being right on a guess doesn’t result in credibility.

  119. 119
    Kary L. Krismer says:

    One more thing–you don’t have to be right to be credible. What Eleua was saying in 2007 turned out to be pretty close to correct as to the problems, but he grossly overstated the consequences–to date anyway–he might be right based on what happens in the future.

    The point is, Eleua is much more credible than say someone who in 2007 predicted the June 2009 median would be $395,000 because they thought prices would fall 15%.

  120. 120
    Kary L. Krismer says:

    RE: shawn @ 117 – Thanks–I’ll have to look at that later.

  121. 121
    what goes up must come down says:

    kary you are spot on being right has nothing to do with being credible.

  122. 122
    patient says:

    RE: DrShort @ 116 – Consistently having good predictions is a result of the factors you mention. There is no contradiction. Most predictions here are not wild guesses but a result of things as knowledge, experience , intelligence and information gathering. But it doesn’t matter how many years of college and experience etc you have if your predictions are wrong your predictions have little credibility. The proof is in the pudding not in the receipe.

  123. 123
    patient says:

    From wikipedia regarding credibility:

    “Traditionally, credibility has two key components: trustworthiness and expertise, which both have objective and subjective components. Trustworthiness is a based more on subjective factors, but can include objective measurements such as established reliability.”

    You see that “established reliability”. Consider it for a while and see if you change your mind of that being right is not a component of credibility.

  124. 124
    Greg Perry says:

    Oh my, does anyone beside me find this side tangent on credibility hilarious?

  125. 125
    patient says:

    RE: Greg Perry @ 124 – No, but I can understand with the record of crediblity that your industry have that you wan’t to redicule it, especially since you seem to be caught with not understanding the concept yourself. From the constant destruction and the apparent willingness to destroy it I can also see that it’s not regarded as a particulary important virtue by your industry. Here’s a newsflash, it’s a critical component to any business.

  126. 126
    patient says:

    RE: patient @ 125 – Credibility also goes to core of the existent and popularity of this site, if there were other credible sources for consumers when this site started it would not have been so relevant and become so popular. After nearly 5 years since it’s it’s inception it is still the most credible source in this area.

  127. 127
    voight-kampff says:

    By Greg Perry @ 124:

    Oh my, does anyone beside me find this side tangent on credibility hilarious?

    I find it hilarious that you point it out. ( in an ironic kind of way, not in a “your an evil agent kind of way”)

  128. 128
    Greg Perry says:

    RE: patient @ 125

    Well, sport, you’re certainly on your high horse.

    In The Tim’s “Guess the closings” post deejayoh summed up the logic quite well, (I agree with this logic).

    “Macroeconomic factors really have very little to do with it at this point. It’s straight math. As Greg points out, we are seeing over 2,000 pendings a month. And my bet is that the close:pending ratio is more likely to get better at this point than it is to get worse. Money is easing up – especially at the low end of the market where all the action is. So worst case is 65% of pendings close (2,500 * 65% =1,625) and more likely we see 70 – 75% of pendings close”

    Here is what I said at the time (nobody at that time had guessed +2000),

    I’ll be the lone brave one and declare 2000. We’ll have 2500 pending sales in May. 4500+ pending sales in 2 months will have to create closings despite the fallout rate. The spring lag between pending and sold is normal, although the the much discussed gap is wider this year. Good post. this will be fun to watch as the year unfolds.

    Since you’re so adamant that this was my “official” guess. Which month did I say?

    ROTFLMAO!

  129. 129
    Sniglet says:

    Being “right” is certainly not all that it’s cracked up to be. It is far better to get along rather than be right if you wind up alienating others, or to appear to be disruptive. I can attest to this phenomena personally. There have been numerous occasions in my career where I articulated (very reasoned) concerns about the viability of given strategies or product directions which later turned out to be eerily prescient. In the process, however, managers would grow to view me as a wrench in the gears. What companies want are “team players” who follow directions.

