Seattle Home Prices Still Not Hitting Bottom

Here are a few charts of price per square foot for Seattle single-family homes…

Redfin:

Seattle Home Price per Square Foot

Zillow (list price):

Seattle Home Price per Square Foot

Altos Research (list price):

Seattle Home Price per Square Foot

Draw your own conclusion about whether or not prices have hit bottom yet.

Full disclosure: The Tim is employed by Redfin.

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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.

91 comments:

  1. 1
    ARDELL says:

    Just curious as to why you felt that a disclosure (at the bottom) that you are employed by Redfin was of note on this post, but not on some others where you defame an agent and her listings (Kendra Todd) or allow commenters to take pot shots at someone’s home for sale (guess this home’s sold price).

  2. 2
    ChrisM says:

    I’m not a fan of graphs like this where the y axis doesn’t begin at 0. These graphs are deceptive, though I understand you didn’t produce them.

  3. 3
    The Tim says:

    RE: ARDELL @ 1 – I’m posting and linking to Redfin stats, so I think it’s appropriate to point out that I work there. When Redfin is not a subject of the post, it’s not relevant to add a disclosure.

    And for the record, I dispute your characterization of the other posts you mention, but that’s off-topic, so I won’t go into it on this thread. I’ve responded in detail on the current open thread.

  4. 4
    DavidB says:

    Correct me if I’m wrong but didn’t Ardell call the bottom for Seattle housing well over a year ago?

  5. 5
    JW says:

    I’m continually suprised that anyone argues we are not yet near the bottom? Of course we’re not. I’m also suprised by criticism that its ‘buyers holding out’ that are perpetuating this deflation. The article in the ST that pointed out how home prices rose 3 times that of personal income is the key statistic as to where prices are returning to.

    Doom and Gloom forecasts aside (however i don’t dismiss them), at least interest rates are returning to a ‘normal’ further driving prices back down to earth and lenders are caution not to lend on an overpriced house (after all its their money).

    Potential buyers are so much better off holding out on a purchase, holding onto the money saved by renting, and waiting.

    I love the selling point, ‘but now’s a great time to buy, interest rates are still so low!!’…man that couldn’t be farther from the truth, with all that we’ve been through and the information thats available today (thanks Seattle Bubble, Zillow, Redfin) however, i can’t say i feel too sorry for today’s buyer if they buy at 05 prices…to say they should know better is a understatement (unless they really know what they’re doing and buying atleast at 00’-02 prices.

    Friends we have a long way to go before we hit bottom, and i suspect based on the Times article about Seattle tapping their equity in refi’s, that a large number of home owners who bought well before ‘the bubble years’ even those who bought in the early 90’s and before are finding themselves underwater due to the money pulled out of their house during a refi.

    Housing still has a really dark night ahead of itself before morning, we’ve just started to see prices fall, the last couple years have been just the tip of the iceberg. Want to throw away a significant amount of money…! Buy a house tomorrow at ’05 prices and watch it drop 50% in value in the next few years!!

  6. 6
    Marc says:

    Tim,

    I clicked on the “Max” link in the Redfin graph and the resulting chart looks rather different from yours. For instance, the list price and sales price lines intersect on your graph but never intersect on the graph on Redfin’s site. What am I doing wrong?

  7. 7
    Lurker says:

    By Marc @ 6:

    Tim,

    I clicked on the “Max” link in the Redfin graph and the resulting chart looks rather different from yours. For instance, the list price and sales price lines intersect on your graph but never intersect on the graph on Redfin’s site. What am I doing wrong?

    When clicking on the image it defaults to house/condo info on Redfin’s site instead of just house info like what The Tim posted. You can change the view in the upper right hand corner of the graph.

  8. 8
    The Tim says:

    RE: Marc @ 6 – As Lurker pointed out, the default view on Redfin’s stats pages is for SFH+Condo. Click the tabs in the upper-right corner above the graph to change to SFH only.

  9. 9
    Pegasus says:

    By ARDELL @ 1:

    Just curious as to why you felt that a disclosure (at the bottom) that you are employed by Redfin was of note on this post, but not on some others where you defame an agent and her listings (Kendra Todd) or allow commenters to take pot shots at someone’s home for sale (guess this home’s sold price).

    My my my! It is hard to defame someone with the truth and showing their sloppy handiwork(pictures). As far as posting about quessing what a house will sell for probably got the homeowner more free advertising than he will ever see from their broker. Oh yeah, now that the house will be watched, it might prevent the ridiculous bumping the price up and down every week or so. I wonder who’s idea is that? So do you think prices have bottomed?

  10. 10

    Freedom of Speech Protects The Tim

    They haven’t taken that away from Americans and if they tried, I’m sure most of us would put up a fight.

  11. 11
    Marc says:

    Thanks Lurker & Tim. I figured it was most likely pilot error.

    So how are we to explain the apparently on-going micro trend of buyers paying above list price for Seattle area homes since November 22nd? It would appear to be the longest and largest time period of sales prices exceeding list prices (per sq. ft.) in the past two years.

    Tim do you have the data to tell if this trend holds true for straight list and sale prices (i.e., not on a price per foot basis).

  12. 12
    The Tim says:

    RE: Marc @ 11 – If you check the “Sale-to-List %” box and un-check the other boxes, you can see that the aggregate sale price to list price ratio for the homes that are actually selling right now is still below 100% for Seattle at around 3% off list. Compare this to San Francisco, where from June of last year through August of this year, homes were actually selling for more than list price, on average.

    The difference in the red and blue lines in the above chart for Seattle is apparently due to higher-quality homes selling vs. what is sitting on the market.

  13. 13
    Scotsman says:

    H@ll, we’ve hit “bottom” so many times already in this market I’ve lost count. And how appropriate that one of the most prolific bottom callers starts off the thread!

    We can’t be at the bottom, we haven’t even gotten to the main event.

