Hagar: Never Mind the Bogus Data, Recovery is Here!

In yesterday’s post I took local real estate agent, appraiser, and real estate educator Richard Hagar to task for some misleading statements he made during a live appearance on KUOW last week. Specifically, I called out his claim that Washington State is currently experiencing net migration of 125,000 people per year.

Mr. Hagar dropped by the comments to defend his statments:

I was talking about a growth rate, not absolute figures. The Blog’s figures are based on April stats from the Gov. My figures are from the stats. supplied by the DOL “Net Drivers License” for September, which is why we have different figures. The State and PSCG uses the DOL numbers as an interim between the population update supplied by the Budget Office.

Net drivers licenses are nice since they are reported on a monthly basis and are usually only 60 days behind reality. The bad side is they don’t count the population, only people obtaining drivers licenses (add for kids, subtract for illegals). However, they are good at indicating the direction in growth and over the years have been reasonably accurate.

Drivers licenses increased by:
> 14,209 in July,
> 11,010 in Aug and
> 12,100 in September.

These three months indicate a growth RATE of approximately 120,000 (ish) for the year. The year to date stats. indicate Washington has grown by approximately 65,544 ending in Sept. That’s a healthy growth. Very similar to growth in the mid 90’s and 2004/2005.

There are a couple of major problems here. One was pointed out by reader NumberMonkey:

Using drivers licenses as a seasonal proxy is pretty awful because registration is highly seasonal. Both immigrants and new driver residents prefer to register in summer. So your growth rate figure is going to be badly overstated in summer because of your poor data selection.

NumberMonkey is right. It makes no sense with a highly seasonal data series such as migration to select the three busiest months of the year and interpolate an annual rate from those numbers. In fact, it’s downright misleading. Unless of course you think it’s valid to claim—based on July-September data—that Seattle’s average high temperature is 72° year-round.

There’s another problem with Richard’s method though. Head over to the Department of Licensing page to grab the driver license data he refers to and you’ll notice the following warning just above the download links:

Note: The calculation of net migration is not recommended due to incomplete or delayed reporting of surrendered license data by other states or countries.

In other words, Richard is doing exactly what the DOL says not to do with their numbers.

Here’s a visualization of actual net migration via the OFM, the annual sum of net drivers license data from the DOL (that they specifically warn is not net migration), and the “annual rate” of net drivers licenses based on July-September data:

Washington State: Migration & Not Migration

Of course, the fact that he’s applying an invalid method of annualization to a set of data that users are explicitly warned against using in exactly the way he’s using doesn’t matter, according to Richard:

I understand both warnings and of course Summer has higher figures. I’ve been tracking population growth for quite a while. Chart the DOL figures over the past 10 years. Overlay that with Census figures of actual growth. You will note a correlation. It’s not exact and that was not the direction I was going. I think… that while people are trying to nit-pick a figure, they are missing the point… The Seattle area is growing and the figures are looking nice, especially after what was going on last year.

Actually, I’m not seeing much of a correlation at all in the above chart. But that shouldn’t matter, according to Richard. Who cares if the data is way off? You’re missing the point! The point is, a recovery is just around the corner!

Just like how in August 2007, home prices were due to keep going up!

John Maynard: Richard Hagar, I want to ask you about real estate prices in Seattle. Where do you think they’re headed?

Hagar: Well, here’s the good news. I don’t think they’re going down. … I think for the rest of the year, and maybe into the first month or two of 2008, our property values are going to remain fairly neutral. I don’t see any up, but I don’t see any major downturn in any of these prices.

We’ve got something going on in the state of Washington that very few other people have. We have a phenomenal economy. We have growth going on like you will not believe. We have—in the state of Washington, roughly a hundred and twenty thousand people move here every year. …That’s the net.

Maynard: So, if I understand what you’re saying, you’re saying prices are going up, and will continue to do so?

Hagar: At a much slower rate than they have over the last five years, yes.

In my opinion, Mr. Hagar should stick to the subject of real estate mortgage and appraisal fraud, and stay out of the market forecast business.

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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.

96 comments:

  1. 1

    I’m not sure this deserved a second post, but on the topic one other problem with drivers’ licenses is the numbers probably are largely reflective of the number of births 16 years prior. If 16 year old kids bought houses, it might be somehow relevant to real estate, but they don’t and can’t legally.

  2. 2

    You’re Right Tim

    There’s a plethora of holes in his logic:

    Even if he was correct, increasing population density in Seattle Metro due to insourcing generally decreases per capita incomes and increases numbers of tennants per home unit too. Big ticket items like homes, cars, boats, etc….are even further out of the reach of avg per capita pay.

    Add in the energy/food inflation Bernanke caused with Stimulus II to the banksters, and more lower income masses into Seattle spells “trouble” not prosperity. I think some of Seattle’s elite, safe in their gated/guarded HOAs, forgot the other 98% of us dealing with high snow-balled unemployment, crime and uncontrolled lower income population growth in our neighborhoods and schools.

  3. 3
    Brandon Adams says:

    Thanks for defending reality. Is KUOW going to inform its listeners that one of its guests was making factually incorrect statements, apparently in an effort to create an atmosphere that would be better for his business?

  4. 4
    sallybuttons says:

    Mr. Hagar has no clothes – not a stitch – totally nude

  5. 5
    ray pepper says:

    Holy Macrel! No Xmas card from Hagar to The Tim!

    Thats a Fact!

  6. 6
    Scotsman says:

    “In my opinion, Mr. Hagar should stick to the subject of real estate mortgage and appraisal fraud.”

    I can’t quite put my finger on it, but there’s something ironically wrong about having someone who has shown themselves to be intellectually dishonest teaching others about real estate mortgage and appraisal fraud. Who can tell me what’s wrong with this picture?

