January Reporting Roundup: Clearance Sale Edition

It’s time once again for the monthly reporting roundup, where you can read my wry commentary about the news instead of subjecting yourself to boring rehashes of the NWMLS press release (or in addition to, if that’s what floats your boat).

Before we get to the local dead tree press, here’s a bonus link to my appearance last Friday on KUOW’s Weekday program. I was in-studio for the entire hour with Lynn Robertson (a Queen Anne real estate broker) and Glenn Crellin via phone. Here’s the audio:

All righty, let’s have a look at the source material from the NWMLS itself. Here’s their press release: Motivated buyers returning to the housing market

Dramatic increases in open house activity and shrinking inventory are fueling optimism among members of the Northwest Multiple Listing Service. Commenting on the just-released MLS report on January’s housing activity, one director stated, “There is a strong belief in the industry that the worst is behind us and we can look forward with confidence.”

Everything Must Go! by Flickr user London Permaculture
photo by Flickr user London Permaculture

Darin Stenvers, managing broker at John L. Scott in Bellingham, who made that comment, also noted consumers are gaining confidence and buyers may be seeing what they believe is the bottoming of the market. “I’m very optimistic about the housing market for 2011 and the buyers and sellers should be as well,” he exclaimed.

In King County, the median sales price on last month’s sales was $333,500, a drop of 4.7 percent from twelve months ago when it was $350,000.

Brokers attribute part of the price drop to sales of distressed homes (in general, meaning homes under foreclosure or impending foreclosure).

“Distressed properties are making up an increasingly greater share of sales than a year ago, and that trend is expected to continue,” observed Jacobi. Noting the sales price for distressed properties could be 20-to-30 percent less than for normal sales, he said “it’s no surprise that a greater percentage of low-priced distressed properties is pulling down the median price.”

In case you still haven’t figured it out… lower prices for homes (like every single other product one might purchase) means more people buying. Go figure. These continued price declines are the main reason I’m breaking from many other commentators with my prediction of a slight increase in home sales in 2011.

Read on for my take on this month’s local news reports.

Eric Pryne, Seattle Times: King County median home price for Jan. hits 6-year low

Sales of distressed homes are on the rise in the Seattle area — and they are helping to drive prices down, real-estate professionals say.

House prices in King County in January sank to their lowest level in nearly six years, according to statistics released Thursday by the Northwest Multiple Listing Service.

The median price of single-family homes that sold last month was $356,000, the service said. The last time it was lower was in April 2005.

Brokers and other observers said prices are dropping because distressed properties — foreclosed homes and short sales for less than a seller owes its lenders — make up a growing share of total sales.

A Windermere Real Estate analysis of listing-service data found that distressed sales accounted for 35 percent of all house and condominium sales in King County last month, up from 27 percent a year earlier.

Those sellers often are willing to settle for less.

Buyers closed on 1,017 houses in the county in January, 6 percent more than in January 2010. It was the first year-over-year increase since June, when popular federal homebuyer tax credits expired.

But it’s probably not the start of a trend, professionals said, because the tax credits spurred a surge in sales during the first half of last year that will be difficult to equal in 2011.

These are points I’ve been making for at least a few months. Distressed sales are driving prices (down), inventory pretty much sucks, but sales are picking up slightly thanks to lower prices.

Gerry Spratt, Seattle P-I: New MLS home-price report not all gloom and doom

The median home price is a six-year low, but economists have warned that sales of distressed properties will be a drag on prices for the foreseeable future.

“I think the first half of 2011 is going to continue to be really rough as you have those foreclosure properties moving through the pipeline (driving down prices),” Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, said last month.

But it’s not all bad news.

Pending sales – considered the best indicator of market activity – were up 19.58 percent in January compared with December, although they were down 6.57 percent year-over-year.

In Seattle, pending sales of single-family homes were up 23 percent from December and down just 1.92 percent from last year. The median price of $390,000 was unchanged from December, but down 6.02 percent from last year.

Wait, what? It’s not bad news when you look at pending sales—a highly unreliable figure—and compare month-to-month with the month that always marks the low point for the year? Sorry, that doesn’t make any sense. Oh wait, no wonder. It’s the P-I’s sports reporter, Gerry Spratt at the helm again instead of Aubrey Cohen, who actually understands the real estate market.

Mike Benbow, Everett Herald: Home sales in county improve in January

Home sales in Snohomish County rose in January, providing some hope for real estate agents who have survived tough times in recent months.

There were 533 homes sold last month, the Northwest Multiple Listing Service reported Thursday. That’s a 7.7 percent increase from January of 2010.

