NWMLS: Closed Sales Still in the Gutter, Median Price Falls to a New Post-Peak Low

November market stats have been published by the NWMLS. Here’s their press release: November’s home sales rose modest 2 percent, surprising some Northwest MLS Brokers.

Northwest Multiple Listing Service members recorded a few pleasant surprises last month. Pending sales during November outgained the same month a year ago, marking the first year-over-year increase since April, when the tax credits expired.

Also noted as encouraging were an upswing in relocation sales, shrinkage in the number of new listings added to inventory, and a year-to-date volume of closed sales that is outpacing 2009.

Northwest MLS director OB Jacobi described last month’s gain in the number of transactions written as “surprising.” “That’s surprising, since November is typically one of the slowest sales months of the year, and this year we essentially lost a week to poor weather conditions.” Jacobi, the general manager at Windermere Real Estate Company, also reported increased activity at open houses last month.

Jacobi suggested the increase in sales was due in part to an uptick in interest rates that motivated some buyers to move forward, combined with a desire for people to be in their new homes before the holidays.

The only way that this moderate year-over-year gain in pending sales would surprise anyone is if they weren’t paying any attention at all to pending sales last year. For those who need a quick refresher, last November, pending sales fell 36% year-over-year and 31% MOM, thanks to the original expiration of the homebuyer tax credit, which had a November 30 cutoff for closed sales. In other words, this month’s YOY “increase” in pending sales represents only the extreme weakness of November 2009, not any sort of strength of November 2010.

Here’s the same explanation in simple chart form:

King County SFH Pending Sales

The 10.1% month-to-month drop in pending sales between October and November this year was slightly less than the average drop between 2000-2008 of 13.7%, but there’s not enough of a difference there that it makes sense to interpret it as some sort of signal of recovering sales.

CAUTION

NWMLS monthly reports include an undisclosed and varying number of
sales from previous months in their pending and closed sales statistics.

Here’s your King County SFH summary, with the arrows to show whether the year-over-year direction of each indicator is favorable or unfavorable news for buyers and sellers (green = favorable, red = unfavorable):

November 2010 Number MOM YOY Buyers Sellers
Active Listings 8,722 -9.8% +6.1%
Closed Sales 1,092 -16.6% -30.6%
SAAS (?) 2.06 +1.1% +39.4%
Pending Sales 1,628 -10.1% +3.0%
Months of Supply 5.36 +0.3% +3.1%
Median Price* $359,950 -4.0% -2.7%

Feel free to download the updated Seattle Bubble Spreadsheet (Excel 2003 format), but keep in mind the caution above.

Here’s your closed sales yearly comparison chart:

King County SFH Closed Sales

Hey, we managed to get back above 2008. Barely.

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

King County SFH Inventory

Nothing much new with inventory. Tracking the usual seasonal pattern, lower than 2007 and 2008, but higher than every other year.

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

King County Supply vs Demand % Change YOY

Sales continue to fall faster every month, but the growth in inventory slowed slightly.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

Oops, dropping back further below zero.

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

King County SFH Prices

Yikes. Dropped quite a bit below the same month in 2005. Actually we hit the lowest point since April 2005, falling to a new record of 25.2% off the peak value. April 2005: $355,000. November 2010: $359,950.

Here are the news blurbs from the P-I and the Times:

Seattle P-I: Are we recovering from homebuyer tax-credit hangover?
Seattle Times: Median home prices in King County down from a year ago

Check back tomorrow, when all the local reporting will be mashed together in our reporting roundup.

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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.

25 comments:

  1. 1

    The number that sticks out to me is average days on market. For King County residential almost twice as long over last November (145 vs. 77).

    I don’t track pending volume, but I do track pending price just to get some idea of where we might be heading the next month. That hasn’t worked so well as short sales increase, as demonstrated by the fact it’s been lower at least 3x in the past year, so apparently a lot of short sales still are not closing.