    I have seen numerous glad-handers zip by me on their career tracks, never challenging the directions from above, and diligently working on (or implementing) policies or directives that would ultimately fail. The fact that my early insights may have proven to be right on the money is irrelevant.

    Even in my sideline of economic/financial forecasting (and how it relates to business), I have engendered a fair bit of hostility in my company. Some people view me as just an apocalyptic doomsayer who reeks of negativity. One colleague has said she can’t stand to even be in the same room as me because she knows what I think about how the economic trends will impact our business. Sure, I have fans (over 200 people have joined my economics discussion club at work), but those who are rankled by bearish views have become increasingly hostile. It’s as if this recession is driving people into different camps, and raising the temperature levels of any discussions.

    Just look at the people who lost their jobs during the boom years because they were unwilling to play along. The Wall Street Journal had a series of stories about compliance or risk managers, and even executives, who voiced serious concerns with what their firms were doing and lost their jobs as a result. These same people would have been much better off to just have turned a blind eye, collecting those hefty bonuses, while the good days lasted. Analysts who give sell recommendations will find themselves out of a job in short order. I believe I described my experience as a tech journalist, where the analysts who had the most positive stories had smoother careers.

    Taking a contrarian stand is a lose-lose proposition. You are ridiculed for an unorthodox view, and resented if proven to be correct. If you are following the crowd, it doesn’t really matter if you are wrong, since you can just say that “everyone” made the same mistake.

    In short, being “right” is almost never useful to your career, finances, friendships, or even mental health.

  130. 130
    patient says:

    RE: Greg Perry @ 128 – Greg, I think your prediction could have been part of the reason to the poll, long before the poll you were explicitly asked by me if we would see 2000 closings in May and June. You replied yes, we will see 2000+ closings in June. This was in relation to when the big difference between pendings and closings was discussed and your interpretation was that it’s normal with just a bit added delay due to underwriters being busy with things like refi’s. Others suspected a big fallout of short sales and changes in the nwmls pendings definition. Does that answer your question?

  131. 131
    patient says:

    Greg for someone who started this discussion back at 56 with words like these:

    “74% of those who voted felt closings would not hit 1500
    Of course we all remember what Kary predicted ;)
    So how are you doing? Fess up time. ”

    you are very touchy for being called out on the details and accuracy of your own predictions.

  132. 132
    jon says:

    By Greg Perry @ 128:

    RE: patient @ 125

    “Macroeconomic factors really have very little to do with it at this point. Itâ��s straight math. As Greg points out, we are seeing over 2,000 pendings a month. And my bet is that the close:pending ratio is more likely to get better at this point than it is to get worse. Money is easing up â�� especially at the low end of the market where all the action is. So worst case is 65% of pendings close (2,500 * 65% =1,625) and more likely we see 70 â�� 75% of pendings close”

    On the other hand, the strength of prices and volumes could lead banks to discard all the low-ball offers they have been sitting on. If the offers weren’t high enough to accept before, they would only be accepted now if they had been waiting for a better offer and not gotten one.

    As I understand it, these monthly pending numbers are rolled over to the next month like inventory, and so are not comparable to monthly sales. Am I wrong about that?

  133. 133
    Sniglet says:

    I’ll be the lone brave one and declare 2000. We’ll have 2500 pending sales in May. 4500+ pending sales in 2 months will have to create closings despite the fallout rate.

    I certainly won’t even try to argue with this prediction. Short-term predictions like this are not my game. What I will say, however, is that we will see the number of King County mortgage delinquencies more than double of where they are now by September 2010, and that distressed sales (short, REO, or foreclosure) will increase to be 50% of King Country total closings by end of 2010.

    I am less certain as to what will happen to median prices, since we might start to see more high end properties wind up in distressed sales in 2010 (which could drive up over-all prices). Case-Schiller, however, will record at least a 15% YOY drop in prices by January 2011.