  14. 14
    The Tim says:

    By Scotsman @ 13:

    We can’t be at the bottom, we haven’t even gotten to the main event.

    Ok… I’ll bite.

    What exactly is this forthcoming “main event”? Please describe.

  15. 15
    Jeremy says:

    RE: Scotsman @ 13 – It is interesting that Dr. Doom aka Nouriel Roubini decided it was a good time to buy in NYC. Obviously there are both local and national factors in the real estate market but he’s been just about the biggest bear out there.

    http://www.bloomberg.com/news/2010-12-17/nouriel-roubini-purchases-5-5-million-condo-in-east-village-of-manhattan.html

  16. 16
    David Losh says:

    RE: DavidB @ 4RE: The Tim @ 3RE: ARDELL @ 1

    I’m going to second that, and say that you should really disclose you work for redfin on every post.

    The tone, and direction of the site has, in my opinion, changed since you started promoting the redfin business model.

    Internet photos, and pretty graphs are all redfin has to offer. So in your heading when you say Real Estate news without the spin, it seems kind of a hollow promise.

    The graphs here aren’t news, it’s a demonstration. The fixation of listing photos is pushing agents into gatering to the redfin business model.

    No, people guessing how little a house will sell for is just weird. It does nothing for the property other than it moved it up on the redfin most looked at property tab.

    You have a sales ad going on here, nothing more. Isn’t that redfin graph at the top just awesome!

    Oh, by the way most people know the starting point of price per square foot is $100 per sq ft.

  17. 17
    Scotsman says:

    RE: The Tim @ 14

    We’re on an unsustainable path- 40% of federal expenditures are borrowed, and projections for the next several years don’t have that changing. GDP growth, while currently positive, isn’t robust enough to lower the unemployment rate and isn’t expected to change for several years. The dollar is falling, export prices are climbing- especially energy and raw materials- interest rates are slowly climbing. Why people passively accept that this can continue, just like they assumed that housing prices could continue to climb while incomes stagnated completely escapes me. This isn’t just a loss of short term memory or a logic deficiency, it’s willful rank denial. But as any good alcoholic or drug user will tell you denial doesn’t affect reality at all, just our response to it.

    It seems to be pretty well accepted that we can’t grow our way out of the corner we’re in, and to be honest as a country we haven’t even made the effort to push back to equilibrium, let alone turn the ship of state in a different direction. Nothing has changed, but we somehow expect to magically escape the math that defines our ultimate end.

  18. 18
    The Tim says:

    RE: Scotsman @ 17 – Okay… I’m with you on the current state of affairs. But none of that really describes what you’re alluding to as the “main event.” How do you see it ultimately playing out, and how soon?

  19. 19
    Blake says:

    RE: Jeremy @ 15
    Re: Dr. Doom/ Roubini buying a $5,5 million New York condo…

    It’s notable that he “took out an adjustable-rate mortgage that has a fixed rate of 3.625 percent for five years…”

    Perhaps he’s thinking that he’ll sell within 5 years… or he doesn’t think it is likely that interest rates will be much higher in 5 years!? Nouriel is still quite pessimistic in the short term and you can make the argument that New York City will be in better shape than 98% of the rest of the US…

  20. 20
    Blake says:

    RE: Scotsman @ 17
    >> “export prices are climbing”
    I think you meant import prices are climbing…?
    But, yes, agreed. It is bad and not much has changed as far as the people running our country. And, sadly, “U.S.” corporations are turning their back on the US and focusing overseas where most of their growth and profits are…
    http://www.huffingtonpost.com/robert-reich/post_1462_b_799539.html
    -snip- “It’s much the same even for America’s biggest retailers. 2010 wasn’t an especially good year for Walmart in the United States. Its third-quarter sales fell, as U.S. shoppers continued to hold back. But Walmart International is contributing mightily to its bottom line. Its UK business, Asda, will be adding 7,500 new jobs next year. Walmart is also doing well in Japan and Brazil, and hiring like mad in both countries. So when President Obama tells American CEOs our biggest challenge comes from abroad, you’ve got to wonder. The leaders of American business are already abroad, and doing quite nicely.”

  21. 21
    Scotsman says:

    RE: Jeremy @ 15

    He likes to party. Women are impressed by penthouses and status. What makes you think, or assume, it was a rational decision? Why assume he wanted to maximize his lifetime wealth instead of this year’s pleasure? What’s the old saying- “the market can remain irrational longer than you can remain solvent?” I wouldn’t read too much into one guys actions- I’d look at the underlying math, assumptions, and rate of responsiveness in the markets. Reality and especially cash flow always wins in the end.

  22. 22
    Scotsman says:

    RE: Blake @ 20

    Dang- make that import. Too much going on at once.

  23. 23
    Scotsman says:

    RE: The Tim @ 18

    I wish I knew. For timing it looks like this coming spring/summer is a possibility- there’s some movement in interest rates and political recognition that real change is necessary. Several states have stepped up to the plate with mixed results- CA,WA, NJ, IL, MN. Awareness is building on the political side and pressure is building on the fiscal side. A new congress after the first of the year, some ongoing examples both here and internationally of how things can go right/wrong, maybe that’s enough to get the conversation started.

    Most are looking to the bond market and interest rates to put the brakes on spending/deficits, initiating corrective change. I’m not so sure- just when you think they can’t come up with new tricks the Fed suddenly steps up and buys all the new debt with play money. While that too is unsustainable, it can push back the inevitable for perhaps years. I think we may have to wait until after the 2012 elections, so the spring of 2013? I still assume there can be a political solution within the existing framework, but can also see things breaking down into martial law and a general mess.

    All one can know for sure is that major change is required to correct the imbalances, and that a lot of people will be unhappy with what they need to do to adjust/survive in the new system. Should be interesting.