The listing service noted that activity at open houses increased last month, typically a poor selling time for homes.

Why oh why does any reporter pay any attention at all to this open house nonsense.

Maybe I’m not looking hard enough, but I can’t seem to find any stories about the January NWMLS release in either the Tacoma News Tribune or The Olympian. Point me in the right direction if I’ve just overlooked it.

(Eric Pryne, Seattle Times, 02.03.2011)
(Gerry Spratt, Seattle P-I, 02.03.2011)
(Mike Benbow, Everett Herald, 02.04.2011)

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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.


  1. 1
    bob says:

    argg … it really depends on the buyers’ mindset. Are they 1) looking for a good deal, and intend on steady paying off on the mortgage, 2) or are influenced by any type of hype.

    I live in on of the condo buildings in Seattle that is getting ready to auction of some units. So potential buyers were traipsing through this weekend (and you could over hear conversations, especially in the elevator). There is still some mindset of get a good price and selling once things ‘recover’. Have these guys really done the math and some worst case scenarios? Perhaps.

  2. 2

    Buyer Demand Would Be far More Dismal

    If all the MSM could reference is unemployed workers….but, QEC2 debt gives ’em phony shorterm lower interest rates, simulatneously fueling a growing stock market to gloat at and then allege we’ve “bottomed” out, bring on more uncontrolled growth….until the $600B QEC2 runs out ths June.

  3. 3
    Mike says:

    I generally agree with the conclusion that prices will slide more this year (and then bottom) with more sales occuring as prices, particularly outside the urban core, get down to a more reasonable level in terms of rents and income. It seems though that interest rates and how long the Fed can keep them at historical lows are the big second shoe (after foreclosures) waiting to drop. Though what do I know, maybe rates going to 6-7% wouldn’t have as big an impact as it seems they would?

    Tould love to see if you have the ability to crunch out a comparison of what the current market prices look like in terms of assumed monthly payments (say 10% down at the December-January average 30 year rate) and then go from there and back into what comparable prices would be today if you assume buyers have a relatively constant “monthly payment buying power” but interest rates go up 2 or 3 percent. Basically is there a way to see what the price fall would look like if we backed out the Fed interest rate intervention? Low rates now may be great if you manage to stay in your house and pay that rate for 10+ years but it seems any buyer who has any sense that they might possibly need to move in less than 10 years (i.e. not planning to move like the fools who buy starter houses but someone how can’t rule out wanting to move with a near certainty) should also be factoring in that risk, which my gut says is substantial.

  4. 4
    Drone says:

    RE: Mike @ 3 – Let’s assume that the our hypothetical buyer can support a monthly payment of $2,000. This does not include insurance, maintenance, taxes, etc. Let’s further assume that the buyer has a 10% down payment for any purchase price. Here’s the price that monthly payment supports:

    4.5% – $438,580
    6.0% – $370,648
    8.0% – $302,852

  5. 5
    Scotsman says:

    Pfft! The bottom is in- and we missed it! Even 18 year old students can make hundreds of thousands of dollars in this market. Time to leave the computer and get out there and start flipping!


    “He bought the 3,340-square-foot-house with four bedrooms and 3.25 baths for $287,000 at auction. He sold it after two days on the market for $415,000, a 45 percent profit.

    The most surprising number is 18, the number of years Scrivanich has been on this planet.”

  6. 6
    David S says:

    RE: Scotsman @ 5 – That’s pretty awesome that this young man had $287,000 of cash when he was 18. I suppose it it easier to save hundreds of thousands of dollars when you live rent free with your parents and your mom buys all your clothes at Abercrombie & Fitch for you. Or maybe he was just able to secure one of those amazing loan products designed for these trustee cash sales environments.

  7. 7
    Scotsman says:

    RE: David S @ 6

    If I recall he was a saver/investor since an early age, and had a previous business giving tours. His dad chipped in $5K. But all that aside, what counts is that he found a market discontinuity to take advantage of. Give him credit.

  8. 8
    David S says:

    RE: Scotsman @ 7 – That market discontinuity discovery came at a price. He must be well connected.

  9. 9
    ; says:

    By Scotsman @ 5:

    Pfft! The bottom is in- and we missed it! Even 18 year old students can make hundreds of thousands of dollars in this market. Time to leave the computer and get out there and start flipping!


    when i read these stories, it makes me think the busting of the bubble is far from over.

    when everyone hates housing, and no one wants to buy is when we’ve hit bottom.
    we need another story like “The Death of Equities” story in BusinessWeek in 1979:

  10. 10
    What's my name says:

    RE: Scotsman @ 5

  11. 11
    One Eyed Man says:

    RE: Scotsman @ 7

    “Give him credit.”