    Here’s an even bigger problem I see- the generally low level response to these situations. Are we now so numb to the repeated manipulations and deceit that permeate our lives that we don’t even know how to respond? Or is it still the 1970’s where I’m OK, you’re OK, and everything goes? Or perhaps a case of “who cares” while we get ready to suffer years and years of malaise as a reward for our complacency? Does Kary really not see the bigger issue here, or is he just defending the brethren?

    We get the government- and the society- we deserve.

  7. 7
    HenryInSeattle says:

    Washington state is one of three states where illegal aliens can get a drivers license. Surely that must have some impact.

  8. 8
    Ryan says:

    Boom, Roasted!

    Although I am not a big fan of digging up past statements (from 2007 or prior) and putting those on display to show how wrong some people were, I am a fan of calling out bs and allowing those people the chance to defend themselves.

    Great job to The Tim and NumberMonkey for calling him on it…extra kudos for the snarky comment about sticking to what you do best, lol.

  9. 9

    Per the Census and results posted on Office of Financial Management “The population of Washington’s cities and towns totaled 4,196,962 on April 1, 2010, a growth of 677,400 people since the 2000 census count.” Mind you the state saw it heaviest growth between 05-07.

    http://www.ofm.wa.gov/news/release/2010/100630.asp

  10. 10

    The thing is:
    In Hagar’s class on RE fraud, he’s very critical of the industry, and angers a lot of the people in the class ( RE agents) because he criticizes the atmosphere in which dishonest behavior is allowed to run rampant. In the RE industry, there are a fair number of shills, robots, and Kool-Aid drinkers. I never thought of Richard Hagar as being one of those.
    Was he wrong on KUOW, factually? Absolutely. A mouthpiece for a corrupt industry? Nah.

  11. 11

    By SoberBySaturday @ 9:

    Per the Census and results posted on Office of Financial Management “The population of Washington’s cities and towns totaled 4,196,962 on April 1, 2010, a growth of 677,400 people since the 2000 census count.” Mind you the state saw it heaviest growth between 05-07.

    http://www.ofm.wa.gov/news/release/2010/100630.asp

    Further on myself total numbers are as follows:
    OLYMPIA – The 2010 population estimate prepared annually by the Office of Financial Management places Washington state’s population at 6,733,250 as of April 1, 2010. This represents an increase of 65,050 persons, or a growth rate of 0.98 percent since last year.

  12. 12

    RE: Scotsman @ 6 – I’m not sure of the point of your reference to me. I’ve said in the past that neither real estate agents or appraisers are generally trained or equipped to predict future prices, and shouldn’t do so. I’ve also said banks should not be making mortgage loans to people based on credit scores or if they show a pattern of irresponsible borrowing (house ATM). I’ve also said some of these large entities that invested in mortgage backed securities were incredibly naive and/or ignorant if they thought that secured by real estate meant safe.

    What more do you want? Me to start throwing out the “fraud” term where fraud doesn’t exist?

  13. 13
    TheHulk says:

    I suppose there is nothing to be gained by beating a dead horse but, since the 120K number has been thoroughly debunked (and yes, I would still think on radio he only misspoke), I only suppose we should give Richard Hagar one more chance. I would especially like to see him defend this claim from the transcript – “So what we are seeing is—in fact, we’re already seeing it as we’re doing appraisals—certain neighborhoods have already started a recovery. What that means is that their prices aren’t going down. In fact, we’re starting to see some price increases in some select neighborhoods moving up. So that’s a good news there.”

    Richard, could you post some statistical evidence about these special neighborhoods where a recovery has already started? We would like to see how you arrived at this conclusion. Over and above everything else on SB, we avid readers love to look at raw data. You could even send it over to the Tim and I assume he would be more than happy to dissect your data.

  14. 14
    Lurker says:

    So, bottom line is there has been a decrease of people moving into WA since 2006. People have a hard time moving when they are underwater on their mortgage.

  15. 15
    sleepwalker says:

    By softwarengineer @ 2:

    You’re Right
    …uncontrolled lower income population growth in our neighborhoods and schools.

    Oh NOES!!!!! Dirty renting poor people are going to school. Maybe we can have a special class where they just maintain the schoolgrounds.

  16. 16

    RE: TheHulk @ 13 – While there is obviously the mix issue, when you have a King County median that has been basically flat for 18+ months I don’t think it’s that unthinkable that there are property neighborhoods/types that have gone up in value. I don’t tend to do comparisons to 18+ months back, so off the top of my head I can’t point to such a neighborhood, but I just don’t think it would be that difficult.

    If he had said there are neighborhoods that are continuing to fall at an alarming rate, would you have challenged that? Well for there to be that type of neighborhood, there has to be the other type too.

  17. 17

    By Lurker @ 14:

    So, bottom line is there has been a decrease of people moving into WA since 2006. People have a hard time moving when they are underwater on their mortgage.

    And keep in mind that is when other parts of the country started falling, if not before.

    One other thing, even assuming there are people moving here now, how many of them would be in the house buying mode as opposed to the renting mode. Any migration would probably be just as good for landlords as sellers, if not better.

  18. 18
    ARDELL says:

    Was just looking at this post I wrote in December of 2007

    http://www.realtown.com/Ardell/blog/selling-a-home/seattle-area-home-sales

    so it surprises me when some say I was bullish in 2007 (Kary)

    In December of 2007 I called for a 20% decline in that post. Seems pretty spot on in hindsight.

  19. 19

    RE: ARDELL @ 18 – I don’t see that you predict much of anything in that post, you just lay out some possible hypotheticals. Rather obviously at any point in time if you delay selling you could risk selling for less. And in any case, you made no such pronouncements on Seattle Rain at the time.

