One in Four Local Houses Sold for Over List Price in April

We’ve been hearing a lot about how much hotter this spring has been than spring in other recent years, and the stories of “bidding wars” seem to be getting a lot more frequent. I decided to see if we could visualize this trend by plotting the percentage of houses that sell for over their list price each month.

I have reliable detailed sales data for King County back through 2008, so here’s the last 4+ years of that measure, with April’s number highlighted in each year:

Percent of Homes Sold for Over List Price - King County Single Family

Yikes. That’s quite the ramp-up in 2012, easily dwarfing every other post-boom year, with April 2012 coming in 6.5 percentage points higher than April 2011.

Just another sign that we may in fact have finally, really, hit the bottom.


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.

49 comments:

  1. 1
    Pegasus says:

    The bluest skies you’ve ever seen are in Seattle
    And the hills the greenest green, in Seattle
    Like a beautiful child, growing up, free an’ wild
    Full of hopes an’ full of fears, full of laughter, full of tears
    Full of dreams to last the years, in Seattle
    . . . in Seattle!

  2. 2
    Roger says:

    let wait and see when bank forclosures will start hitting the market. banks are waiting for this moment

  3. 3
    deejayoh says:

    Interesting to look at the King County and Seattle proper market stats on Redfin. Sale to list price for SFH is at 99.4% for both

    http://www.redfin.com/county/118/WA/King-County
    http://www.redfin.com/city/16163/WA/Seattle

  4. 4
    deejayoh says:

    By Roger @ 2:

    let wait and see when bank forclosures will start hitting the market. banks are waiting for this moment

    Do you have a source to back up your assertion?

    REO inventory backlog has been dropping for quite some time, as have NTS and late-pays. The entire foreclosure pipeline is shrinking. For the last year in King County:
    – Bank-owned inventory has fallen 37%
    – Foreclosure filings have fallen 53%.
    – Properties going back to the bank have fallen 70%
    Exactly which banks do you think has been waiting? Looks to me like they have been clearing the shelves

    http://www.foreclosureradar.com/washington/king-county-foreclosures

  5. 5

    Keep in mind that seller financing concessions make this appear more common than it is.

  6. 6
    The Tim says:

    RE: Kary L. Krismer @ 5 – In a low-inventory seller’s market like we are in today, wouldn’t those types of concessions be even less common, meaning that the change in 2012 is potentially even more dramatic than it appears in the above chart?

  7. 7
    ray pepper says:

    They keep turning the crank! Gotta love it! Foreclosures at a near stand still…Homeowners getting the DEALS of a lifetime to sit around and wait for deed in lieu offers from their Servicer or short sale GIFTS from the lenders..

    Everyone gets one……………..Appears millions are going to use their *1* in coming years.

  8. 8
    ChrisM says:

    Seems like # closed sales should appear on the same graph to give context…

  9. 9

    RE: The Tim @ 6 – I don’t know if they are more or less common, but they still occur with significant frequency.

  10. 10
    No Name Guy says:

    RE: The Tim @ 6

    Or it could be that sellers are FINALLY getting it through their thick heads that we’re not at 2007 pricing any more and are adjusting their asking prices to more closely reflect the reality of the market. I’d suggest that this could be just as valid of an explanation to the data as another sign that the bottom is approaching or in.

  11. 11
    redmondjp says:

    By No Name Guy @ 10:

    RE: The Tim @ 6

    Or it could be that sellers are FINALLY getting it through their thick heads that we’re not at 2007 pricing any more and are adjusting their asking prices to more closely reflect the reality of the market. I’d suggest that this could be just as valid of an explanation to the data as another sign that the bottom is approaching or in.

    Maybe, maybe not. There’s a 4bd 3bath 4K sq ft home about 8 years old near me (close to Microsoft) that has an asking price of $1M (no joke, and the price is not even on the flyer out front either). Based upon similar sized homes in my same area that I have been watching, that still appears to be a 2007 price (several other 2006-7 $1M homes in my neighborhood have been foreclosed on and re-sold in the $800K range).

    The home next door to me will be on the market soon (1977 3 bed 2bath split level) and I’m really curious to see what it will list for. Inventory is definitely the lowest that I have ever seen in my neighborhood over the past 15 years.