    Finally, I’m having a bit of “American memory,” meaning I can’t remember something that occurred over six months ago. What was the reason for the low volume in January and February? Was that 30-60 days after the period where it was uncertain the tax credit would be extended? It was two months in a row under 1,000, when the months that surrounded them were roughly 1500.

  2. 2
    Ben says:

    Thanks, Tim. Your continuing work is much appreciated.

  3. 3
    EconE says:

    “Jacobi suggested the increase in sales was due in part to an uptick in interest rates that motivated some buyers to move forward”

    Haven’t they used the opposite argument also? That a “downtick” in interest rates was the motivator?

  4. 4
    Scotsman says:

    RE: EconE @ 3

    Ah yes, the reading of the interest rate tea leaves is very complex and best left to NAR professionals. Much mystery and danger lurk there.

    The weather and its influence, however, is easily discerned- if not for that nasty storm we would have the beginnings of a new bubble! ;-)

  5. 5

    By EconE @ 3:

    “Jacobi suggested the increase in sales was due in part to an uptick in interest rates that motivated some buyers to move forward”

    Haven’t they used the opposite argument also? That a “downtick” in interest rates was the motivator?

    What would you expect a director of the MLS to say?
    ” We’re absolutely baffled. We don’t have a friggin’ clue. We don’t know why anybody would be buying a house in this economy.”

  6. 6
    ray pepper says:

    I love Tim’s CAUTION sign in bright yellow . I think I have the same one in my garage on some acid. Great correlation!

  7. 7
    Jonness says:

    “Yikes. Dropped quite a bit below the same month in 2005. Actually we hit the lowest point since April 2005, falling to a new record of 25.2% off the peak value. April 2005: $355,000. November 2010: $359,950.”

    Fantastic! Prices shot down another 4% this month, and we’ve moved into double-dip territory. The rate of house price decline has accelerated to an annual pace of 48%.

    It looks like I’ve made a bunch more free money for doing nothing more than exercising a little patience. :)

  8. 8
    Hugh Dominic says:

    RE: Kary L. Krismer @ 1 – Word up, Kary.

    The inventory may be the lowest in two years, but what’s out there is stale, stinking garbage. The good stuff is gone. What’s left are short sales, overpriced dumps, and houses with oddities. It’s the ding n dent bin, not even worth the time to go out and look.

  9. 9
    Lo Ball Jones says:

    Here’s what I do…go to Redfin.

    Set up brackets like $100-200K, 200-300K, 300-400K.

    See how many houses there are.

    Pick a few, and see if they’re livable.

    Try the next bracket. And so on.

    Here’s where I see trouble:

    http://www.redfin.com/WA/Seattle/3521-S-Bennett-St-98118/home/172269

    $190K home in Rainer.

    http://www.redfin.com/WA/Seattle/2605-NE-145th-St-98155/home/115103

    $190K in beautiful N. Seattle

  10. 10
    doug says:

    I would agree that things look very picked over. We’re looking mostly in Snohomish, and most of the houses that are attractive and under $300k are pending. There are still cheaply-constructed vinyl boxes with no back yard priced at $290k… I don’t know who they think they’re kidding.

    That said we’re going back out to look at houses this weekend, :-/

    Lots of thanks to this site for arming me with information, and letting me know I can be choosy.

  11. 11
    Crazy Eddie says:

    More bank foreclosed houses coming on the market.

    4Bd Everett, only $69K:

    http://www.redfin.com/WA/Everett/702-E-Marine-View-Dr-98201/home/2489869

  12. 12

    Interesting how few comments this post generated.

    BTW, one thing I checked this morning is to see if it was a change in mix, specifically more short sales and REOs. While I don’t record those percentages, from memory they don’t seem to be up significantly. SS’s are under 10% and REOs about 15%, which is about what I recall from past months.

    Numbers from NWMLS sources but not compiled or guaranteed by the NWMLS.

  13. 13
    The Tim says:

    By Kary L. Krismer @ 12:

    Interesting how few comments this post generated.

    Probably due to the fact that it wasn’t posted until after 2:00 PM yesterday. Which is why I’m waiting until closer to mid-day to post today’s reporting roundup. I think this one deserves a little more time at the top of the page.