    I’ll give him kudos for capitalistic hutzpah but he got his credit courtesy of the co-signature from his father who owns the Mission Ridge ski area and a Woodinville stone yard. And I’d imagine he’s seen a proforma financial or two on family real estate deals. Per the article,
    “His father helped him through the process, showing him the ropes and how it was done . . . “

  12. 12
    ray pepper says:

    “To me it’s not even work,” he says. “It’s just really interesting.”

    Agreed…Its fascinating young man. Lets talk again when you slip up and cannot unload. One bad deal can kill 5-8 good deals. Then lets see if you think its work.

  13. 13
    TheHulk says:

    RE: Scotsman @ 5
    Nice article scotsman! More than anything else this seems to be the rich old dad trying to get his son to look good for whatever reason.

    Let me put it this way. For outsize returns, you need to take outsize risk. Knowing you have a few million stocked away (maybe even tens of millions?), throwing 300K at something seems like chump change. I do it with the nickel slots at Vegas, but I am sure even those nickels are mighty precious for someone else.

    I just wonder who was the buyer @ 415K. Seems like that person could have bargained a lot more and didn’t do his homework. I mean seriously, 45% on 287K in 2 days? If it had been on the market for 6 more months (and presumably some time to fix up the place) I might have believed it. Something is fishy here and it ain’t pike place.

  14. 14
    Real World Express says:

    Anyone with half a brain should realize that they should sell out now and move to another city before Conlin takes any gains away as tax.

  15. 15
    Scotsman says:

    I smell jealousy. Is it the money, or this:

    ” Tall, with dark-blue eyes and shaggy blond hair,. . .”

    Seriously, he has three properties purchased, two sold at a profit, with the third ready to go. The Tim should follow up on this- maybe some of the “experts” around here could learn a thing or two. ;-)

  16. 16
    David S says:

    RE: Scotsman @ 15 – Nephew of yours? Nepotism? :)

    Scotsman, I’m not jealous at all, just joshing you. If this is the career path he has chosen it sounds like it’s working out well for him.

  17. 17
    One Eyed Man says:

    RE: Scotsman @ 15

    I confess. I’m jealous. But not of the kid. I’m jealous of the father, he owns his own frick’n ski area.

  18. 18

    By Scotsman @ 15:

    Seriously, he has three properties purchased, two sold at a profit, with the third ready to go. The Tim should follow up on this- maybe some of the “experts” around here could learn a thing or two. ;-)

    I’m not sure who you’re including in that category. Even through some of the darkest times there have been successful flippers. It’s like most everything else–few things are black and white or as extreme as some people try to make them.

  19. 19

    Interesting Investment Story In Today’s RE Stagnation

    Bill Gates had a dad that got him mainframe access in his garage; given that boost up we all could of been possible billionaires too…..but alas, most of us don’t have family pulls.

    Buying distressed properties before they hit the courthouse is another way to make money at any time in RE, but you need insider information or a sweetheart deal from a family member [I bought my first house that way]. A warning, if you’re an in-law and you buy a sweetheart deal, beware, there may be hidden hooks in the deal [mine led to a divorce]; especially if other family members feel they got cheated out of inheretance.

  20. 20
    Drone says:

    By TheHulk @ 13:

    Let me put it this way. For outsize returns, you need to take outsize risk.

    I disagree. You either need to take outsize risk OR have superior information. It seems to me that this kid, through his forclosure group, had access to information unavailable on the broader market. Risky yes, but still a solid play.

  21. 21
  22. 22
    Devmud says:

    It was good discussion on KUOW, missed an important point though. Whole media is screaming on seattle is not a buy area, but renting (Price to rent ratio). I don,t remember if this point came across discussion table. Can anybody through light on this?

  23. 23
    Urban Artist says:

    I would just like to be able to buy a house to live in for a long time. A house I can afford without having to win Lotto. I think I’m like most people we have a job that pays fairly well but not a high six figure one. It seems like in Seattle (North Seattle) if you’re not making a really good six figure income you’re out of luck. Unless you have family to bank role you. I really hate hearing about people still flipping houses. It makes it hard for people who just want a home not something to add to an investment portfolio.

  24. 24

    […] of today’s post, here’s a brief service announcement. I’ll be on KUOW 94.9 FM again today to discuss the topic of “walking away.” Here’s their promo copy:Is It […]

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