  12. 12
    No Name Guy says:

    RE: redmondjp @ 11

    Perhaps I should have phrased it such:

    “Or it could be that AN INCREASING FRACTION OF sellers are FINALLY getting it through their thick heads that we’re not at 2007 pricing any more and are adjusting their asking prices to more closely reflect the reality of the market. :”

    My point being that prices are very sticky when moving down. People anchor on the highest price it ever was and take a while to adjust to the now current reality. As more and more folks manage to do this adjustment, it would only be natural that an increasing percentage of sales are above the asking price. This doesn’t necessarily have to coincide with a halt in prices dropping. It may just be that an increasing fraction of sellers are wising up and realizing that if they want to sell in a timely manner, they have to cut their asking price.

    Without a reliable historical context from the pre bubble years (which The Tim stated isn’t available) the current increase could be significant, then again, it might not be either. Without a yard stick, it’s tough to tell. The Tim posted his less pessimistic SWAG / take on the info. My SWAG / take on the info is a bit more pessimistic.

  13. 13
    explorer says:

    Are prices moving down from sellers, or from the clearing of foreclosures and short sales? In my anecdotal experience, it’s the latter.

    Houses that are not short sales or foreclosures, and are turnkey, are the ones getting into bidding wars and go for higher than list, at least in the Seattle Area. Location, of course is a big factor too.

    A lot of sellers are STILL sitting on houses, underwater or not, waiting for that magic moment that would indicate they might get more money than at present. This is why there is a very low inventory of that type where they don’t have to sell, but would like to. People are not putting the money into maintainence, or for those improvements that would be cost-effective at the time of sale. Just like during the bubble.

    If one in 4 houses are going over list, but the number of houses for sale that make up that number is very low, does that mean the bottom has been reached? Probably not yet.

  14. 14
    CMDCMF says:

    Is that one in four homes selling for over original list price, or selling for a revised, presumably downward, list price? Also interesting is seeing homes selling for over list during bust years of 2008 – 2011.

  15. 15

    Do these sales data include distressed properties? A few days ago, The Tim posted that the percentage of sales that were bank-owned homes had dropped 7% in the past two months.

    https://seattlebubble.com/blog/2012/05/03/nwmls-median-price-spikes-as-bank-owned-sales-dip/

    Today’s chart shows that the share of sales above list has gone what looks like about 9%. So even if bank-owned sales don’t account for all of the difference, isn’t it possible that the change in the mix of sales playing a role here?

    I don’t want to sound like a permabear … I think it’s more likely that prices will just bounce along or rise modestly in the next year or so … but I’m not sure this particular data is solid evidence of a big rebound in demand. Of course with such low inventory of listed homes a small (seasonal?) uptick in demand without a rise in inventory could result in a lot of bidding wars and/or buyers fearful of losing out on a home they want.

  16. 16
    David Losh says:

    RE: deejayoh @ 3

    What’s interesting is that we have a spike in the price per square foot, from February to now.

    So, if you bought in January, February you got a bargain.

  17. 17

    By David Losh @ 16:

    So, if you bought in January, February you got a bargain.

    It’s a good thing that David doesn’t make agent type sales pitches. /sarc

    While not as clear cut as the effect on the median is, the lower percentage of short sales and REOs also likely increased the price per square foot. So no, it does not mean you got a bargain if you bought in January (even ignoring the fact that not everyone who buys in any month gets a bargain).

  18. 18
    S-crow says:

    I’m sitting here in my office working away and we have had numerous evenings this Spring where we have left the office at 10pm 11pm and after midnight. We keep thinking should we hire or will this pass? The hire sign is out. By the way, lots of short sales and REO’s are involved in the multiple offers. Agent I spoke with this morning said, “where the !$LL are all these buyers coming from with money?” —um, they’ve been on the sidelines and have been dipping their toes into the water more and more.

    PS. stress level of people in the biz and buyers and sellers are increasing–maybe due to market?

    Go OKC Thunder!

  19. 19
    robotslave says:

    It bothers me very much that this graph starts at 2008.