  134. 134
    patient says:

    RE: jon @ 132 – deejayoh’s prediction and reasoning looks like they will turn out to be really good. +1 for him. In my mind he does have a record of being slight on the bullish side compared to actual fallout but this one seems to be real good. I have no problem acknowledging that or as I said that my own prediction was poor as was my latest C/S month to month prediction.

  135. 135
    Greg Perry says:

    By patient @ 130:

    RE: Greg Perry @ 128 – Greg, I think your prediction could have been part of the reason to the poll, long before the poll you were explicitly asked by me if we would see 2000 closings in May and June. You replied yes, we will see 2000+ closings in June. This was in relation to when the big difference between pendings and closings was discussed and your interpretation was that it’s normal with just a bit added delay due to underwriters being busy with things like refi’s. Others suspected a big fallout of short sales and changes in the nwmls pendings definition. Does that answer your question?

    Absolutely correct. Historically June is the biggest month for closed sales in any year and I was thinking 2009 would be, as well. As I continued to study the sales data and larger lag created by anemic January, Feb, and early March pending sales, on June 4, I revised the 2000+ target date to July.

    BUT for this discussion, we were talking about the “guess” poll. I don’t really care. You can pin me to “pre official guess”, “official guess”, or “post official guess”, I don’t care. I think we’ll see 2000 in 2009 based on past charts, the numbers I see and basic logic. And if we don’t? We don’t. This market is unlike any market in the past and we’re learning as we go.

    And….it is a GUESS! I’m with dejayoh. I think the prize should be a pie. This is a “for fun” poll and I approached my guess with past history, current numbers and an outright guess. I will be right, or I won’t. Panties need to be un-bunched, I’m thinkin’.

  136. 136
    deejayoh says:

    By jon @ 132:

    As I understand it, these monthly pending numbers are rolled over to the next month like inventory, and so are not comparable to monthly sales. Am I wrong about that?

    I thought it was established on another thread about this same topic that the pending numbers are only reported once, in the month the listing disappears – but I could be mistaken.

    And nice to hear I am regarded as bullish. hrm. I guess anyone who doesn’t believe home prices will fall over 50% is bullish is the eyes of some. LOL

  137. 137
    patient says:

    RE: deejayoh @ 136 – “And nice to hear I am regarded as bullish. hrm. I guess anyone who doesn’t believe home prices will fall over 50% is bullish is the eyes of some. LOL ”

    Not really, but I think your YoY predictions have been a bit higher than the fallout and I also think your inventory driven model predicted a more bullish outcome than the actual result. I could remember wrong though but I do have the perception of you as slightly bullish in relation to the fallout from the comments/predicitions I can remember.

  138. 138
    patient says:

    RE: patient @ 137 – You could easily correct my perception by providing a couple of pedictions where you have been more bearish than the actual outcome if you find it worth while. I kind of figure though that you couldn’t give a RA what my perception is ;-)

  139. 139
    Sniglet says:

    nice to hear I am regarded as bullish. hrm. I guess anyone who doesn’t believe home prices will fall over 50% is bullish is the eyes of some.

    Self-awareness is a beautiful thing… I am thrilled that you have now been able to accept your “bullish” nature. Don’t be ashamed, the bears will be nice to you. We bears realize how hard it is to be accepted by others, and will embrace you regardless of your mis-guided beliefs. :)

  140. 140
    Matsayswhat says:

    By jon @ 108:

    By Sniggy @ 106:

    RE: jon @ 104
    Flat is not the first word that comes to my mind to describe the last 4 years. The recent upturn in sales indicates that already some people have stopped viewing the market as deflationary. When YOY goes positive, I think even more people will do so and therefore sales will start to move back to the normal range. That isn’t going to affect the excess inventory of house very much, but it will help soften the impact of the alt-A wave here next year, which in any case is not going to be nearly as bad here as it will be in California.

    Alt-A Wave? Can someone explain this term? (Thanks in advance)

  141. 141
  142. 142
    what goes up must come down says:

    greg can I ask do you think housing will rebound or will we still see price declines in the next six months?

