Quick Look: October 2009 in Bar Charts

Here’s another installment of “quick look,” a series of posts in which I present a fresh set of charts for some recent data with minimal commentary.

Today’s theme is King County SFH October stats in bar charts compared to each October since 2000.

King Co. SFH Closed Sales: October

King Co. SFH New Listings: October

King Co. SFH End of Month Active Listings: October

Note that the definition of “Active Listings” was revised in July 2008 to exclude certain listings.

King Co. SFH MOM Price Change: October

King Co. SFH YOY Price Change: October

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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.

32 comments:

  1. 1
    Ray Pepper says:

    -3.7%..the bleeding continues but far less arterial. I maybe the only one but I applaud the Fed for accomplishing what they set out to do…To soften the landing..sacrafice the future for today?…yeah yeah yeah whatever…

    Furthermore the last three weeks I’m receiving many reports from clients that their Loan Mods are actually getting done. The banks have really stepped it up a notch it appears. However, the recent FNM “Deed for Lease” is a sham with far too many restrictions.

    I’m still waiting to hear if anybody got Principle Reduction. I see lots of 5%-5.5%, forgiveness of accrued/outstanding interest, and lower payments to the property owner but has anyone gotten and Mtg Cramdown? I only hear reports about this in California from word of mouth but cannot verify.

  2. 2
    Trigger says:

    No but the closed sales are up and are better than in 2008! We are ready to rock n roll?

  3. 3
    David McManus says:

    BUY! BUY! BUY! BUY! BUY! BUY! BUY! BUY!

  4. 4

    As I mentioned before, closed sales are also better than 2007. That increase over 2007 is certainly due to the tax credit, where the increase over 2008 is a bit more questionable.

  5. 5

    If I recall correctly, we reached our price peak in July 2007, but we’d been seeing year over year closed sales declines for quite a while before that, as well as rising inventories of homes for sale, so it seemed glaringly obvious to me at the time that prices couldn’t keep going up.
    Now, inventories have shrunk, closed sales are increasing, but prices are still dropping. Does that mean that prices can’t keep going down?
    Maybe? In ’07, prices kept going up far longer than I’d predicted, so I’m assuming now that prices will continue to decline , maybe at a slower rate, and flatten out and stay there for a while before they start going up….It’s also possible that this is a “false start” that some other cities have experienced, that things look like they’re going up for a while before they go back down again.
    I’ll take my usual wussy stand: I think we’re headed towards the end of price declines, but I don’t really expect any upward trajectory within the next 2-3 years at the earliest.

  6. 6

    Another Interesting Chart For October 2009 Tim?

    How about dig out the % down payment this year and compare it to previous years’ sales.

    I’d exclude the 2009 $8000 tax credit from 2009 to be a fair comparison.

  7. 7

    RE: Ira Sacharoff @ 4 – I think part of what you were seeing in 2007 was properties going on the market because prices were so high. Now it’s just the opposite. I don’t think you can predict price changes as a result of that. That said, there probably are some specific type houses in short supply, and that might drive the price of those up, without affecting the median much, if any.

  8. 8
    sead97 says:

    Are those Y/Y price changes correct? Case-Shiller shows a Oct ’08 to Aug ’09 decline of 13% – far greater than the 3% Oct-Oct change shown.

  9. 9
    AMS says:

    RE: Trigger @ 2 – I’m ready to rock and roll when other indicators start showing some improvements, such as:

    1. Unemployment
    2. Consumer spending
    3. Bank Failures
    4. Sustained housing gross volume ($)
    5. Price-to-rent multiples that are reasonable (somewhere near 10)
    6. An economy that produces real economic value with increases in: 1. Farming, 2. Mining, 3. Manufacturing
    (real economic value by my definition. Automation can be measured by increased manufacturing productivity, for example.)
    7. Investment in capital goods
    8. Reduction in foreclosure activity
    +++

    I have a difficult time finding positive news that is not in some way flawed or does not have many negative indicators surrounding it. For example, it might be good that the quantity sold is up, but when prices are down so much that gross revenue is actually down, it’s a hollow positive indicator. Even if the gross volume is up slightly, what good does that do when prices are significantly down? Just the same, when the government is handing out cash to buy a home, is it a positive that people are taking the cash, or does it simply pull demand from the future?