  14. 14
    Ahau says:

    By Jonness @ 7:

    “Yikes. Dropped quite a bit below the same month in 2005. Actually we hit the lowest point since April 2005, falling to a new record of 25.2% off the peak value. April 2005: $355,000. November 2010: $359,950.”

    Fantastic! Prices shot down another 4% this month, and we’ve moved into double-dip territory. The rate of house price decline has accelerated to an annual pace of 48%.

    It looks like I’ve made a bunch more free money for doing nothing more than exercising a little patience. :)

    Um, no.

    The median went down by 4% for one month, that does not mean that the price of any given house went down by 4%, and extrapolating that out to a 48% annual decline makes no sense in context. The current annual rate is -2.7%.

    I do, however, agree that you’re money ahead for waiting.

  15. 15
    BillE says:

    By Ben @ 2:

    Thanks, Tim. Your continuing work is much appreciated.

    Yeah, what he said. Can’t beat this kind of info.

  16. 16
    Scotsman says:

    RE: Kary L. Krismer @ 12

    “Interesting how few comments this post generated.”

    I think the lower post volume is because the news only reinforces expectations, so what’s there to say? The consensus has shifted from “houses only go up” to either “wait and see” or “maybe renting would be a good idea.”

    By the way, Zillow, the most worthless of sites, has finally decided my house isn’t worth half a million and has been dropping the Zestimate by big chunks, 3-5% a month for several months now. Better late than never. Still too high by 10% or more though.

  17. 17
    Jonness says:

    By Ahau @ 14:

    The current annual rate is -2.7%.

    B.S. The PAST annual rate is -2.7%. The November rate of decline (most current on record) was 48% when extrapolated to a yearly rate, and extrapolating it out to this degree gives a better sense of just what an extreme drop 4% in a single month represents. It’s a real eye opener, to say the least. Note: I never claimed the market would continue to drop at this rate for the next 12 months, and that is quite obvious.

    Kary has often pointed out that Case-Shiller price data closely correlates to NWMLS median price data. IOW, this 4% median drop is much more meaningful than your claim that this has no relation to the value of any given house. The market, as a whole, is dropping like a rock (not all neighborhoods are dropping at the same rate, blah, blah, blah). The official data releases are coming in and largely validating my previous statements about having witnessed the list prices of the homes I am tracking begin to drop into the sewer. I fully expect a similar story when November Case-Shiller data is released.

    I’ve been warning of continued falling prices throughout the tax-credit period at a time when many analysts jumped in bed with government and claimed prices had bottomed and that we had reached a period of price stabilization. The notion of a bottom having been reached was clearly ridiculous in light of the fact that the free tax giveaways could not last forever amidst a period when the consumer had overleveraged to the extreme due to easy money policies and too lax lending standards during the bubble period. This spelled a need for continued credit tightening while the consumer continued to deleverage on its debt. To anybody who was paying attention, this was a clear recipe for future asset deflation in the bubble class.

    We have before us a double-dip situation in a deflationary environment where people are afraid to buy a house because they feel waiting just a little longer will yield them a better price. This is an alarming environment (aka Japan), and should be taken extremely seriously by anybody currently contemplating purchasing a house.

    The double-dip now showing in the house price data will most likely result in increased fear and reinforce the already present deflationary mindset. It’s unlikely current fiscal and monetary policy will prove strong enough to address this problem. Predicting a price bottom is not an easy task, nor is predicting whether we eventually see deflation, slow growth, moderate growth, or high inflation. However, understanding that MUCH more pain lies ahead is an absolute no-brainer. Thus, the consumer should proceed with extreme caution!