  143. 143
    Sniglet says:

    it will help soften the impact of the alt-A wave here next year, which in any case is not going to be nearly as bad here as it will be in California.

    Make no mistake, the Alt-A wave will be painful in the Puget Sound. In the bubble years upwards of 30% of all new Seattle area mortgages were of a zero interest or option-ARM variety (almost all of which were Alt-A). California may have had a higher percentage of Alt-A loans, but the Puget Sound had a respectable number in it’s own right.

  144. 144
    patient says:

    RE: jon @ 141 – Nice link jon, did you catch if all the charts are for California only or if it’s a mix between Cali and national data?

  145. 145
    patient says:

    RE: Sniglet @ 143 – A friend of mine just got his 5y i/o 0-down jumbo recast to another $600 a month, now pushing $4k. That and his wife lost her job a while back. It’s tough to watch their struggles as they love their home but realizes that the situation is unsustainable. Unfortunately I don”t thik this is very uncommon.

  146. 146
    Sniglet says:

    A friend of mine just got his 5y i/o 0-down jumbo recast to another $600 a month, now pushing $4k. That and his wife lost her job a while back. It’s tough to watch their struggles as they love their home but realizes that the situation is unsustainable. Unfortunately I don”t thik this is very uncommon.

    I remember going to a barbecue at one of my wife’s mother’s groups in Kirkland back in 2005. The husband of the lady hosting the event was a mortgage broker, and was telling me of how stunned he was that almost all of his customers were burying themselves in mortgages with payments that were at the very edge of what their incomes could afford. He waxed philosophical about how the attitudes of how to manage debt had changed a lot since he was a young man.

    Not for the better, it would seem. We are going to have to re-learn those old values the hard way.

    In any event, both the statistical and anecdotal evidence (from conversations like the one I just mentioned) would indicate that the Seattle area is going to suffer significantly in this credit deflation depression. We are NOT immune, we’re just lagging a bit.

  147. 147
    Cheap South says:

    By Sniglet @ 100:

    I am incredibly curious how long people have carried the beliefs they express on this blog? 2 years, 5 years , 25 years? To me that is a critical factor in determining your credibility.

    I didn’t start believing in the possibility of a major deflationary depression until about 2003, when I saw the extent to which policymakers were willing to open the credit spigots in order to avoid any serious pain from the .COM bust. I was sort stocks in 2000, but not because I believed in a “collapse”, just because I felt the stock-market was over-heated.

    I sold my (Bellevue) house in 2003 when I saw how swiftly things were appreciating. In two years our home had appreciated 20%! This kind of price run-up scared me silly, and when I started seeing people getting interst-only and pay-option loans, I knew this was all going to end VERY badly.

    That said, I am not predicting an end to American civilization. As I am sure eveyrone on this blog has heard me say before, I expect this deflationary depression to be similar to what Japan has experienced over the last 20 years. Japan has been seeing prices drop for MANY years, yet their society hasn’t collapsed, and people aren’t going around with guns.

    Just because I believe real estate prices will drop some 80% from peak doesn’t mean I think we will be living in some mad-max type world. I completely agree with Tim’s assertion that lower prices are NOT a bad thing. This depression will merely purge the global economy of all the mal-investments (and non-performing loans), allowing the entire world to move on to even bigger in better things in the century ahead.

    I am actually very bullish on America, and think it will be one of the best places to live both during the depression and after it. Hey, I am one of those grubby job-sucking immigrants after all. :)

    Sniglet – just remember the Japanese had money saved in the bank as their mess developed; we have credit card debt. They stay put in the same city all their lives, we move like gypsies. They are highly educated; etc…..

    The US will lead in technology!! Sure! Solar panels, batteries, wind turbines, electric cars, trains, etc, etc. Let’s suppose the US catches up with the rest of the world and every top company is founded in the US; where will the factories be located??….You know the answer; so we are back to square one.