  10. 10
    patient says:

    RE: sead97 @ 8 – it’s median so it can’t be seen as a measure of the change in home values it’s a measure of the sales mix. We’ll have to wait until the end of Dec until we better know the cange in value when c/s for Oct is out.

  11. 11
  12. 12
    Scotsman says:

    If you understand the following chart that shows the dollar and S+P, you’ll know that while the real estate market appears to have returned to some level of normalcy, it won’t last. The “soft landing ” is a sham, and can blow up at any time. We are walking the razor’s edge.

    http://market-ticker.org/uploads/Nov2009/carry-year.png

  13. 13
    Kevin says:

    Tim, I wonder whether you have the same set of data for condos?

    Thanks!

  14. 14
    One Eyed Man says:

    RE: Ira Sacharoff @ 5

    I tend to see it the same way you do Ira, and with just as little conviction. Not only that, I dislike technical analysis and don’t think it applies readily to slow moving, illiquid markets with high transaction costs like real estate. Can I just get shock therapy at Schick Shaddle or do I have to go thru a 12 step program not to be a wussy?;-)

  15. 15
    HappyRenter says:

    RE: Scotsman @ 12

    Can you please better explain the chart? I can’t figure out what the two red lines are.

  16. 16
    Scotsman says:

    RE: HappyRenter @ 15

    The falling line is the current value of the dollar against a “market basket” of foreign currencies, an index of relative value. The rising line is the S+P 500 market index. There appears to be a perfect inverse correlation between the two- as the dollar falls, the equity markets rise.

    What’s going on? This is the “carry trade” we’ve been starting to hear more about. US banks borrow from the FED at near zero interest rates and use the money to buy both U.S. and foreign bonds that give them a guaranteed positive return. Bond sellers then take the cash they’ve just acquired and buy U.S. equities driving the markets up. It is in effect a mechanism that transfers most of the new money the FED is “printing” into the equities market as opposed to the lending system. The result is our next bubble- in equities, founded not on real expected earnings, but easy credit and relative currency values. Like housing, the problem comes when it unwinds and the dollars in equities need to be paid back because of either rising interest rates and/or a stronger dollar. It is a largely unintended consequence, and undesirable as it reduces the Fed’s control of the money and credit supplies.

    Here’s the minute-by-minute chart of the same two for today- note the almost perfect inverse correlation;

    http://market-ticker.org/uploads/Nov2009/carry1.png

    You can read Karl’s post (source of the charts) and discussion here:

    http://www.tickerforum.org/cgi-ticker/akcs-www?post=117432

  17. 17

    By sead97 @ 8:

    Are those Y/Y price changes correct? Case-Shiller shows a Oct ’08 to Aug ’09 decline of 13% – far greater than the 3% Oct-Oct change shown.

    From August to October 2008, the King County median fell over $30,000.

  18. 18
    Matsayswhat says:

    RE: Scotsman @ 16

    Thanks for those links, that was a great read and I’m going to bookmark that site for future reading.

  19. 19
    HappyRenter says:

    RE: Scotsman @ 16

    Thanks Scotsman for explaining this to me. I’m new to economy. I guess that the FED is doing this in the hope that meanwhile the economy recovers so that eventually banks will be able to pay the borrowed money back to the FED before interest rates go up.

  20. 20
    Jonness says:

    I’m keeping in mind the trillions the govt. has pumped into the system in an effort to keep house prices at artificially high levels. The problem is, this action is not sustainable forever because, if we continue record deficit spending, the economy will fly apart.

    I’m going to throw this out there and see if it sticks. You have MV=PQ. Govt spending is a subset of P (i.e. Pgov). Govt. pumps GDP. Since MV has to move when GDP goes up, either M goes up, V goes up, or a combination of both (and one can move up more than the other goes down). The govt’s hope is it can temporarily pump P to raise GDP, and this will increase velocity. As V goes up, the govt can reduce Pgov because Pconsumer will take its place (consumer confidence returns). At that point the economy comes roaring back, and all the extra money made can be used to pay back the debt.