    “This article summarizes the size and scope of the housing crisis, making the point that if governmental policy does not change, one borrower out of every 5 is in danger of losing
    his/her home. A crisis of this order of magnitude requires both supply and demand side measures. On the supply side, a successful medication is critical. This will require principal
    reductions to re-equify the borrower. The moral hazard (strategic default) issues must be addressed by first recognizing that this is an economic issue, not a moral one. Second liens must also be addressed. As supply side measures alone are likely to prove insufficient
    to address a crisis of this size, we discuss demand side measures to increase the buyer base.”…Laurie Goodman-senior managing director of Amherst Securities and a former co-head of fixed income research for UBS.

    http://www.politico.com/static/PPM170_101006_amherst.html

  18. 18
    LA Relo says:

    Pricing certainly isn’t at a bottom, especially as rates go up, but another month or two of this and I’ll bet banks will start dropping prices on REOs for anyone with 5% down, a FICO over 650 and a pulse.

    A 4% month drop is huge, but it could mean the majority of activity is at the low end. The median will likely creep back up as foreclosures work their way up the housing food chain, and while that will look like good news, it won’t be.

  19. 19

    By LA Relo @ 18:

    Pricing certainly isn’t at a bottom, especially as rates go up, but another month or two of this and I’ll bet banks will start dropping prices on REOs for anyone with 5% down, a FICO over 650 and a pulse..

    I think Homepath (Fannie Mae) is lower down than that, but I’ve seen other banks refuse to budge and require conventional financing.

  20. 20

    By Jonness @ 17:

    Kary has often pointed out that Case-Shiller price data closely correlates to NWMLS median price data. IOW, this 4% median drop is much more meaningful than your claim that this has no relation to the value of any given house.

    This drop was just the NWMLS catching up to C-S. Usually it’s the other way around, especially after traumatic events. Apparently the end of the tax credit wasn’t truamatic! ;-)

    Neither C-S or th NWMLS has much application to any particular house.

  21. 21
    Ahau says:

    RE: Jonness @ 17 – You’re correct, -2.7% is the past annual rate. We don’t know what the rate will be over the next year, and I agree that we’re probably heading for more pain. I guess my poorly made point was this: saying that this month had a -48% annual rate is as meaningful as stating that prices increased from June-July at a +30% annual rate. This is also a true statement; it is also not intended to state that this rate will continue through the next 12 months. However, if I had made such a foolhardy statement in July, I would have been eviscerated on this forum.

  22. 22
    David Losh says:

    RE: Jonness @ 17

    http://quickfacts.census.gov/qfd/states/00000.html

    2009 Census Data puts the number of housing units at 120,000,000. That number will rise with new data. Everything will change with new data from Census 2010. The number of people living in poverty was the first set of satistics. Housing, house hold income, and cost of living will follow.

    The report you linked to, in my opinion, is a feel good peice about how some financial planner can help you sort the whole thing out. They won’t.

    The only way you can have a double dip is if there was a decline in asset value, and there hasn’t been, yet. I don’t think there will be.

    All of these sales data statistics are absolutely meaningless. Property has a core value you either hit or you don’t. You can go out today, any day, and buy a property at a fair market value. Just because pricing went out of conrol for five years between 2003, and 2008 is just a blip on the screen.

  23. 23
    Jonness says:

    By David Losh @ 22:

    All of these sales data statistics are absolutely meaningless. Property has a core value you either hit or you don’t. You can go out today, any day, and buy a property at a fair market value. Just because pricing went out of conrol for five years between 2003, and 2008 is just a blip on the screen.

    IMO, that’s an extreme understatement. Pricing has been out of control since the late 90’s and continues to be so to this day. The wild swings of +30% extrapolated annual appreciation during periods of government handouts and -45% shortly after the handouts were removed are evidence that out of control pricing is alive and well and will remain with us for some time to come. Unless you are a professional investor with a very clear understanding of what you are doing, at best, buying a house in this environment represents gambling with the odds greatly stacked against you.

  24. 24
    David Losh says:

    RE: Jonness @ 23

    You’re right about this last swing in pricing. It being characterized as a stabalization of the housing market was completely false.

  25. 25
    patient says:

    Thanks The Tim. Btw I still read the posts but doesn’t comment that much as things are chugging along pretty much as expected as Scotsman said. I still enjoy the clear and easy to digest info and the often fun and informative comments from the regulars.

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