    Am I supposed to compare this rate only to what it’s been since the market collapsed? Where was it at the top of the market? What was it like before the bubble inflated? What’s the historical average?

  20. 20

    By robotslave @ 19:

    It bothers me very much that this graph starts at 2008.

    Tim says that’s as far back as he has reliable information.

    In any case, it doesn’t really bother me because I’m not sure it’s that much of an indicator.

  21. 21
    David Losh says:

    RE: Kary L. Krismer @ 17

    This is the same sales hype as anything else. OMG the price per square foot went up for two months so you better buy, or…… be priced out forever.

  22. 22

    By David Losh @ 21:

    RE: Kary L. Krismer @ 17

    This is the same sales hype as anything else. OMG the price per square foot went up for two months so you better buy, or…… be priced out forever.

    You took it that way. I don’t even necessarily take it as an indication values are going up, for the reason I explained. Also, as you mentioned today, smaller houses tend to have a higher price per square foot. Perhaps it was a change in the mix, like that or perhaps more of the houses were north of I-90. ;-)

  23. 23
    Sarah says:

    I have to agree that more sellers must be getting it through their heads that this is not the same market as it was a few years ago and are finally lowering prices. But I think more sellers still need to get that. I read a post on the Seattle Times a while back from someone who thought the rule of thumb was, ‘for every year the housing market went down, it takes two to recover’ – meaning we’ve got another 4 years to recovery, and according to the Case-Shiller index, the Seattle area still has some room to lower prices even more. What will it take for sellers to realize that this is a slow recovery, not an instant rebound?!

    I’ve been to open houses now where the listing price ranges from $500k to $1M and frankly, there’s no consistency in pricing, further proving that some sellers get it and some don’t, (even after accounting for location). There doesn’t seem to be much difference between the lower priced houses to the higher priced ones – you would think that for $1M, houses really would be what the Seattle Times categorizes those houses as ‘luxury homes’, but frankly, there are some sellers who are still unwilling to make any remodels and are just dumping their houses out there and charging ’06 prices – their rationale seeming to be not charging the peak ’07 prices, but almost – again, these are the sellers that don’t seem to get that we’re not quite at that point yet.

    I think the buyers who are paying over the listing price must just be new to buying a house and don’t know any better or from out of town. It’d be interesting to see if this graph could indicate if these buyers are first time buyers or not and/or relocation offers.

  24. 24
    patient says:

    1 in 4 homes sell above listing instead of 1 in 5 and that’s suppose to indicate a bottom? It feels like this site is rapidly becoming RCG with better graphs.

  25. 25

    RE: patient @ 24 – LOL.

    The problems I have with this indicator is it’s based off of list price, and affected somewhat by seller financing concessions. Focusing on the list price aspect, that’s just a number set by agents and/or clients. Would anyone [not working for Zillow or Trulia] claim that the market is improving because the average list price is going up? If not, why should the market be seen as improving because more listings are selling above list price? Maybe it just means that sellers or sellers’ agents became too pessimistic?

  26. 26
    Sarah says:

    It would be interesting to see what the average percentage above list price people are selling their homes. Also, would be interesting to see a graph, to the earlier point made above, comparing listing price vs. actual sales price.

  27. 27

    RE: Sarah @ 26 – I’ll give you two points.

    For January 2012, KC SFR the sales price was about 96% of the list price and 92% of the original list price. For April, 2012, the sales price was about 98% of the list price. I can’t give you the average of the original list price, because one of the properties that sold was apparently originally listed for $2.256 Billion dollars! How did we miss what must of been a historic price reduction? :-D

    Approximate percentages from NWMLS sources, but not compiled by or guaranteed by the NWMLS.

  28. 28
    krs says:

    I think realtors have just gotten smarter and are pricing some houses aggressively (so they look like a screaming deal) which brings in more buyers. The house ends up at the price it would have sold for if it had been priced properly, but shows up as having sold for well above the asking price. How many homes end up finally selling well below the initial list price?

  29. 29
    Pegasus says:

    RE: krs @ 28 – That has definitely been the pattern for many short sales in the past six months and they are not afraid to lower the price substantially every 10 to 15 days either.