    But since it took you quite some time to respond to my prior post laying out your Seattle Rain predictions, here it is for the benefit of others:

    Your year 2007 prediction: http://raincityguide.com/2007/02/06/ardell-on-where-is-the-2007-market-heading/ (February 2007, things will remain rosy like the past, but not quite as strong. 5 months before the peak.)

    Here’s where you suddenly turn bearish: http://raincityguide.com/2008/04/17/seattle-real-estate-2008/ (April 2008, 9 months after the peak. Not bad on the $400,000 guess, but it took a near complete collapse of the economy to get there! I wish you would have warned us about the near complete collapse of the economy!).

    Here’s where you called the bottom: http://raincityguide.com/2009/02/07/were-at-bottom/ (February 2009).

  20. 20
    sallybuttons says:

    RE: ARDELL @ 18 – totally nude and bad fashion. Humility in any size – go ahead and try it on!

  21. 21
    TheHulk says:

    RE: Kary L. Krismer @ 16

    Ha ha. Funny that you say that “some neighborhoods have gone up in value”. I would argue that even though prices have stayed flat, I strongly suspect people are getting more value for their money. I closely monitor houses in Sammamish for instance and have seen prices consistently falling over the past 18 month period that you mention. In short what was selling for 450K a year ago would be lucky to get 420K today. Now, if people are still spending 450K but getting a house that was previously at 550K, it implies the median didnt change, but value to the buyer changed a lot. This is exactly what Case Schiller tracks and AFAIK, they are also predicting a decline in winter.

    Personally, I dont think the house value/price ratio has climbed in the last 12 months (I am not considering the tax credit bump). Since that is my assumption and Richard claims to have data that is the exact opposite, I would like to see that. Heck that would mean I made the wrong assumption and am actually losing out by staying on the sidelines. Richard please prove me wrong.

  22. 22

    RE: TheHulk @ 21 – What you would need to do is pick a common style of house and then determine what it sold for 24, 18, 12, 6 months ago and now. That would take the mix out of it, and leave only condition, which you would need to judge by pictures and marketing comments.

  23. 23
    vHatch says:

    DOL announced that it intends to again have some sort of address verification process to obtain a Driver’s license. For some time now there has been no address verification so illegals and others would come to Washington to get a license. The anticipation of this change could have caused many to rush and get a license before the could no longer do so.

  24. 24
    LA Relo says:

    I’ve heard the “everyone wants to live here” argument so many times, and every time it’s wrong. It was wrong in So Cal where everyone really does want to live, and it’s certainly wrong here in Seattle.

    Unless it’s a mass exodus like Michigan any change has little affect on prices, particular when every other factor is pushing them down: jobs (or lack thereof), supply, lending standards, foreclosures.

    Who cares how many people moved here or left:
    Prices.
    Are.
    Falling.

    The next CSI numbers should be pretty bad and probably worse seasonally.

    I’ll give the perpetual bottom callers one thing though, they are optimistic!

  25. 25
    deejayoh says:

    By Kary L. Krismer @ 22:

    RE: TheHulk @ 21 – What you would need to do is pick a common style of house and then determine what it sold for 24, 18, 12, 6 months ago and now. That would take the mix out of it, and leave only condition, which you would need to judge by pictures and marketing comments.

    I think you can do the same thing by looking at $ per square foot trends. Which redfin provides on a neighborhood basis. Sammamish is basically flat.

    http://www.redfin.com/neighborhood/2367/WA/Bellevue/Sammamish-Bellevue-WA

  26. 26
    Scotsman says:

    RE: LA Relo @ 24

    “I’ll give the perpetual bottom callers one thing though, they are optimistic!”

    Or some combination of hungry and clueless.

  27. 27
    Brian says:

    Geez – let’s not get carried away. This blog too often blurs the line between attacking people and criticizing ideas.

  28. 28

    By deejayoh @ 25:

    By Kary L. Krismer @ 22:

    RE: TheHulk @ 21 – What you would need to do is pick a common style of house and then determine what it sold for 24, 18, 12, 6 months ago and now. That would take the mix out of it, and leave only condition, which you would need to judge by pictures and marketing comments.

    I think you can do the same thing by looking at $ per square foot trends. Which redfin provides on a neighborhood basis. Sammamish is basically flat.

    http://www.redfin.com/neighborhood/2367/WA/Bellevue/Sammamish-Bellevue-WA

    Not really, because you could still have a different style of house selling.

  29. 29

    RE: TheHulk @ 21
    I wouldn’t consider Sammamish one of those areas where prices have gone up, or even stayed flat. Prices there have continued to drop. But for a 1920’s Craftsman in good condition on a nice street on Phinney Ridge or in Ravenna, in the 400-550 thousand range, prices appear to be slightly up over the last year.
    I wouldn’t say that anywhere in the Seattle area was immune to price drops, but 1920’s Craftsman homes in good condition, on nice streets, in certain neighborhoods within the city of Seattle, in a certain price range,have certainly fared better than most of the Seattle area and tend to sell more quickly. That doesn’t mean they won’t go down in price, or that they’re not overpriced.

  30. 30
    TheHulk says:

    RE: Ira Sacharoff @ 29

    Good point, and yes this could be happening. It would be nice if there was some way to track this without getting confused by the median/mix/price-sqft stats which dont really apply in this case (and which is what I suspect MOST sellers/buyers are actually interested in).