  148. 148
    patient says:

    RE: Sniglet @ 146 – They have a good chunk of savings and about $80k “equity” left from the lowest estimate on selling price from a handful of realtors they had over for an analysis and are now preparing to sell. So they are still not in an iminent risk of foreclosure but they do realize the obvious risk if they wait any longer. My guess is that many 5y i/os are in a similar siuation and more are going to be added. It’s not pretty.

  149. 149
    deejayoh says:

    By Sniglet @ 100:

    I sold my (Bellevue) house in 2003 when I saw how swiftly things were appreciating. In two years our home had appreciated 20%! This kind of price run-up scared me silly, and when I started seeing people getting interst-only and pay-option loans, I knew this was all going to end VERY badly.

    King County SFH Median 06/03: ~$295k
    King County SFH Median 07/07: ~$475k (+61%)
    King Count SFH Median 06/09: ~$395k (+34%)

    Just sayin’

  150. 150
    Greg Perry says:

    By what goes up must come down @ 142:

    greg can I ask do you think housing will rebound or will we still see price declines in the next six months?

    Here is an article that I wrote in early 2007 that sums up most of my market philosophy.

    http://workingforyou.typepad.com/feature_article_pricing_t/

    I work very different than most agents in that before taking buyers out to look at properties, I ask them to come in for a meeting that lasts for 1 -2 hours, depending on the amount of questions the buyer has. I use a power point presentation that keeps me on track. For 14 years my “market slide” has shown the following:

    1. What is a Buyer’s market?
    2. What is a Seller’s market?
    3. What about appreciation. Will your home appreciate on a daily basis?
    4. What are our seasonal trends?
    5. What’s happening in today’s market.

    This slide kept ME grounded as much as anything could in the huge run up from 2002, as it forced ME to have a frank discussion with EVERY SINGLE BUYER about market appreciation. I have always believed “what goes up must come down”. So, 10% plus appreciation rates were a temporary bonus for some, I never felt this would sustain. My words to every buyer for over 14 years is “all markets correct”, and I believe this.

    Next 6 months? It depends on the neighborhood, price range……and absorption rate. I suspect the high end will continued to be troubled. Whether we believe in government stimulus….. or not….. the gov will do everything it can to throw at housing to get it going. Watch for more stimulus. I think prices may stabilize in the best neighborhoods. Outlying areas will continue to struggle. I really do not like measuring markets MOM by median price, especially with segments of the market, like the high end, eroding overall pricing. When I work with a buyer, or a seller, I do my best to figure out what is happening in their specific market.

    By the way, I also believe what goes down, will come up.

  151. 151
    Scott Weitz says:

    Sniglet @ 129

    Good post…that’s been one of the toughest parts of this ‘great recession’. Many friends and colleagues don’t want to hear about how bad things are or how bad they will get. They’d prefer to bury their heads in the sand.

  152. 152
    jon says:

    By Sniglet @ 146:

    In any event, both the statistical and anecdotal evidence (from conversations like the one I just mentioned) would indicate that the Seattle area is going to suffer significantly in this credit deflation depression. We are NOT immune, we’re just lagging a bit.

    The statistical evidence is essential, because the alt-A foreclosures will hit at about the same time that Seattle area overbuilt inventory runs out, assuming population trends continue. It appears that move-up buyers are active again now, but we don’t know if they will continue to be enough to absorb the alt-A distress sales.

    So what do the latest results do for the meme that sales will increase once the price goes down far enough? Over the past three months, the volume of sales has been increasing as the price increased. Have buyers blinked?

  153. 153
    Sniglet says:

    the alt-A foreclosures will hit at about the same time that Seattle area overbuilt inventory runs out, assuming population trends continue

    Population has little to do with demand for housing. In the last year we have seen demand for housing shrink in absolute terms, nationwide, even as the population has increased. People are adjusting their housing needs by doubling up, moving back with parents, looking for roommates, and so on. Many families are deciding they can have the kids share rooms, and increasing numbers of home-owners are now renting out rooms to help make ends meet.

    Thus, housing demand is highly elastic, and is much more correlated to economic growth and incomes than population.