  24. 24
    Chris says:

    RE: David Losh @ 16

    Mr. Losh and Ms. Ardell (and presumable ChrisM at post 2)
    Aren’t you the least bit concerned about your association and its spokespeople damaging your credibility by proxy? Before you complain about Redfin or Zillow have you written one letter to the National Association of Realtors about its five plus years of ridiculous, self-serving predictions? Its spokespeople Lereah and Yun have become laughingstocks.

    Redfin and Seattlebubble put the information out there and let you decide. I understand you don’t like that but have you taken any effort at all to clean your own house before criticizing others (and here I won’t get into your predictions there is no housing bubble followed by early bottom calls Ms. Ardell).

    http://blogs.wsj.com/developments/2010/08/24/realtor-chief-economist-stands-by-optimistic-forecast/

    The NAR reported this morning that home-sellers closed on 27% fewer homes in July as in June, and 26% fewer homes in July 2010 as in July 2009. NAR’s news release took a surprisingly rosy view, with the headline “July Existing-Home Sales Fall as Expected but Prices Rise.”

    Mr. Yun assured the public that this historically-low level of sales could be little more than a “pause.” After September, sales seem primed to recover.

    http://www.walletpop.com/2009/11/16/national-association-of-realtors-predicts-4-gain-for-housing-in/

    The good news: National Association of Realtors chief economist Lawrence Yun is predicting that home prices will rise 4% in 2010.

    The bad news: Lawrence Yun has never been right about anything in his entire life, ever.

    http://davidlereahwatch.blogspot.com/

    Mr. Lereah, 55 years old, is one of many prognosticators who won professional accolades during the housing boom, only to see their reputations wither in the bust. Throughout 2005, when home prices in the U.S. hit their fifth consecutive annual record, Mr. Lereah was on television so often his wife, Wendy, would catch him by accident. He flew first-class to meetings and speeches in places like Hawaii and Aspen, Colo., staying in suites at expensive resorts. His bosses awarded him more responsibility. That year, he published his second book, “Are You Missing the Real Estate Boom?”

  25. 25
    David Losh says:

    RE: Chris @ 24

    Oh yeah, the National Association of Realtors do know my views. redfin has done nothing to educate any one. Zillow is trying to do some thing, but I applaud Lennox Scott for actually bringing the Real Estate industry to the public. Lennox is the one who spear headed it, and paid for it, in my opinion.

    The value of Real Estate never changes. All the sales gimmickry is just to generate sales.

    Real Estate is a financial decision. If you think you are getting something from the internet about Real Estate you are mistaken.

  26. 26
    Daniel says:

    By Scotsman @ 17:

    RE: The Tim @ 14
    and to be honest as a country we haven’t even made the effort to push back to equilibrium, let alone turn the ship of state in a different direction. Nothing has changed, but we somehow expect to magically escape the math that defines our ultimate end.

    This is what happens when ideology clashes with reality/reason. We all saw it in an extreme case in the former Soviet Union and its satellite states. What type of ideology does not matter.

  27. 27
    Daniel says:

    By David Losh @ 25:

    RE: Chris @ 24
    redfin has done nothing to educate any one.

    Actually if I have the choice between someone who has done nothing to educate and those who either willfully or out of stupidity misrepresent facts to suit their own wallet, I choose the first any day of the year.

  28. 28
    Daniel says:

    By ARDELL @ 1:

    Just curious as to why you felt that a disclosure (at the bottom) that you are employed by Redfin was of note on this post, but not on some others where you defame an agent and her listings (Kendra Todd) or allow commenters to take pot shots at someone’s home for sale (guess this home’s sold price).

    It is the listings defaming the agent, not those who point them out. But there is a long standing tradition of blaming the messenger ranging from ancient Greece to Wikileaks.

    But keep on “defaming” yourself by posts like this.

  29. 29
    Ben says:

    RE: Chris @ 24 – Chris, those great observations strike at the inherent contradictions facing any industry organization that relies on sales revenue. Thus, it follows that it is always a good time to buy (or sell) a house, new car, stocks, etc. Until the advent of blogs where industry bs is routinely exposed and analyzed, the general public had no facts to counter with.

    Mish references the 10th Annual Year in Ideas – Do-It-Yourself Macroeconomics. Sites such as The Tim’s Seattle Bubble are doing an immense service in exposing NAR’s and the local media lapdog boloney press releases for the marketing shills they really are.

    http://globaleconomicanalysis.blogspot.com/2010/12/new-york-times-10th-annual-year-in.html

    Bravo Tim. You are a local hero.

  30. 30
    David Losh says:

    RE: Daniel @ 27

    Your comment doesn’t make any sense.

  31. 31
    JW says:

    RE: Blake @ 19

    I’m guessing here, but I’d bet that few mil is just a drop in the bucket for mr roubini, I mean if you want to put that against his ‘net worth’, his assets, his income, etc…I don’t think i’m going out on a limb here but I think that 5 mil condo to his money is like most of us taking a vacation to hawaii…just a thought

  32. 32
    GH says:

    Let’s do some critical thinking:

    1. You can only see market tops and bottoms in hindsight. No “conclusions” can be drawn from any of the graphs.

    2. “Price per square foot” can drop for reasons unrelated to home values. It is a poor way of determining an overall market’s trend. [1]

    3. The same Redfin page that Tim references shows “Median Sold Price” increasing 6% from a year ago. NWMLS data has King County “median closed sale” prices increasing 1%.

    Hardly a tanking market.

    [1] “Can I Use the Price Per Square Foot to Figure Home Values?’
    http://homebuying.about.com/od/marketfactstrends/f/062408_persqft.htm

  33. 33
    David Losh says:

    RE: Ben @ 29

    You see it’s comments like this that give a false impression about this site. You had me reading these articles like Tim was a contribution.

    This post is about promoting a product, a redfin product.