    In fact Tim here is an idea for redfin – It would be awesome if on a person’s redfin profile, that person could register certain characteristics they are interested in – like say 2 bed+, 2 bath+ 1500 sq ft+ 1950+ houses in say 98033. Then redfin would automagically track pricing of all houses that match that criteria over say the last year. Wouldn’t that be great – I mean I know currently you can specify all that and see all the houses on the map, but I dont think that gives you the price trend over time. Plus, if you plot both a trend line and all data points you can easily spot outliers (like say major remodel vs. house trashed since it was a foreclosure).

  31. 31
    Michael says:

    RE: deejayoh @ 25

    Depends which “Sammamish” you are looking at (Redfin breaks it into two pieces). The much larger/more populous Sammamish (east of the lake) is dropping like a rock…just like the rest of King County.

    http://www.redfin.com/city/15735/WA/Sammamish-King-County-WA

  32. 32
    David Losh says:

    I’m going to ask the obvious, because I have noticed that people are buying houses.

    Why would any one buy, in today’s ecconomic climate, an asset that is sure to go down at least 10% in value?

    Hagar’s statistics may be wrong, but his claim, at least to me, seems correct.

    What’s the reasoning in the market place? Why are buyers so bully?

  33. 33
    David Losh says:

    RE: ARDELL @ 18

    I’m just going to comment on this because it’s another absurd assertion.

    By December of 2007 it was a global economic collapse. A better reference would have been the unsustainable price increases of the previous two years. Both of those years of 2006, and 2007 were double digit appreciation in pricing, while inflation was low.

    This comment, along with a bottom call on the heels of two huge infusions of cash by the Federal government are the same thing.

  34. 34
    ARDELL says:

    RE: Kary L. Krismer @ 19

    Seriously Kary?

    I wrote on 12/22/2007 “…you may be better off selling in 2008. Maybe that will be a fraction less than you could have gotten had you sold 12 months ago. But it very well could be 20% more than you will eventually sell for…”

    That’s not “specific”??? The market proceeded to drop from that point by almost exactly 20% until I “called bottom” when it abruptly stopped declining and is still not lower than that bottom point today.

    Both dead on right. If you don’t see that…you don’t want to see that.

  35. 35
    TheHulk says:

    RE: Michael @ 31

    I was referring to the east side of the lake. Only msfties that were here before 2000 can afford something on the west side.

  36. 36

    RE: ARDELL @ 34 – Okay, I’ll come out and say it. It sounds like a “script” for a real estate agent trying to get a reluctant owner to list a property, not a prediction.

    In any case, it’s entirely inconsistent with anything else you were saying at the time at Seattle Rain. When you had your 2008 bearish post linked above, it was like a light switch had been flipped.

  37. 37

    RE: David Losh @ 32 – 1. They want to own a house due to issues that have nothing to do with predictions of where prices are going. People do that every day with all sorts of assets.
    2. They want a hedge against an inflation risk that they see.

  38. 38
    Michael says:

    RE: TheHulk @ 35

    Actually..after looking at the Redfin numbers some more..I’ll withdraw my “dropping like a rock” statement about the east side Sammamish prices (price/sq ft). Looks like condos are slipping..but SFR’s are hanging in pretty well.

    Nice tool by Redfin (thanks for the link deejayoh)..great to have this kind of data available.

  39. 39
    ARDELL says:

    RE: Kary L. Krismer @ 36

    Well then here’s a data post more than a month earlier than that one. While everyone else was waving the early decline off as “seasonal change”, I was screaming “scary!” data here.

    http://www.realtown.com/Ardell/blog/tracking-the-market/home-sales-way-down-october-2007

    Again…you don’t want to see it…not sure why.

  40. 40
    Alex says:

    Awesome graph from Forbes showing where americans are moving.

    This graph clearly shows a trend towards people moving to Seattle.

    http://www.forbes.com/2010/06/04/migration-moving-wealthy-interactive-counties-map.html

  41. 41
    The Tim says:

    RE: TheHulk @ 30 – Well you can’t create the cool charts for a custom search like that, but you can do the search, limit it to sold homes, then download the results to your spreadsheet editor of choice and create your own charts fairly easily.

    Here’s the search you described. Just click the “download” link on the lower-left.

  42. 42

    RE: ARDELL @ 39 – I don’t see any predictions there because you didn’t make any. You’re just wondering why sales declined.

  43. 43
    David Losh says:

    RE: ARDELL @ 39

    I don’t get it. I understand the chart, but it does look like something you would include in a listing package.

  44. 44
    David Losh says:

    RE: Kary L. Krismer @ 37

    That doesn’t explain the number of sales, and it makes no sense. I’m speculating, but it is in line with this post, that Real Estate agents are telling buyers what they want to hear.

  45. 45
    ray pepper says:

    RE: David Losh @ 32

    I’ll answer..People are making ALOT of money now buying homes and turning them. Remember that one I sent to you 3 months ago? Well, he closed today in Puyallup for a 43,500 profit.

    Going forward I see ALOT of opportunity in the “flip.” I even wrote up an offer yesterday for a formerly listed home in Gig Harbor @ 249k on 5+ acres for 115k. Guess what..I got countered at 130k 1.5 hours ago…..Its only 10 years old but I’m holding out for 115k. Another one I was outbid on for 120k a few months back. Well, guess what…deal flipped and I got the call back to resubmit to the bank the 120k offer today as well.

    Lots of opportunities if your patient and do your OWN due diligence.

  46. 46
    The Tim says:

    RE: TheHulk @ 30 – e.g. – Here’s a chart of median $/SqFt for SFH homes sold in 98033 with the criteria you specified over the last 12 months:

    That took me about 10 minutes in Excel after downloading the aforementioned csv file.

  47. 47

    By David Losh @ 44:

    RE: Kary L. Krismer @ 37

    That doesn’t explain the number of sales, and it makes no sense. I’m speculating, but it is in line with this post, that Real Estate agents are telling buyers what they want to hear.