    Like I have said earlier, this blip in the Puget Sound housing market will pass late this year, or in 2010, and demand for housing will contract. The Alt-A recast wave will contribute to this, but broader macro-economic issues will be the biggest factor as unemployment grows (with more lay-offs from Seattle’s major employers), and consumers continue to increase their savings rates (and corresponding debt reduction).

  154. 154
    jon says:

    By Sniglet @ 153:

    the alt-A foreclosures will hit at about the same time that Seattle area overbuilt inventory runs out, assuming population trends continue

    Population has little to do with demand for housing. In the last year we have seen demand for housing shrink in absolute terms, nationwide, even as the population has increased. People are adjusting their housing needs by doubling up, moving back with parents, looking for roommates, and so on. Many families are deciding they can have the kids share rooms, and increasing numbers of home-owners are now renting out rooms to help make ends meet.

    This graph says otherwise:
    http://www.alanpope.com/May09/PugetS_NewCon_Res.pdf

  155. 155
    The Tim says:

    By jon @ 154:

    This graph says otherwise:
    http://www.alanpope.com/May09/PugetS_NewCon_Res.pdf

    All that graph shows is the number of new construction SFHs and condos listed and sold through the NWMLS. It has nothing whatsoever to do with population.

  156. 156
    jon says:

    By The Tim @ 155:

    By jon @ 154:

    This graph says otherwise:
    http://www.alanpope.com/May09/PugetS_NewCon_Res.pdf

    All that graph shows is the number of new construction SFHs and condos listed and sold through the NWMLS. It has nothing whatsoever to do with population.

    It shows that inventory of unsold new houses in the Puget sound has dropped by 3000 in the past year, and extrapolating to next year will reach a level that will drive prices back up. It is at that point that people will really start to double up.

  157. 157
    The Tim says:

    RE: jon @ 156 – Again, you’re looking only at the new construction that happens to be listed on the NWMLS. This is a small piece of the overall local housing inventory picture that includes used houses on the NWMLS as well as bank-owned foreclosures, FSBOs, and new construction inventory that are not included in the NWMLS stats at all.

    e.g. – Do you really think there are only 7 units available for sale right now at Olive8? Because that’s all that is currently listed on the NWMLS, and all that would be included in that chart you linked to.

    To assume that prices will be driven up merely by a dip in new construction inventory on the NWMLS is a pretty major leap of logic.

  158. 158
    Sniglet says:

    It shows that inventory of unsold new houses in the Puget sound has dropped by 3000 in the past year

    But this doesn’t demonstrate any correlation to population. There is NO direct correlation to housing demand and inventory, housing stock, or population. Demand for housing is highly dependent on things like financing availability, employment, wage levels, etc.

    For example, if a given region experiences massive amounts of lay-offs I can virtually guarantee that the inventory of unsold homes will skyrocket, and demand will shrink, even if the the over-all population increases.

  159. 159
    patient says:

    RE: jon @ 156 – The drop in inventory as a result of less listings than normal is an interresting subject. Especially how sustainable this is, builders need to build to survive and many owners want or need to sell. On top of that you have a predicted increase in short sales and foreclosures. We have been stuck at about 10k units in King co. SFH for the whole of 2009. It will be interresting to see how the balance shifts one way or the other going forward.

  160. 160
    Kary L. Krismer says:

    RE: The Tim @ 157 – I’m not familiar with what Pope reports, but the NWMLS only has a fraction of the new construction reported because the builders only list representative units–thankfully! It would make it much more difficult to search if they listed everything.

  161. 161
    jon says:

    By The Tim @ 157:

    RE: jon @ 156 – Again, you’re looking only at the new construction that happens to be listed on the NWMLS. This is a small piece of the overall local housing inventory picture that includes used houses on the NWMLS as well as bank-owned foreclosures, FSBOs, and new construction inventory that are not included in the NWMLS stats at all.

    e.g. – Do you really think there are only 7 units available for sale right now at Olive8? Because that’s all that is currently listed on the NWMLS, and all that would be included in that chart you linked to.