  34. 34
    Daniel says:

    By GH @ 32:

    2. “Price per square foot” can drop for reasons unrelated to home values. It is a poor way of determining an overall market’s trend.

    Did you even read your link? It ends with “The pricing per-square-foot simply gives you average or median ranges; it shows you trends. It can’t compute value. ”

    Apart from that this statement is also wrong if you are interested in value of a representative housing portfolio as opposed to a single home. We had this type of discussion here countless times when discussing CS data.

    Back then it amazed me that some real estate professionals here had no clue what the CS Index is intended to measure. One person in particular defended his flawed understanding even when confronted with the wording from S&Ps supplementary material.

  35. 35
    David Losh says:

    RE: Daniel @ 27RE: Chris @ 24

    I guess you’re referring to this mess of comment #24.

    The National Association of Realtors is a trade organization. This is like pointing out the Trade Association of Die Makers is promoting the use of dies, or the Restaurant Association is encouraging people to eat in restaurants. Maybe some one should start a blog telling people they can eat at home for less.

  36. 36
    paco_serpico says:

    RE: David Losh @ 30 – Most ironic comment ever. I’ve lurked on this blog for a long time and I don’t think I have ever made sense of one comment you have made, except for this one. I think it’s mostly because I don’t know jack about real estate and your comments are for people with more industry knowledge. Your comments push the edge of my reading comprehension skills.

    As far as the prices hitting bottom, I think there’s a ways to go. So far, in fact, I don’t think I’ll buy even when I’m able to afford it in the next five years.

  37. 37
    ChrisM says:

    RE: Chris @ 24 – Nope, I agree w/ your post.

    However, IMO 90% of graphs need to start at 0 on the y axis, unless there’s a very good reason not to. These graphs Tim presented make the drops look alarming, when they don’t look nearly as exciting when the y axis starts at 0.

    I have the same beef w/ stock market graphs.

    The zillow graph shows a 7% decline.

  38. 38
    GH says:

    RE: Daniel @ 34

    I did read my link.

    You should read it again:

    “The main reason prices per-square-foot is important is to show you trends… But much of that depends on the average size of home. As long as all homes are similar in square footage, the average price per-square-foot will show you a trend. But if some homes are larger than others, an average won’t help you at all.”

    Or do you believe every home in the Seattle area is the same size?

  39. 39
    pfft says:

    By Scotsman @ 13:

    H@ll, we’ve hit “bottom” so many times already in this market I’ve lost count. And how appropriate that one of the most prolific bottom callers starts off the thread!

    We can’t be at the bottom, we haven’t even gotten to the main event.

    too funny. you think things will be even worse? can you spell out your scenario?

    home prices in seattle posted YOY gains a few months ago. the largest YOY decreases were many many months ago. the trend until very recently was that of going from large YOY decrease to progressively smaller ones. what data are you seeing that we don’t?

  40. 40
    Daniel says:

    By David Losh @ 35:

    Maybe some one should start a blog telling people they can eat at home for less.

    Actually there is quite a number of blogs telling people how to cook healthy, tasty meals at home and on a budget… There is also blogs that expose the lies of fast food chains, etc.. Seems someone thinks those are useful =)

    Do you really have no clue what I refer to? (Hint: it was not what you mentioned in your last post.)

  41. 41
    Daniel says:

    By GH @ 38:

    “But if some homes are larger than others, an average won’t help you at all.”
    Or do you believe every home in the Seattle area is the same size?

    Combine the median with information on the size distribution and you again have useful information. Any general statement can be disproven by finding one example where it is false. This will be the base on which I argue. Questions?

  42. 42
    Leigh says:

    By David Losh @ 35:

    RE: Daniel @ 27RE: Chris @ 24

    I guess you’re referring to this mess of comment #24.

    The National Association of Realtors is a trade organization. This is like pointing out the Trade Association of Die Makers is promoting the use of dies, or the Restaurant Association is encouraging people to eat in restaurants. Maybe some one should start a blog telling people they can eat at home for less.

    Yeah, but if I make a bad real estate decision I could lose tens of thousands of dollars and ding my credit. Not sure how much damage I could do by eating out a few times?

  43. 43
    Scott Weitz says:

    RE: pfft @ 39

    I don’t want to speak for Scotsman, but it seems fairly obvious.

    Foreclosures and bankruptcies are raising rapidly…that will lead to more distressed sales, which will lead to more foreclosures, and more distressed sales.

    The ‘Main Event’ is coming as he says. In my opinion, it will be the collapse of one or more major banks (who continue to commit accouting fraud) and/or continued depreciation in real estate. The fundamentals still do not measure up, and by that I mean two things: 1) it makes way more sense to rent right now given the debt service on a average home/ taxes, and 2) the home price/ income ratio is still way to high and unsustainable.

  44. 44
    Trust Issues says:

    After reading this blog for the past few weeks I’ve come to a few simple conclusions:

    1. The Market has not yet hit bottom so hold on to my rental for the time being.

    2. Don’t trust RE agents.

  45. 45
    Ben says:

    RE: Scott Weitz @ 43 – Don’t bother trying with pfft. He’s consumed enough Kool Aid to do himself in. Petard hoisting is his specialty.

  46. 46
    Chris says:

    RE: ChrisM @ 37
    Ok, I understand now – looks like you are interested in the statistical side rather than attacking the general idea of Redfin and Seattlebubble putting more information in the market place. I misread your intentions and assumed you were defending traditional industry.

  47. 47
    ChrisM says:

    RE: Chris @ 45 – Bingo. I’m a buyer who just wants accurate information! :-)

  48. 48
    David Losh says:

    RE: Leigh @ 42

    Master builders Association, and Mortgage Bankers Association did much more damage.

  49. 49
    David Losh says:

    RE: Trust Issues @ 44

    Your link doesn’t go anywhere, and this post has nothing to do with top, bottom, or anything other than a graph demonstration.