    How could you possibly determine how many people are buying for reasons other than what they think prices will do (e.g. the birth of a child), or how many people are worried about inflation?

  48. 48

    By ARDELL @ 39:

    RE: Kary L. Krismer @ 36

    Well then here’s a data post more than a month earlier than that one. While everyone else was waving the early decline off as “seasonal change”, I was screaming “scary!” data here.

    http://www.realtown.com/Ardell/blog/tracking-the-market/home-sales-way-down-october-2007

    Again…you don’t want to see it…not sure why.

    Here’s something 15 days later where you conclude reduced sales are because sellers are raising their prices too much.

    http://raincityguide.com/2007/11/25/why-are-sales-down-and-prices-up/

  49. 49
    TheHulk says:

    RE: The Tim @ 46

    That is sweet! The only other thing it needs is a trend line so we can easily spot the outliers and click on them to see why they are outliers. Also, is that the tax credit bump I see in the graph? If so, why is it after June (since we are talking about closed sales and hence actual selling prices)?

  50. 50
    Paul says:

    Instead of just shooting holes in someone elses data analysis approach, show us a better way. I think migration is a factor in the market and would love to see what it looks like. If this approach is flawed enough to warrant two postings, show us how you would do it.

  51. 51
    The Tim says:

    RE: Paul @ 50 – We have discussed the subject of migration and population growth at length in the past. Here are a couple posts:

    Also, hit just about any post with the “fundamentals” tag for some data-driven discussion of the actual underlying fundamental factors that drive home prices.

  52. 52
    wreckingbull says:

    A real estate investor who teaches real estate investment classes thinks that housing is poised for great comeback. Go figure.

  53. 53
    Nick Sincere says:

    Also, think about it, 120,000 people per month is over 1.5 million people each year!

  54. 54
    David Losh says:

    RE: Kary L. Krismer @ 47RE: ray pepper @ 45

    OK, I’m going with the Ray answer because it makes more sense that people feel like they are getting a bargain.

    I talked with a guy today who asked about a Bank Owned property that has been on the market for a year. It was listed, and sold for $350K. The deal died after the inspection, but the listing agent swore he was working another deal. It’s a year later.

    The guy I talked to wants to make an offer of $175K cash, half price.

    His strategy is to rent it out to pay off the investment. His money is conservatively invested, and with interest rates so low, he figures this house will be safe investment, with a good return.

    I’m also going to point out that some builders just got out of the worst trouble of their lives with today’s Real Estate market. They have averaged the cost of the lot, built, and sold.

    My question would still stand, why would people buy, but they are, and as long as people buy there is a chance for a return.

  55. 55
    Lurker says:

    RE: deejayoh @ 25

    Strange. I see that if you look past the graph and down at the monthly numbers they say different things. For instance, sold sq/ft on the graph shows it being flat around $302 for all of Sept and Oct but if you look down at the numbers for October it says Median Sold $/SqFt. as $294.

    Tim, why is this?

  56. 56
    Jonness says:

    By TheHulk @ 21:

    Personally, I dont think the house value/price ratio has climbed in the last 12 months (I am not considering the tax credit bump). Since that is my assumption and Richard claims to have data that is the exact opposite, I would like to see that. Heck that would mean I made the wrong assumption and am actually losing out by staying on the sidelines. Richard please prove me wrong.

    Despite what the shills say who do this for a living, I continue to see prices drop. The last few months have been extra fun. The outskirts are getting hit the hardest, but the disease is rapidly spreading to the central organs. It’s almost unbelievable that anybody is still out there defending this market. It’s absolutely terrible. You can’t give houses away right now. But we haven’t seen anything yet. Wait until the upcoming REO wave. At that point, all these delusional homeowners who are still looking to double their money since buying in 1999 are in for an extremely rude awakening.

    Meanwhile, Bernake is spending most of his time stockpiling food and weapons in his underground ammo bunker. He figures he better do it now because after QE2 bubbles up commodity prices he will no longer be able to afford it.

  57. 57
    Dave D says:

    Thank you for exposing this guy. His manipulation of ‘statistics’ to suit his agenda is remarkable. He is a liar.

  58. 58
    patient says:

    Immigration doesn’t mean much if it doesn’t add jobs in the same pace. It would be much better to look at jobs and salary growth than immigration volume on the demand side of things. Than of course you have the underwater issue that hampers a lot of move up purchases. Me think the demand outlook is very bleak indeed.

  59. 59
    Hugh Dominic says:

    Completely discredited.

  60. 60
    chico says:

    I would have thought that SoftwearEngineer would have been all over this stating that his numbers were way too low.

    I do remember some wildly inflated numbers in regards to population growth by SoftwearEngineer in the past!

  61. 61
    TheHulk says:

    Speaking of statistics and trends, take a look at this: http://seattletimes.nwsource.com/html/businesstechnology/2013389201_homevalues10.html

    some astonishing stats (at least for me)
    – About 22 percent of the homes sold in the Seattle metro area in September sold for less than the last time they changed hands; that’s up from 16 percent a year earlier. (I wonder how they define the Seattle Metro area though)
    – Foreclosure re-sales — mostly by banks that had repossessed homes — accounted for one-sixth of all sales in the region in September. Nationally, the figure was one in five.
    – Nearly 28 percent of all owners of Seattle-area single-family homes with mortgages were “underwater” in September — they owed more to lenders than the houses are worth.

    If those statistics are true, it is all because – “Seattle-area home values now are 28 percent below their June 2007 peak, Zillow said — a bigger decline than the 25 percent that values have dropped nationally since their June 2006 apex.”.

    I think this wont be a pleasant winter at all, weather wise or housing wise.