    To assume that prices will be driven up merely by a dip in new construction inventory on the NWMLS is a pretty major leap of logic.

    All that my point depends on is that the true inventory is roughly proportional to what is listed. The true inventory is really what is going to determine prices, not monthly sales, which is mostly people going between between one housing unit and another and so not affecting net supply or demand.

  162. 162
    jon says:

    By Kary L. Krismer @ 160:

    RE: The Tim @ 157 – I’m not familiar with what Pope reports, but the NWMLS only has a fraction of the new construction reported because the builders only list representative units–thankfully! It would make it much more difficult to search if they listed everything.

    If it is really just representative units, that indicates entire developments are leaving inventory. For some undeveloped areas that could because they have mothballed it, but given that prices and sales are increasing, I doubt that is the explanation over the last few months.

  163. 163
    deejayoh says:

    RE: jon @ 162 – What I have seen is that most big builders don’t list on the MLS because they don’t want to pay a seller’s commission. The retain companies like Williams Marketing to do their sales for them or do it in house. When they start listing units on the MLS it’s either because they a) only have few units left so they let the marketers go or b) they are desparate for some foot traffic.

    That said, I don’t see any evidence that supports an assertion that decreases in new home inventory are correlated with home price changes. It’s just an assertion at this point. Love to see it

  164. 164
    jon says:

    By deejayoh @ 163:

    RE: jon @ 162
    That said, I don’t see any evidence that supports an assertion that decreases in new home inventory are correlated with home price changes. It’s just an assertion at this point. Love to see it

    Take a look at the ten year data from that site, http://www.alanpope.com/10yearPuget.pdf

    The two years with the lowest inventory are 1999 and 2005. Those are the years with the highest YOY % price increase according to the data in The Tim’s spreadsheet. 2006 started out strong for YOY prices, but then dropped off, just as inventory was increasing. The years 2000 and 2004 had a little bit higher inventory and a little bit lower YOY% increase in price.

  165. 165
    David Losh says:

    RE: jon @ 152

    I would like to see population trends that show population growth in the Pacific Northwest.

  166. 166
    The Tim says:

    By jon @ 161:

    All that my point depends on is that the true inventory is roughly proportional to what is listed.

    1) That’s a pretty big assumption.

    2) Your assertion that home prices will be “driven back up” depends on additional factors, whether you care to believe it or not.

  167. 167
    Mikal says:

    RE: deejayoh @ 149 – I’d be bitter if I had lost out on all that potential money.

  168. 168
    deejayoh says:

    RE: jon @ 164 – yes, I made a post on this a long time ago. There is a inverse relationship between the change in overall inventory levels and the changes in price – with about a 1 year lag

    But that chart is for all inventory, not just new construction (as was my analysis). I don’t see how you can make the leap that one component drives the change.

    By Mikal @ 167:

    RE: deejayoh @ 149 – I’d be bitter if I had lost out on all that potential money.

    Bitter? You might even state a strong belief that home prices will fall below where they were when you sold! ;^)

  169. 169
    DrShort says:

    RE: jon @ 156
    All that my point depends on is that the true inventory is roughly proportional to what is listed. The true inventory is really what is going to determine prices, not monthly sales, which is mostly people going between between one housing unit and another and so not affecting net supply or demand.

    Whatever the true inventory is, that’s only half of the equation. Demand is the other half and we know this about demand:

    1. Easy loans with no money down are gone.
    2. Bridge loans are difficult to find for move up buyers.
    3. Loans for those with poor credit are difficult to find.
    4. Equity that move up buyers would have used for down payments is reduced or gone.
    5. Stock market savings are reduced.
    6. Job losses are high.
    7. Private mortgage companies are getting much stricter.
    8. Housing is no longer seen as a “can’t miss” investment.
    9. Several key Seattle area employers are gone or cutting back and there doesn’t seem to be many up starts taking their place.
    10. Employee stock options and stock rights are generally worthless.
    11. California buyers are no longer coming to Seattle with bags of cash from their home sales there.