    In my opinion the trust issue is with anonymous comments.

  50. 50
    One Eyed Man says:

    RE: Leigh @ 42

    Perhaps NAR’s advertisements containing statements like “There’s never been a better time to buy,” are more like the misleadingTobacco industry ads that said smoking was good for your health, than they are like the average restaurant ad.

    Did anyone read this in the “Congressional Findings” stated in the Preface to Finreg:

    “The Congress of the United States hereby declares that the interests of the Nation in protecting its citizens and avoiding future financial catastrophie justify the exercise of constitutionally recognized police powers when issues of Interstate Commerce are involved. As in the case of tobacco products, the use of certain financial products has been shown to endanger the financial health and welfare of the American Public. This danger warrants the enactment of federal regulation to educate and protect the consumers of said services. It is therefore determined that certain consumer warnings shall be required for the provision of specified forms of Real Estate Brokerage and Mortgage Brokerage Services.”

    And from Finreg Section 223(b)(1):

    “Any agreement to provide Real Estate Brokerage Services as defined in Section 220(c)(42) or Mortgage Brokerage Services as defined in Section 220(c)(33) and any agreement for the purchase of real estate provided for use by a Multiple Listing Service as defined in Section 220(c)(27) shall state in a separate paragraph in not less than 12 point bold face type as follows:

    CAUTION: THE USE OF REAL ESTATE BROKERAGE SERVICES AND/OR MORTGAGE BROKERAGE SERVICE MAY BE HAZARDOUS TO YOUR WEALTH.”

    Said paragraph shall be separately initialled by the recipient of said services. Failure of any provider of Real Estate Brokerage Services or Mortgage Brokerage Services to comply with this Section shall result in forfeiture of all compensation related to said services and may be punishable by a fine not to exceed the sum of Five Thousand Dollars ($5,000.00) per offense for each and every act in violation of this Section.”

    OK, Finreg doesn’t actually say any of that. But when the regs are drafted, the consumer protection provisions might require some warning or education element. I hate that kind of stupid regulation, but unfortunately the American public has once again demonstrated that its too F__ing stupid to recognize that real estate prices can go down. Unfortunately, the lure of big profits on a little or no money down investment is just too much for the average American to handle. Its like looking for sex at a strip club. Its not a fair playing field. The attraction is too potent for the weak minded to be able to exercise good judgment so you probably have to tell them over and over again just like we do with tobacco. If people are that stupid then maybe we should copy the example of Chris Rock in his message to the GED class of 1999 where he tells them:

    “No matter what a stripper tells you,
    There Is No Sex In The Champagne Room!”

    Maybe we could just say:

    “No matter what a Realtor tells you,
    There is No Pot of Gold In the Master Bedroom.”

  51. 51
    Chris says:

    RE: David Losh @ 35
    The NAR has been able to dominate information on real estate transactions to such a degree, it looks like some sort of government agency.
    Its release of sales figures is treated like a release from a government agency.
    http://www.bloomberg.com/news/2010-12-22/sales-of-u-s-existing-homes-probably-rose-as-market-struggled-to-recover.html
    http://www.realtor.org/research/research/ehspage

    I understand why it is upset at the attention directed to the Seattle upstarts. Over time the NAR turned its hold on the real estate industry into cash that has in turn allowed it to ram through absurd legislation with very short term goals – sales now at any price.

    http://www.arizonarealestatenotebook.com/2010/09/15/the-nar-slump-in-home-sales/

    Here are some other areas it is has its fingers in:

    http://www.realtor.org/politicaladvocacy/currentissues

    Combine that with advertising and NAR has an impact well beyond a trade group for restaurants. Do you think the restaurant industry could get a $8,000 tax credit on the books for eating at a restaurant (in the face of a a monstrous deficit).

    It’s only now that there’s been a sustained downturn most people can see what its all about.

  52. 52
    David Losh says:

    RE: One Eyed Man @ 50

    Man, I like you, always have, but this is something entirely different.

    Tim did a bottom post with graphs, nothing but these weird graphs. The first one is red, white, and blue, with two lines instead of one. The other two are a little more bland.

    Red, white, and blue happens to be redfin. The price per square foot in all the charts is way over the top. The lowest, which is Zillow is at $242.

    The problem with the internet is that you can make anything look good with charts, and graphs. They are sales tools.

    redfin is a sales company. redfin survives by Real Estate sales. The phone app will only carry so far.

    The Real Estate industry is a combination of commercial, residential, property management, business opportunity, and maintenance.

    Having a Real Estate Brokerage dependent on only residential Real Estate sales has to be a selling machine.

    We’re getting sold something here, Ardell pointed it out in the first comment, she is after all the premier bottom caller.

    Tim took that comment to the Open Thread, but then engaged Scotsman in an off topic exchange. Some thing is for sure going sideways with this site.

  53. 53
    Jonness says:

    By David Losh @ 33:

    RE: Ben @ 29

    You see it’s comments like this that give a false impression about this site. You had me reading these articles like Tim was a contribution.

    This post is about promoting a product, a redfin product.

    David: Remember the good ol’ days when you used to hype Tim and convince us all to donate to seattlebubble.com? What has changed from those days? I suspect it’s Tim’s redfin connection.

    You have been anti-redfin for as long as I can remember. What exactly is it about the redfin business model that is less ethical than the NAR model or the Lennox Scott model you openly support?

    I’m not knocking you. I’m just trying to better understand your viewpoint.

  54. 54
    Jonness says:

    By Scott Weitz @ 43:

    the home price/ income ratio is still way to high and unsustainable.

    Especially in light of the fact of how much money was available in the system to chase assets during the bubble runup compared to now. People seriously overpaid for their homes and/or drew out huge amounts of equity against them. In addition, many people were picking these things up with $0-down ARM’s. Add in 10% U3 unemployment, and you have a long-term debt crisis on your hands. We are going on 4 years since the bubble burst, and prices are still heading down.