  62. 62
    Yeti says:

    Richard Hagar did not cause the housing crash. Nor did he cause the dot com bubble crash, 9/11 or a fascist US government. Why waste energy attacking one individual who uses data to advance his sales commissions? Is it any wonder that he does such things, and should he really feel guilty for it? Sales is sales, afterall.

    When it comes right down to it, most human beings really don’t need 98% of the material belongings they surround themselves with — the conclusion being that 98% of all marketing and sales is therefore manipulative and exploitative, which it is. This is the social agreement of living in the United States, under the influence of international central bankers who run the whole show.

    I invite you and everyone here to focus on the real culprits at the top of the food chain. Not the culprits handed to you on a silver platter by the paid-for mainstream news media. I am referring to the real culprits. The same culprits that continue to exploit central banking and currency manipulation worldwide, and manage to get average citizens to regularly blame puppets such as Bush and Obama, as an intentional, manipulative distraction.

  63. 63
    Cheap South says:

    RE: Alex @ 40

    Fantastic. Thank you for posting.

  64. 64
    Ahau says:

    By Lurker @ 55:

    RE: deejayoh @ 25

    Strange. I see that if you look past the graph and down at the monthly numbers they say different things. For instance, sold sq/ft on the graph shows it being flat around $302 for all of Sept and Oct but if you look down at the numbers for October it says Median Sold $/SqFt. as $294.

    Tim, why is this?

    I’ll take a shot at this one, because I’ve noticed the same exact thing. In Issaquah, for example, the $/sqft graphs for SFR have been going down steadily since mid-September, but their numbers show an increase in $/sqft from September-October. October’s number is $209, but the graph shows $230-$225 throughout the month This is occurring because the numbers you see on the graphs are a 90 day rolling average. You had sales from July and August propping up the numbers for September, when the real numbers were actually dropping. Now that the early summer numbers are leaving the mix, you’re just now seeing the graphs start to drop, when in reality the numbers peaked, dropped, and have stabilized at a lower level (between September and October, anyway).

    I’ve not yet found a good link on Redfin that gets me to a listing of all their spreadsheet data, but if you go through their “Good Digs” blog posts, usually around the 13th of each month, there’s a link to their spreadsheets. King County $/sqft dropped 2.3% between August and September. Issaquah dropped 12% MOM during that period:

    http://blog.redfin.com/seattle/files/2010/10/Redfin-Seattle-Real-Estate-Market-Report-September-2010.xls

    I’ve stopped putting much stock in those graphs when looking at short-term trends. Look at the hard numbers, and run your own math if you don’t want rolling averages. C-S numbers for Seattle will continue to drop at least through their January reporting (even if prices stabilize right where they are), because that is a 90 day average as well.

  65. 65
    doug says:

    RE: David Losh @ 54

    I’m buying right now. I’ll let you in on our thought process.

    We have an offer in below-market, for a house that would be 131/$ a square foot. My wife and I would really like the extra space, it obeys the law of 3 (it actually obeys the law of about 2.2) and thus should be affordable for a long time. We are assured low interest rates for 30 years.
    I’m sure there are a decent number of younger professionals like us who felt completely priced out years ago, did some research, and figured things were unsustainable. It’s such a relief to have houses that are actually affordable, and comfortably so, that we’ve felt we’ve waited long enough. I’m 30, and it’s time to finally own a house instead of moving every 12-18 months. It’s a place in which I believe we’ll be comfortable for the next 15 years. I don’t really care what the market does. I’m looking at it as a home first, an investment a distant second.

  66. 66

    RE: TheHulk @ 61 – I don’t trust Zillow as a source of data, except perhaps that one on percent that sold for less than their prior sale. They clearly don’t know what percent of houses are underwater.

  67. 67
    Ahau says:

    Is there a way to upload a picture here? I made a graph showing the $/sqft for King County, Sammamish, and Issaquah that shows where the numbers are without 90 day averaging.

  68. 68
    The Tim says:

    RE: Lurker @ 55Ahau @ 64 is correct on this. The short answer is that the interactive chart is a 90-day rolling average, updated weekly. The table below the chart is a one-month snapshot, updated around the 9th of each month. The long answer is on the methodology page.

    RE: Ahau @ 67 – You can email it to me if you want and I’ll post it here. Unfortunately WordPress only allows the admin to post pictures in the comments. Alternatively you can just upload it to some free image hosting site and post the link here.

  69. 69
    The Tim says:

    RE: Ahau @ 67 – Here’s the chart Ahau sent (click to enlarge):

    His comment:

    Here’s a pic of the table I put together. I only went back through May, because IIRC there were some issues with the MLS reporting back then, plus I was too lazy to pull more spreadsheets from Redfin. More data would probably be interesting, to better see the effects of the tax credit. There appears to be a strong correlation with movement in median purchase price (when the median goes up, so does the ppsqft), especially in Issaquah.

  70. 70
    Lurker says:

    Thank you The Tim and Ahau, I forgot that the Redfin graph was a rolling average.

  71. 71
    Dirty_Renter says:

    I think you guys are being too harsh on Mr. Hagar.
    He simply abides by one of my basic tenets of life, which is to:
    Never let the truth stand in the way of a good story.

  72. 72
    what goes up must come down says:

    RE: doug @ 65 – I guess the gold question is how far second.

  73. 73
    Scotsman says:

    RE: doug @ 65

    “We are assured low interest rates for 30 years.”

    Very dangerous assumption. See “Ireland Bond Implosion.” Just like gravity always wins in the end, the need for more debt equals higher risk and higher rates. Housing values will be further depressed as affordability falls through higher rates and unemployment coupled with falling average wages.