    The only positives for housing demand are low interest rates and reduced prices. I’d agree that there appears to be a backlog of buyers out there who held off buying last year. I’d even throw myself in that group. But what I have doubts about is whether any pent up demand is sustainable. Will there be any demand once the “fence sitters” are through.

    What percent of the population that could have qualified for an average sized mortgage in 2005 can no longer do so in 2009? If I had to throw out a number, I’d say 15 – 20%.

  170. 170
    David Losh says:

    RE: DrShort @ 169

    I will say that there are people who own and will stay put. There are people who rent and will never think of doing anything else. There is a certain per cent of people who have to move and i think we saw that this year.

    I agree that once the fence sitters are done pent up demand will be done. Once the curiousity wears off I think Real Estate will be something of a dream for most people.

  171. 171
    jon says:

    By DrShort @ 169:

    RE: jon @ 156
    All that my point depends on is that the true inventory is roughly proportional to what is listed. The true inventory is really what is going to determine prices, not monthly sales, which is mostly people going between between one housing unit and another and so not affecting net supply or demand.

    Whatever the true inventory is, that’s only half of the equation. Demand is the other half and we know this about demand:

    That;s a long list. That’s why it is so important to look at real demand and real supply. Otherwise we are left discussing only Sniglet’s head-fake following by a quadruple dip with full reverse, degree of difficulty 8.0.

  172. 172
    Softwarengineer says:

    RE: jon @ 154

    WE’VE PASSED THE CREDIT LIMIT ON THE ORWELLIAN NEWSPEAK “GROWTHFRIEND”

    A major corporation [IBM] coined the phrase, “Innovation for Growth”.

    Up until about 2006 or 2007, we had a Greenspan lever to reduce mortgage interest rates and raise house prices with population growth….if FOX news is correct [and it appears correct in all my other economic blog sites]and the $787B stimulus that was “imminent” is still only 5% spent….what does that mean to credit for the growth population?

    IMO, it means America is flat broke.

    Credit to build for more growth overpopulation has expired. The Greenspan lever broke off.

    The party is over, time to throw the empty beer containers in the trash.

    How about magic technology innovation bringing in industrial base JOBS to replace this phony glueboard manufacturing with “Growthfriend” debt?

    IMO, we’re looking at 10+ years before we see any new invention tech JOBS, or as one blogger put it above, it will likely be all outsourced anyway and we’re back to square one.

    Even the CEO of General Electric agrees with me in principle, America must take back its manufacturing or die. He suggested raising our current 9% manufacturing workforce to 20%….I say we need 80%.

    I’m talking TVs, cars, computers, etc….we don’t need new tech too late, we need old tech right now!

  173. 173
    jon says:

    By Softwarengineer @ 172:

    RE: jon @ 154

    I’m talking TVs, cars, computers, etc….we don’t need new tech too late, we need old tech right now!

    And that would require barring imports from countries with lower cost of labor or better technologies. Then those countries would bar imports from us, and we would all be out of a job.

  174. 174
    what goes up must come down says:

    RE: Greg Perry @ 150 – greg much appreciated, I agree with what you said about the govt, it is not about weather it is right or wrong but I believe it is what will happen

  175. 175
    David Losh says:

    RE: Softwarengineer @ 172

    I’m going to address this later in an open thread because it is way off topic here. Manufacturing means very little to the finished product. Jobs are what you keep talking about. We can pay every one in the country minimum wage, no matter what the skill level, and every one would be employed.

    It will take time to research an argument.

  176. 176
    rent for now says:

    …and if you are wrong, then you are incredible.

  177. 177
  178. 178

    […] As we head into winter, I’m comfortable now calling the winners in May’s poll: Guess the maximum 1-month total closed SFH sales in King Co. for 2009. 1,750-2,000 takes the prize. Only 12 of 123 voters selected the correct answer. Congratulations to deejayoh and me, as well as four other registered commenters. […]

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