    If home prices are about to shoot to the moon as pffft argues, where in the heck are people going to get all the money. The fact is, the American consumer is amidst a heavy debt deleveraging cycle, and these cycles take years to complete. MV=PQ and M=MB/r. You can increase the monetary base till you’re blue in the face, but it does absolutely no good if the banks sit on their excess reserves, refuse to lend, and people are too tapped out and afraid to borrow. 1 trillion/1 trillion * V = V. And if V is a constant due to a lack of increase in lending, nothing gets better.

  55. 55
    Scotsman says:

    RE: Jonness @ 53

    It’s the death of the 6% model along with the status, the seemingly easy money, and the sense of being “in the club.” Redfin is slowly chipping away at the foundation of the past.

    Perhaps for David it’s compounded by the fact that in the very back of his mind he knows he’s never going to get the social security and medical care he expected would be waiting for him in retirement. Gotta admit I know how he feels.

    Beyond the statistics and graphs this site so ably presents lie real pain, loss, and fear, a sense of uncertainty and betrayal. As a society we aren’t to the point where those issues get much air time yet, but they will in the future. It’s good to give people a lot of slack whether we think they deserve it or not. We rarely know someones whole story, especially here on the web.

  56. 56
    David Losh says:

    The 6% is still the redfin business model. They rebate. Rebates are what big, the very big Brokerages want on the table.

    There again 6% doesn’t really cover what it costs to be in the residential retail sales business.

    A Real Estate brokerage needs diversification. redfin is a sell, sell, sell site, that’s all, that is all it can do.

    Zillow sells mortgages, and redfin will also.

    The charts and graphs are sales data. It’s the same sales data that is hyped by every Brokerage in the country.

    Yes, I would have liked to see this site monetize on it’s own merits. It didn’t.

  57. 57
    David Losh says:

    RE: Scotsman @ 55

    You make good points, you always do.

  58. 58

    Over 50 posts and no one has commented that 3 of the 4 data sets given are for list price? What’s next? Trying to prove/disprove a bottom based on the median Zillow “Make-Me-Move” price?

  59. 59
    NumberMonkey says:

    RE: GH @ 38

    You’re right to complain that $/sqft is affected by the blend of the market’s sales. It’s similar to the way median can get screwed up when cheap houses stop selling (as has happened in recent months). What we would want for market data is to compare apples to apples, so to speak.

    If I were doing the analysis I would take all “normal” non distressed sales and separate out a few bands of housing types based on neighborhood, year of build, and lot size (and also maybe set some upper and lower bounds on sqft to catch outliers) and then run the $/sqft on each band. Of course there may not be enough data to do this well :(

  60. 60
    Tim says:

    Kary,

    In your experience, what % range are most buyers receiving off the list price.

  61. 61
    The Tim says:

    By David Losh @ 16:

    I’m going to second that, and say that you should really disclose you work for redfin on every post.

    The tone, and direction of the site has, in my opinion, changed since you started promoting the redfin business model.

    I was going to just let this slide, but since you keep harping on it, I will comment on the matter once.

    I’ve been saying nice things about Redfin on these pages since at least 2008 (well before I ever considered working for them), and you have been ripping on them here for at least as long. At least you’ve dropped the ridiculous intentional misspellings of their name since then.

    If you want to hate Redfin, go right ahead. But don’t pretend like I’m somehow suddenly pro-Redfin only since I started working there. It’s demonstrably false. It also makes zero sense to characterize this post as some sort of “sales ad” for Redfin or a promotion of their business model.

    Redfin makes money when people buy or sell homes with them. Where in this post or any of my other posts that mention Redfin am I promoting their agent services? Also, this post makes a pretty lousy ad for Redfin since it includes graphs and links to Zillow and Altos Research as well.

    As has always been the case, Seattle Bubble is my blog. It’s not Redfin’s site, and they have no say in what is or isn’t posted here. In the future, if you go off on an off-topic rant about Redfin on a post that just happens to mention them or contain some of their stats, your comments will be deleted or disemvoweled. You have been warned.

  62. 62

    By Tim @ 60:

    Kary,

    In your experience, what % range are most buyers receiving off the list price.

    Trick question. The answer to that is 0% (at least if you carry out the discount to the one-hundredth percent). ;-)

    Seriously, I just ran Kent sales for the past 30 days and only 1 out of approximately 90 had a discount greater than 10%, and that was a low priced property. Roughly a third sold for 100% or more. Remember though that those discounts include seller financing concessions, so net of such concessions the discounts would be greater. Also, remember that this is only the population of listings that sold, and that it is based on the last list price.

  63. 63
    ray pepper says:

    Damn, I’m late to this party. What a comedy show! So much to say and I’m committed to the Teddy Bear Room today at The Fairmont this morning so I will just say this:

    From the Trustee Sales and the immense #’s of REO’s, combined with short sales, for anyone to even hint we have bottomed makes me laugh. All we can hope for is maintaining a flatline as we pray for more Fed Stimulus………….As I have said before MORE STIMULUS is coming…………………and it will be E P I C!!

    However, Buyers must always look..ALWAYS…Today, tomorrow, next year, and 5 years from now. The Gems you seek could be released at any point and I’m happy to say I’m starting to see them more often every Friday now. 2011-2017 could build you a portfolio of a lifetime. Analyze cost to build, rent v. buy, and could you sell the next day for a profit scenario..

    Tim, the Bubble has been a gift to so many and there is simply no better place for me to laugh and criticize the bloggers around me. I love getting bashed and equally dishing it out. MLS 4 Owners, FindWell, Shop Prop, 500 Realty, and all the other alternative brokerages should THANK TIM for his small part in educating people. We have had probably 50 clients over the years from the Bubble each one educating a new generation of Buyers that there is another way.