  30. 30

    RE: Pegasus @ 29 – The past couple of months I’ve seen much less of that lowering the price every X days. It still happens (I saw one just this week), but apparently more agents finally heard about the 10 year suspension of license for doing that!

    I also wonder how that works with appraisals. Appraisals are coming out more and more at almost exactly the sales price. I wonder what they do if the original agreed sales price is $150,000 but the bank raises it to $180,000 and the buyer agrees to that increased price?

  31. 31
    Pegasus says:

    RE: Kary L. Krismer @ 30 – I think the fact that prices have firmed probably has more impact on whether they engage in rapid price drops than the rare occasion of rule enforcement upon the real estate industry…

  32. 32

    RE: Pegasus @ 31 – I forgot the $10,000 NWMLS fine for apparently doing that. That gets the attention of designated brokers, because if agents can’t pay the fine, then the firm has to cough up the money. That could have an impact too!

    Also, since that is obviously on the NWMLS’s radar, it’s also possible that they are giving warnings without fines, and cutting down on the behavior that way.

    But for the last two months, you might be right. A lot of agents may be parking their over-anxious buyers into short sales.

  33. 34

    Oh things do seem to be getting “better”. But I don’t know how much people have thought through what “better” means. Obviously we’re not going back to the bubble days of 10%+ price appreciation per year. But what does it mean for the market to be “back to normal”? Does it mean prices stop falling? A return of price:rent ratios to their average? Consistent 5% annual home value appreciation similar to what we saw in the ’80s and ’90s? And how long will it take to get to whatever definition of “normal” people have in mind? One year? Two? Five? Ten?

  34. 35
    Dave says:

    Sure – that’s a good point. I was simply referring to “better” being price appreciation, rather than price depreciation. In real terms, annual appreciation achieving the rate of inflation.

  35. 36
    deejayoh says:

    By Sarah @ 26:

    It would be interesting to see what the average percentage above list price people are selling their homes. Also, would be interesting to see a graph, to the earlier point made above, comparing listing price vs. actual sales price.

    Redfin makes these stats available at a neighborhood/city/county level. Click the links in my post @3 and you can customize to show all the items you mention.

    Not shilling for Redfin, it’s just the only place I know to get the views you are seeking.

    By krs @ 28:

    I think realtors have just gotten smarter and are pricing some houses aggressively (so they look like a screaming deal) which brings in more buyers. The house ends up at the price it would have sold for if it had been priced properly, but shows up as having sold for well above the asking price. How many homes end up finally selling well below the initial list price?

    Same views referenced above show that listing prices have been rising even as sales/list price gap has been narrowing – so the data doesn’t appear to support your hypothesis.

  36. 37
    MichaelB says:

    By Dave @ 33:

    It’s been kind of funny to watch the posts this Spring. Tim will put up some objective statistic that appears to show improvement in the housing market, and the perma-bears go through increasingly contorted mental gymnastics to explain why things are actually getting worse. It’s like a wacky circus where the performers must do more difficult stunts each week to impress the audience.

    More like Tim takes some statistics that are statistically insignificant and extrapolates to support his position that the market is improving and we’ve hit bottom.

    Take a look outside – Greece is defaulting. Europe is a mess. The USA is slowing down. Wages are not increasing. China is slowing…Millions of shadow inventory homes. Has the global economy hit bottom? The stock market doesn’t seem to think so…

    These statistics are meaningless given the macro economic realities of the world economy. When median home prices reach 2.5 to 3 X household income or 15 x rents, then we have probably hit bottom.

    Take a look at Japan. 10 years and 75% decrease in home values from the peak. Today Japan is still struggling.

    Getting tired of the constant RedFin cheerleading on this site…

  37. 38
    No Name Guy says:

    RE: Dave @ 33

    I’m hardly a perma-bear, but I’m still quite bearish. Why?

    – We don’t have a free market, we have one dominated by the Government. (Get a private mortgage? Not when 90+% are guaranteed by the Feds). What happens to housing when sanity prevails and the Govt pulls back from guaranteeing practically every mortgage written today?