  74. 74

    RE: Scotsman @ 73

    Speaking of the Ireland Bond Collapse in Recent News

    I see their horrifying national debt to GDP level is like around 30%+…..LOL, America’s is 90%+ and going up…..if Ireland is in dire straits, it must mean we’re already dead and burning in Hades.

  75. 75
    ARDELL says:

    RE: Scotsman @ 73

    That should not impact his “assurance” of a low rate for 30 years. I think he means he has a 30 year fixed rate, vs adjustable rate, mortgage. Living in the same house for 30 years is not the norm…but “the norm” is likely to change. Especially if interest rates increase by the time he may be thinking about selling.

    I just did a “financial health of the surrounding homes” for a buyer client of mine, and most every neighbor on the sides, behind and across the street own their home free and clear and for 30 years or more. Old section of Seattle. Of the total real estate, about a dozen homes, valued at about 7 Million total, there was only about $450,000 of debt all combined.

    Sometimes it’s a blessing to be the only new home in an older neighborhood. The only foreclosure is the one they are buying. New construction; lender-owned.

    Doing a “financial health” evaluation of the immediate vicinity before buying a house, helps resolve the fears of neighbors potentially going into foreclosure and affecting your home value. Everyone should do a neighborhood financial health survey. The research is tedious, but the results are interesting.

  76. 76
    David says:

    RE: ARDELL @ 75 – More please. How is it done? Who does this kind of analysis? How would I ask for it as a buyer?

    I think this has the potential to mine out valuable subjective data about the health of a neighborhood or at least the micro climate around the property of interest.

  77. 77

    RE: David @ 76 – You would pretty much need to ask for it from your agent. While it’s possible to do from county sources, agents have tools that would allow them to do it very quickly.

    It’s probably more important for condos than SFR neighborhoods, because your finances with condos are more tied in with the other owners, and the availability of financing is also affected more by the neighbors with condos.

    I would also point out that if you accept this sort of thing as being even marginally important, it would indicate that you should not buy in a new or newer neighborhood. I’ve said in the past that a new neighborhood may look worse in 5 years than a 15 year old neighborhood, and that you don’t know because you know little about the neighbors and how they will keep up their property. Now, however, we have neighborhoods built in 2006-2007 where most the owners are probably underwater. In some neighborhoods, that wouldn’t be a good thing.

    Finally, I wouldn’t view having a lot of 30+ year owners as being a good thing, because that means you’ll likely have a lot of turnover relatively shortly. A neighborhood that has had slow turnover over many years would be better. But this is probably largely academic. If you find a good house in an older neighborhood that you like, chances are it would have that type of owner distribution, and unless a lot of the neighbors are relatively new or very old owners, I wouldn’t worry about the exact distribution much.

  78. 78
    David S says:

    Good one Kary, thank you.

  79. 79
    sallybuttons says:

    i need an ignore option

  80. 80
    deejayoh says:

    By Michael @ 31:

    RE: deejayoh @ 25

    Depends which “Sammamish” you are looking at (Redfin breaks it into two pieces). The much larger/more populous Sammamish (east of the lake) is dropping like a rock…just like the rest of King County.

    http://www.redfin.com/city/15735/WA/Sammamish-King-County-WA

    Michael –
    My main point was meant to be that there is a very good source for the type of analysis requested available to all. The observation about the trend was a throwaway. As you can see, I don’t know my east side neighborhoods all that well. I just went with what redfin gave me when I typed “Sammamish”

  81. 81
  82. 82
    David Losh says:

    RE: ARDELL @ 81RE: ARDELL @ 75

    You’re presenting something that makes sense as a sales tool.

    Debt level is a red herring at best.

    From what you just described the new home would be the very best property, which gives it the greatest chance of depreciating in value, just as a rule of thumb.

    Maybe, just maybe this time, you will open your post on the Rain City Guide to comments so it can be discussed fully.

  83. 83
    Ross says:

    By softwarengineer @ 74:

    RE: Scotsman @ 73

    Speaking of the Ireland Bond Collapse in Recent News

    I see their horrifying national debt to GDP level is like around 30%+…..LOL, America’s is 90%+ and going up…..if Ireland is in dire straits, it must mean we’re already dead and burning in Hades.

    This CNBC article claims Ireland’s external debt to GDP is a whopping 1305% (US is only 98.4%!):
    http://www.cnbc.com/id/30308959?slide=21

  84. 84
    David Losh says:

    RE: doug @ 65

    I appreciate what you are saying. It’s hard to raise a family, have a career, and keep track of a market place for housing units.

    Where it all went sideways is that you said the family home is a distant second as an investment. That is a sales person talking. The family home is the biggest investment you will make.

    You may make a $250K income, and your wife the same. The home you purchase might be more than $500K which is a years salary for you. So it is something you can afford, and afford to pay off. Now what?

    Increased income which you can invest, or renting behind to buy again, either way having the family home is an asset, a large asset. People forget when the 401(k) hits $500K they think they have money in the bank, but owing the family home free, and clear is security.

  85. 85
    ARDELL says:

    RE: David Losh @ 82

    David,

    The new home is almost never the “very best property” in a down market. Its rate of depreciation is accelerated, same as a new car. It will go down in price even if the market were flat. So no…not the case.

    Exception would be hugely discounted bank-owned new construction.

  86. 86
    David Losh says:

    RE: ARDELL @ 85

    As a rule of thumb, was the phrase I used.

    Hugely discounted bank owned new construction means the builder ran out of money, knew they were running out of money, were running a bank fraud, wanted to get out of a construction loan, walked rather than face building defects, or I can think of a thousand things that would indicate buying a spot lot new construction, that went back to the bank, was a very bad decision.