    Merry Xmas Tim, and please everyone keep up the comedy routine. I love checking everyday who is going to ring the bell next!

  64. 64

    RE: The Tim @ 61 – FWIW & IMHO the tone and direction hasn’t changed enough given that over the past 18 months the C-S data has only dropped about 2% more from the peak than what it was. That’s a lot more attention to price than what it deserves. ;-)

    Stated differently, having the same tone and direction at two different points in time, without adjusting for the data, isn’t necessarily a good thing. In the stock market they call that being a perma-bear or perma-bull.

  65. 65
    Ben says:

    RE: Kary L. Krismer @ 64 – Come on, Kary. I expect a comment like that from pfft, not you. CS is severely lagged as you know. The other data points are falling rapidly. Don’t put yourself in the position of being “surprised” when CS catches up with current data. We all see it coming except those who insist on driving with the rear view mirror.

  66. 66
    Lo Ball Jones says:

    There is a countervailing trend in all this: the high wages of Seattle…especially professional and technology couples.

    Take a dual income family that’s been 401k’ing thousands of dollars for 10 or 15 years.

    At what point does $100K become chump change to them?

    That is the point where people simply say, I want that house, and buy it, no matter how “bad” the deal. It’s just not worth it to care about that bit of money any more if it means getting what you want, when you want it.

  67. 67
    Ahau says:

    RE: Kary L. Krismer @ 58 – ROFL, that’s a great point, Kary. It’s about as usefull as calling a bottom because of increased open house traffic.

  68. 68

    By Ben @ 65:

    RE: Kary L. Krismer @ 64 – Come on, Kary. I expect a comment like that from pfft, not you. CS is severely lagged as you know. The other data points are falling rapidly. Don’t put yourself in the position of being “surprised” when CS catches up with current data. We all see it coming except those who insist on driving with the rear view mirror.

    It’s the same or less if you go by the NWMLS median for King County. I picked C-S because it doesn’t have the mix issues that are possible with the median given the tax credit issues.

    I find the rearview mirror comment a bit ironic, since that’s all that this entire piece is about.

  69. 69
    David Losh says:

    RE: The Tim @ 61

    It’s just unfortunate. Ardell made the point and you dismissed it. I think she’s right.

    Disemvoweled is a term that sounds threatening as demonstrates exactly the problem. You have set up an aggressive site that takes shots at the Real Estate industry, that you are now a big part of.

    You now work for one of the biggest residential Real Estate brokerages, or at least they want to be.

    That should be disclosed. People who come here looking for insight into Real Estate matters should be aware that you now represent a Real Estate Brokerage.

    This post is a plug for internet Real Estate tools and redfin is at the top of the list.

    As you know the internet is a small world. I misspelled the redfin name so I wouldn’t get any of redfin minnion comments. redfin trolls the internet. Today I don’t care. Disemvowel away.

  70. 70
    Lurker says:

    Since The Tim’s Redfin employment is already mentioned in the About section of SB perhaps the need for specific “full disclosure” in posts is not even needed.

  71. 71

    By David Losh @ 69:

    You now work for one of the biggest residential Real Estate brokerages, or at least they want to be.

    First, they’re no where near the largest locally. Not even close.

    Second, is this supposed to be as opposed to those that don’t want to be the largest?

  72. 72
    EconE says:

    RE: Kary L. Krismer @ 62

    How many of those listings were 100% of the OLP?

    I’ve seen numerous examples of a listing that starts at say 300k, goes pending, has a price decrease to 250k and then finally shows up as sold for 249k.

    Using my numbers above (300k, 250k, 249k) did it sell for 1k less than list or 51k less than list?

    How would it be reported by the MLS?

    Would the percentage (sold to list) be figured as 249/250 or 249/300?

  73. 73
    Blake says:

    RE: David Losh @ 56
    Dave Losh wrote: “redfin is a sell, sell, sell site, that’s all, that is all it can do.”

    So – looking at the graphs that Tim posted – what in the world makes you think those graphs promote sales!!?? Hunh?? LMFAO…

    Tim’s site – and many like it on the free Internet – thrive on information… accurate information. If they start spreading BS they get called on it right away and lose cred. Unlike the old media (and old sclerotic RE institutions) that thrived on controlling info and spreading BS.

  74. 74
    David Losh says:

    RE: Blake @ 73

    Those same graphs are used to show you are getting a “good” deal today. Last I checked properties could be purchased for $150 a sq ft, not bad properties either.

    It’s a sales tool, and if you look at the next two posts about analysizing a below market deal, you can get the drift.

  75. 75
    David Losh says:

    RE: Kary L. Krismer @ 71

    You baffle me.

    Ardell made a good point.

  76. 76
    Gerald says:

    By Kary L. Krismer @ 64:

    RE: The Tim @ 61 – FWIW & IMHO the tone and direction hasn’t changed enough given that over the past 18 months the C-S data has only dropped about 2% more from the peak than what it was. That’s a lot more attention to price than what it deserves. ;-)

    Stated differently, having the same tone and direction at two different points in time, without adjusting for the data, isn’t necessarily a good thing. In the stock market they call that being a perma-bear or perma-bull.

    Isn’t that a matter of investment timeframe? Since a purchased home is typically a long-term investment, is it unreasonable for a commenter known for macroeconomic analysis to take the longer view and consider the last 18 months a pause in a continuing downtrend?

  77. 77

    By EconE @ 72:

    RE: Kary L. Krismer @ 62 – How many of those listings were 100% of the OLP?

    I saw this too late–all I can tell you now is that at least one of them was. I did scan down the list to see reductions in list price and noticed one of the first ten didn’t have a reduction and sold for 100%. I didn’t scan the entire list.

    But yes, one of my points was the 100% was based on the latest list price.

  78. 78

    By David Losh @ 75:

    RE: Kary L. Krismer @ 71

    You baffle me.