    I don’t buy that it will work, especially when we see V sitting there not moving up (the banks won’t lend to the consumer). IMO, when you pull Ptaxcredits out of the system, Pconsumer will follow suit. I do believe the Keynes plan can work, it’s just that I don’t believe it can work when the govt and consumer already have massive debt loads before the game begins (look at Japan’s current debt-driven dilemma).

    IMO, it is going to take more than accounting tricks to bring the economy back for real. Oh, we might get another bubble of sorts, but it won’t have a fully diversified impact, and it will be short lived. At the heart of the problem is a thing called jobs, and that starts with a workforce more diverse than those who lend money, sell stocks, and work at WalMart selling China’s manufactured wares.

    I try to see where this is going, and I feel really super stupid, because the only outcome with decent probability I can perceive is a lowered standard of living. And that makes me question, how much is your house going to be worth after the govt removes the stimulus from the system? Is more lending and borrowing really going to make up for the decreased manufacturing base? And even those working are working for less. Boeing pulling out of Seattle and moving toward cheaper labor is a sign of what’s to come. And because of the massive Medicare/Social Security and debt obligations rapidly approaching the workforce’s pocket book, I start to wonder just what the real multiplier of incomes should be to buy a house.

    I stand by an earlier statement that in the short term stimulus stimulates, but in the mid and long-terms it will become a drag on an already fragile economic structure. IMO, not facing up to your mistakes early, getting your spanking, and moving on is the least healthy thing we could possibly do for our country. Sure we put off the spanking, but the problem is, at some point, we have to take the spanking. And by the time our parents catch up with us, they’ll be so angry, they’ll spank us 10-fold what we would have taken in the first place.

    I’ll tell you when it’s a good time to buy a house. When the banks believe they won’t appreciate anymore and start lending money again. Until then, it’s risky.

  21. 21
    Jonness says:

    Sorry, that should be, I’ll tell you when it’s a good time to buy a house. When the banks believe they won’t DEPRECIATE anymore and start lending money again. Until then, it’s risky. IOW, it’s hard to save a large downpayment for a house that’s appreciating at 5% per year. If you save $20K, toward a $400K house, it gets wiped out. This contrasts with the current climate where, not only can you save against the house, the price actually goes down while you’re saving. This is an unusually good time to be sitting on the fence if you are considering a house as both a place to live and an investment into your financial future. You are getting paid double. If you can make some profit on your money while you save, you are getting paid triple.

    That’s a lot better deal than an $8K gimmick.

  22. 22
    Scotsman says:

    RE: Jonness @ 20

    With V currently less than 1 we aren’t even holding even, let alone expanding.

    What everyone forgets about Keynes is that his theories assumed a healthy rate of saving, a sort of buffer, and a key element missing from our modern economy.

    A second problem is that his theories work best when there is a better balance or distribution between government and private spending, i.e. when government is a smaller piece of the pie. At this time it’s estimated that just over half the jobs in the economy are tied to the government. With health care moved from the private to the public side of the ledger over 2/3 of the jobs in this country will be based on government spending, i.e. tax revenue. How long can 1/3 of the country produce enough to support the other 2/3? Wealth/savings will keep the system going for a while, but eventually real net production gains have to come into play or the governmental side will overwhelm the private and it’s “game over.” What’s the saying- “socialism works fine until you run out of other people’s money?”

  23. 23
    Herman says:

    RE: Scotsman @ 22

    I’d like to call out those of you who advocated less than a year ago that Bubbleheads should sit atop piles of hard dollars in the face of deflation. Your advice was wrong. If I recall this was most strongly coming from Sniglet.

    Those of me who advised that Bubbleheads should get into currency devaluation hedges like energy, gold, and other commodities were right, on the basis that the .gov could and would destroy the value of the dollar rather than repay debt at full price. There was at least one other guy with me on this but I forget the name.