    Actually none of your comment pertains to a financial health analysis. Now out by Microsoft it may be essential, but it should be taken for granted that all of those homes will be selling at foreclosed property prices. Foreclosed property pricing should be an index.

    As Ray would say, they are all coming back.

    So even if every house in a six block radius was owned free, and clear the effect on pricing would be negligible once any, or all of those properties came onto the market.

  87. 87
    Macro Investor says:

    By Jonness @ 56:

    By TheHulk @ 21:

    Personally, I dont think the house value/price ratio has climbed in the last 12 months (I am not considering the tax credit bump). Since that is my assumption and Richard claims to have data that is the exact opposite, I would like to see that. Heck that would mean I made the wrong assumption and am actually losing out by staying on the sidelines. Richard please prove me wrong.

    Despite what the shills say who do this for a living, I continue to see prices drop. The last few months have been extra fun. The outskirts are getting hit the hardest, but the disease is rapidly spreading to the central organs. It’s almost unbelievable that anybody is still out there defending this market. It’s absolutely terrible. You can’t give houses away right now. But we haven’t seen anything yet. Wait until the upcoming REO wave. At that point, all these delusional homeowners who are still looking to double their money since buying in 1999 are in for an extremely rude awakening.

    Meanwhile, Bernake is spending most of his time stockpiling food and weapons in his underground ammo bunker. He figures he better do it now because after QE2 bubbles up commodity prices he will no longer be able to afford it.

    Finally someone with a clear perspective. As for “Zimbabwe” Ben, his bunker better be offshore somewhere, because he’s sure destroying what little is left of this place.

  88. 88
    Macro Investor says:

    By Kary L. Krismer @ 37:

    RE: David Losh @ 32 – 1. They want to own a house due to issues that have nothing to do with predictions of where prices are going. People do that every day with all sorts of assets.
    2. They want a hedge against an inflation risk that they see.

    This is not directed at you personally. How many of these people would still buy if they were warned that a year or two from now they could easily be $100k under water? Double that if interest rates go back up.

    Every sales person chooses to have integrity or be a shark. If they have integrity the presentation evenly balances risks and benefits. If they are sharks they gloss over the risks and only talk about the bennies. They take advantage of people’s trusting nature or lack of sophistication.

    A person of integrity would get so much repeat sales and referrals it would make them a much bigger success. Sadly, in my experience I have yet to meet someone like that.

  89. 89

    RE: Macro Investor @ 88 – People all have their own beliefs as to what will happen in the future. Just look at this board. Some people here think we are headed toward inflation, some deflation. Some people think we are headed to recovery, some a double dip. Do you really think it’s an agent’s job to try to change someone’s mind on such topics just because they might personally have a different belief? Do you even think that is possible based on what’s happened here?

    It would be different if someone says something like: “I want to buy this place today with 3.5% down, and then sell it in two years to move into a larger place!” An agent could tell them why that isn’t very likely to be possible. But real estate agents do not typically have doctorates in economics, and even if they did, they would still likely have different opinions on where prices are headed.

  90. 90
    David Losh says:

    RE: Kary L. Krismer @ 89

    Real Estate never changes. People can believe what they want, economies change, but Real Estate is a patch of dirt.

    In 1996, after the release of Windows 95, the world changed, the global economy changed. in 1998 money shifted from stocks to real estate. In 2002 all money went into the financial markets. So yes, economies change.

    The dollar amounts of Real Estate may change but we know that the cost of housing is tied to inflation. Then there are those intrinsic values. It’s neither here, nor there.

    So people have to stop looking at the price, and focus on owning the property. Can you own it? Can you afford to own it, and what is your business plan to get it paid off.

    Sales people spout all kind of numbers, or property turns, or interest rates, and stuff that is a bunch of hooey. You buy Real Estate as an investment in your future,and to provide a security to your family. You buy Real Estate to create wealth.

    Now doug at comment 65 spent a little too much time with a sales person. God bless him, but he outlined perfectly the problem our global economy has. You kind of went along with it.

    Sales people should stick with cars, or refrigerators.

    So yes I can tell you where real estate prices will be fifty years from now. No tricks, no gimmicks, prices will go up, and down, and follow the rate of inflation. What you need to know is how to maximize the returns of owning property.

  91. 91
    ARDELL says:

    RE: David Losh @ 90

    Real estate is always about supply and demand…not the rate of inflation. You will always have one neighborhood doing better than average and another doing worse. You will never have all properties equally following the rate of inflation.

  92. 92
    David Losh says:

    RE: ARDELL @ 91

    Let’s take the housing units around the Microsoft campus. During the construction of the campus there was a limited supply of housing, short supply. That got fixed by over building.

    Miami, San Diego, Henderson Nevada, are all the same. Short supply until there is an over supply.

    Building a Real Estate is something different. Having a housing unit close to the Microsoft campus is a career decision. The value of the housing unit is tied to it’s proximity to the job center. The demand for a housing unit based on that location can rise, and fall according to viability of the job center.

    A second part about that, and a period we are in right now, is that those housing units can be supplanted by rental units. In the past twelve years we’ve had fewer rental units built. In the next five years that will be corrected, and the demand for the over supply of housing units for purchase will be that much less.

    My distinction is that these housing units really have nothing to do with a Real Estate other than as collector items. An investor could put a group of these together as rentals and maybe, maybe cash flow them into something.

  93. 93

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  94. 94

    […] It’s worth noting that although it is back on an upswing, annual net migration is still a tiny fraction of the 120,000 a year that local real estate educator Richard Hagar has been consistently claiming since 2007. […]

  95. 95

    […] Hagar: Never Mind the Bogus Data, Recovery is Here! – 11/09 – 92 comments […]

  96. 96

    […] [Follow-Up: Hagar responds, we stand our ground] […]

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