    Ardell made a good point.

    I was only commenting on your statement that Redfin is “one of the biggest real estate brokerages . . ..” Maybe at the individual office level, since they only have one.

  79. 79

    By Gerald @ 76:

    By Kary L. Krismer @ 64:

    RE: The Tim @ 61 – FWIW & IMHO the tone and direction hasn’t changed enough given that over the past 18 months the C-S data has only dropped about 2% more from the peak than what it was. That’s a lot more attention to price than what it deserves. ;-)

    Stated differently, having the same tone and direction at two different points in time, without adjusting for the data, isn’t necessarily a good thing. In the stock market they call that being a perma-bear or perma-bull.

    Isn’t that a matter of investment timeframe? Since a purchased home is typically a long-term investment, is it unreasonable for a commenter known for macroeconomic analysis to take the longer view and consider the last 18 months a pause in a continuing downtrend?

    I’m just saying the focus on price has been too much given what has actually happened. Volume has been much more volatile than price.

    Whether that period has been a pause will be determined later–you can’t tell that by looking at the past data now.

  80. 80
    Ben says:

    RE: Kary L. Krismer @ 79 – yes you can, as I have been saying, if you stop driving with the rear view mirror. Is there any doubt that next weeks CS will be lower? For those of us looking forward, there many months of negative CS already baked in the cake.

  81. 81

    RE: Ben @ 80 – You think next week’s C-S data is the future? It will be for sales that closed in August through October, written as far back as May or earlier to the extent they include any short sales in the data.

  82. 82
    Blake says:

    RE: David Losh @ 74
    re: “Those same graphs are used to show you are getting a “good” deal today.”

    I’ve been looking to buy a house since I moved to Seattle in ’05. When I look at the graphs Tim posted I do not think about trying to get a good deal and buy now! Far from it… Then again I’m not a big fan of catching falling knives either!

    It looks to me that the market is in free fall, again. Employment and wages are stagnant, interest rates are up, govt support programs have ended, and there is a backlog of foreclosures ahead!

  83. 83
    Ben says:

    RE: Kary L. Krismer @ 81 – reread my earlier post. CS is severely lagged, thus my confidence in negative prints. You seem not to know present conditions and use the small change in CS thus far to claim that prices haven’t fallen that far yet and should not be of concern. Current data says different and CS will fall.

    I am concerned.

  84. 84
    One Eyed Man says:

    RE: Ben @ 83

    I tend to agree with you that CS will fall for the next several months (Oct 2010 thru Feb 2011) due to seasonality if for no other reason. But I don’t think you can tell where the CS chart will go based upon the charts Tim posted. If you compare the non-seasonally adjusted CS Index from Jan 2010 to Sept 2010 to the median chart and the price per sq ft chart that Tim posted, CS was basically flat whereas the others went down substantially. There are a number of potential explanations for the difference including but not limited to things like changes in sales mix after the end of the tax credit in addition to a true drop in home values or perhaps a difference in regional coverage of the data. But given its methodology I think that the CS for the period from Jan to Sept 2010 is probably a better measure of true home value than the median and price per sq ft. It may be that CS looks farther back in the rear view mirror but at least its not pointed in an irrelevant direction if you hope to measure change in value.

  85. 85
    Ben says:

    RE: One Eyed Man @ 84 – I’m glad you are forward in your thinking. There are a few other sources that I have referenced in other posts such as housingtracker and corelogic.

    My main beef is with the head in the sand types.

    http://cr4re.com/charts/charts.html?Home-Prices#category=Home-Prices&chart=RealHousePricesQ32010.jpg

  86. 86
    Scotsman says:

    RE: Blake @ 82

    “Employment and wages are stagnant”

    I’ve said this before, but it bears repeating- in a deflationary spiral, or with chronic high unemployment, wages are the LAST piece of the puzzle to head down. It takes a long time for contracts to end and be renegotiated, for politicians to realize minimum wages need to fall, for unions and such to change and allow lower starting wages, etc. But as long as unemployment remains high and demand is constrained it will happen. This is one reason why I don’t jump on the wagon with other investors who are buying properties because todays numbers pencil out. The income side of their equations is going to change, and what worked today may not work in the future with higher taxes and lower wages. This isn’t speculation- there’s plenty of history and more than enough math/common sense to back it up. It’s just that few people look that far ahead, and today’s 30% off always looks like a bargain until 50% off comes around.

  87. 87

    RE: Scotsman @ 86 – And the first piece of the puzzle is people shopping at Walmart. ;-)

  88. 88
    uwp says:

    Kary, You said in your quick scan that 1 of the first 10 sold for original asking. Is that normal lately? 10% seems low to me, but I assume my view is skewed because you don’t see those houses listed for too long because they obviously sell, while pretty much every house I see on Redfin that has been on the market for more than 25 days has a reduction.

    Is it possible to run a search of sales for King County and spit out the sale price as % of Original Listing Price? Or would you have to manually go through and run the numbers? Would be interesting to see.

  89. 89
    Jonness says:

    By Kary L. Krismer @ 58:

    Over 50 posts and no one has commented that 3 of the 4 data sets given are for list price? What’s next? Trying to prove/disprove a bottom based on the median Zillow “Make-Me-Move” price?

    According to Altos Research (as seen in the strong correlation in its historical charts), list price is a leading indicator for median price.

  90. 90
    Jonness says:

    Here is a chart that demonstrates how changes to list price typically lead the Case-Shiller (chart is national; Seattle’s future looks much worse):

    http://housingcorrection.com/images/listpriceleadsmedian.jpg

  91. 91

    RE: uwp @ 88 – I was just picking an area of Kent (or anything with a Kent address) and as I recall, 90 days back.

    To do the percent of original list price I’d have to do that manually, although I think I could maybe get the mean or median of the original list price.

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