    With the fed promising to hold interest rates in the low zero’s until 2011 and the carry trade destroying the dollar in full swing, I still hold this opinion.

    These green sheets of paper are proving to be little more than just that. I’m amazed that just a small stack of them will still trade for a whole barrel of very useful oil.

  24. 24
    Herman says:

    PS – I don’t trust equities.
    PPS – I’m green-lighting people who want to buy Seattle real estate for the purpose of living in it. I don’t think you’ll lose your butt at this point. Just don’t look for a return on it.

  25. 25
    Jonness says:

    RE: Herman @ 23 – Holding dollars to buy a house has not turned out to be a poor decision, because the value of houses has fell even further than the value of a dollar. OTOH, gold at $750/oz was a good deal. Then again, I only bought into it because I was deathly afraid of banks. IOW, I hadn’t a clue as to what I was doing and pretty much got lucky on the trade.

    That being said, when the carry trade reverses, the dollar will most likely rapidly strengthen. Thus, as a long-term strategy, holding dollars might work out, even if you’re not holding it for a home purchase. I believe it will be brutal in the meantime though.

    My equities account has more than doubled since the system began to crack, so I wouldn’t say I’ve been completely blind to what’s going on. I ran the market down, and then I ran it back up. The turning points were rather obvious, so I can’t take a whole lot of credit.

    Now for the bad news. As a newbie investor, I’ve only been trading a small portion of my available funds. My ultimate goal is to buy a house though, so I’m doing rather well in that perspective. However, if I were holding the money for retirement, I might be a little freaked.

    But that “freaked feeling” to me is a danger signal. It reminds me of the period where everyone floods in at the end and gets burned. I think we have a ways to go before the trend reverses though.

  26. 26
    Jonness says:

    By Herman @ 24:

    PS – I don’t trust equities.

    I think the point of Scotsman’s post is that, partly due to the carry trade, the dollar and equities have an inverse price relationship. Could you explain why you believe the dollar will continue to depreciate when the equity market tanks? Just curious.

    Thanks

  27. 27
    deejayoh says:

    RE: Jonness @ 25 – yes, last time I checked – houses were still dollar denominated and dropping in price. holding those dollars has turned int a good decision for me as well.

    now if I want to buy gold, not so much. but I haven’t seen any lenders asking for down payments in gold.

  28. 28
    Scotsman says:

    I’ll admit gold has been doing well, but I’ve never trusted it to hold it’s value if things get really bad as its true utility or usefulness as an industrial product is worth much less than it’s speculative value. Holding dollars has worked out just fine as other hard assets I’m most interested in have fallen much further than the dollar. And I believe the dollar will find a floor soon for political reasons and equities will then tank.

  29. 29

    […] Let’s get into the stats a little deeper to see what’s going on. The stats I’ll use come from the Seattle Bubble Blog, this post in particular. […]

  30. 30
    Jonness says:

    I chose to use a gold ETF. That way I can get in and out easy. Since it’s taxed as a collectible, you should exit within a year to keep from getting the higher tax rate from the gains.

    Gold futures are interesting, but I am a bit afraid of the leverage involved. I admit I’ve thought about grabbing a 33 oz. mini-futures contract and letting it ride. I’d hate to have it go against me, so I’ve managed to hold off so far.

    As far as physical gold, I would only buy it if I felt I didn’t want to sell it for a very long time. For now, I like the feeling of remaining as liquid as possible. Who knows, maybe I’ll see a house I like and end up needing the money? I’m pretty sure when I buy, depending on the house, it’s going to wipe out my savings. At that point, I’m a grain of sand.

  31. 31

    RE: deejayoh @ 27

    But who knows? Ten years from now the dollar may be completely worthless, and the only way you can buy a house is with gold, weapons, or canned goods.

  32. 32
    Scotsman says:

    RE: Ira Sacharoff @ 31

    Weapons? As in “Mad Max” or civilized barter?

    “Happiness, is a warm, yes it is,…. gun. Bang, bang, shoot, shoot…”

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