    – We have interest rates manipulated by the Fed that are still causing a huge mis-allocation of capital. How did this work last time? Oh yeah….it CAUSED the housing bubble in the post dot com melt down (combined with Barney Frank, et al and the stupid policies loosening lending standards at Fannie / Freddie). What happens when interest rates return to a market driven level?

    – There is STILL a huge hang over from the bubble years. Despite the slow down’s in foreclosures, there are historically very high levels of delinquent “owners” – as Ray says, these ones at least are all coming back.

    – What happens when the banking regulators get a set of b*lls and force the REO holders (banks, such as Chase) to mark to market their REO properties? Yes, that’s right, with them no longer being able to mark to fantasy and spread out their losses to manipulate their apparent capital / profit / loss position, these REO’s all hit the market at once since the losses will be realized by the banks and the smart move will be to dump as quickly as possible since they’re costing money to hold on the books (finally) at that point. Of course, at this point, many large banks will be insolvent and THAT won’t be good for the housing market, now will it (RTC round 2 anyone)?

    – Macro economic data / trends are extremely worrying, doubly so since there is a bunch of idiots with their hands on the levers. We’re suffering from an excess of debt and what are the idiot Krugman types of the world doing? Piling on MORE debt (ctrl + p) at an accelerating rate in a vain attempt to extend and pretend / kick the can. The way out of too much debt is to deleverage by paying down the debt, or at least stop running up new debt and letting growth ease the relative burden of the current debt levels. Instead of taking the lumps, which yes, would have sucked, they’re piling on the debt with the can kicking so that when the day of reckoning comes, it’ll be that much worse – that which is unsustainable will by definition fail at some point. We could have had it short, sharp and quickly over like the 1920 recession (balance the budget, let the losses be realized, bankrupt insolvent entities, wipe out the bad debts, free up the zombie / trapped assets). Instead we’re getting Great Depression, Part Deux / Japan Lost Decade Part Deux of extend, pretend, borrow, spend, can kick and zombie economy. .Ask Japan how well that’s working out for them.

    Amongst other reasons, that’s why I’m bearish on a now to 5 year time horizon.

    Add to that its the spring selling season. Look at the past several years – it’s bounced up in the spring, or at least held on a MOM basis. Meh….so what that it’s bouncing this spring. I’ll be less bearish when it’s flat to up MOM in November after interest rates are at 5-6%, private investors without a tax payer back stop are funding 90% of mortgages and the Fed Govt has a balanced budget.

    So yes, I guess I’m getting all contortionist and all.

    I guess the objective fact that the band is still playing while some folks are playfully kicking around those ice chunks on the deck indicates the ship is well nigh unsinkable after all….. meanwhile, the contortionists are getting their heavy coats and wallets from their cabins and heading off to be in those first lifeboats to be launched.

  38. 39
    Scotsman says:

    RE: MichaelB @ 37

    You sound like me two years ago. Here’s what I missed though, in no particular order.

    Change takes time, lots of time. Momentum is a significant force, especially when looking at second order derivitives- .i.e, yeah/sure, the fuel is out of the tanks, but the ship still weighs 400 gross tons, is moving at 20 knots, and will continue forward for a long time- and during that time other changes will take place. Finally, there is or can be a huge difference between nominal and inflation adjusted prices over time. That will prove to be a big deal as we move forward. It is quite possible for home prices paid to double over the next decade while real prices fall 20%. Think about that for a while.

  39. 40
    johnnybigspenda says:

    RE: No Name Guy @ 38 – I think your arguments actually support the opposite of what you are trying to prove in some ways.

    1. we DO have a government that is able to step in and hold things together even when our banking system let us down.

    2. this blog has shown many times that interest rates and home prices are not highly correlated. It may have some effect, but not to the degree which you are imagining.

    3. the stats show that the hangover is slowly being absorbed. we also know that what is being bought today is by cash buyers and by buyers who have very good credit. neither is likely to default anytime soon.

    4. REO inventory is being absorbed. If they marked everything to market at the peak of the downturn, i agree with your point, but see my point #1. They just need to buy enough time to let those assets normalize or for programs to come along to absorb them. The .gov will not force them to mark to market no matter how much you may want them to.

    5. I do not like our national debt problem either. But I do like that we are the world reserve currency. We are the ‘least bad’ out there. If we go, that means everyone else has worse problems. If you want to spend your life waiting for our country’s debt problems to go away, enjoy it. I say, go ahead and live life, just do so within your means. I am not converting my assets to gold and building bunkers. If that scenario plays out, I doubt the gold bugs are going to rule the world.

  40. 41
    johnnybigspenda says:

    One last thing. I think there is a fantasy by the perma-bears that somehow if they save enough cash (or gold) that they will end up being the rich man who “got it right” while everyone who is going about things in the ‘conventional’ way is going to be destitute. In the mean time, 10-15 years is going to pass and I will have my mortgage paid off.

  41. 42
    David Losh says:

    RE: johnnybigspenda @ 41

    I was a buy your home booster before reading this site, and this site directed me to other sites of a similar mind-set about bubbles, and macro economics.

    I do own a home, and think about sending it back to the bank every month. What am I going to do with? Is land lording really a great way to make a living, or is it hard work, until you have a huge portfolio? Even if you have a huge portfolio is that the best way to make a buck?

    I’m not the sharpest tool in the shed, but I know property, and it took a lot to shake my confidence in building an estate. Once I got to that point of concern about Real Estate though it would take more than some sales charts to get me back on board the boat.

  42. 43
    whatsmyname says:

    RE: No Name Guy @ 38
    I think it is quite optimistic to believe that confusing objective reality with lurid Titanic metaphors would rise to the level of contortionist.

  43. 44
    whatsmyname says:

    RE: johnnybigspenda @ 41RE: johnnybigspenda @ 40RE: Scotsman @ 39

    Excellent!

  44. 45
    Jonness says:

    Artificially low interest rates and artificially low supply are working to support house prices. But the macro picture still does not look good. Therefore, we are not out of the woods.

  45. 46
    MichaelB says:

    By Scotsman @ 39:

    RE: MichaelB @ 37

    You sound like me two years ago. Here’s what I missed though, in no particular order.

    Change takes time, lots of time. Momentum is a significant force, especially when looking at second order derivitives- .i.e, yeah/sure, the fuel is out of the tanks, but the ship still weighs 400 gross tons, is moving at 20 knots, and will continue forward for a long time- and during that time other changes will take place. Finally, there is or can be a huge difference between nominal and inflation adjusted prices over time. That will prove to be a big deal as we move forward. It is quite possible for home prices paid to double over the next decade while real prices fall 20%. Think about that for a while.

    Interesting thoughts! Especially regarding inflation. To me, the ship is debt driven deflation. Currently, gold is dropping like a rock, signalling the market’s view that deflation is more likely than inflation. Krugman and Obama are both talking about driving “growth” ie inflation. This would mean curtailing austerity measures worldwide, especially in the case of Greece / (PIGS). If we assume an inflation rate of 4%+ per annum over the next decade in the USA – it would be very painful, as wages would likely not increase at the rate of inflation, and the monthly cost of buying a home would increase – further pressuring home prices, but possibly preferrable to a debt-deflation driven depression. May not be a good time to buy a home and looks like further home price decreases during the next few years…

  46. 47
    krs says:

    Regarding realtors aggressively pricing properties. I have followed the Magnolia market every day for over four years and have owned multiple properties there. These two homes came on the market last week:

    http://www.redfin.com/WA/Seattle/2563-34th-Ave-W-98199/home/128274

    http://www.redfin.com/WA/Seattle/5651-40th-Ave-W-98199/home/123042

    Both are under priced given their condition and locations. I would bet anything they both went into multiple offer situations and will sell for significantly over the list price.

  47. 48
    ARDELL says:

    Sooo…house on market 1 day. Showed it this afternoon and saw listing agent when we were leaving. She said she had no offers at 4:30 p.m. I’m writing an offer and it goes Pending at 7:35 p.m.? How do you go from no offers at 4:30 on a vacant investor owned listing to Pending Inspection on day 1 on market in a few hours? Someone must have demanded an immediate response? Whacky!

  48. 49

    RE: ARDELL @ 48 – Sounds like something my wife would do. She didn’t, but she usually makes response dates very short, and in this market that can mean the same day.

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