Seattle’s Summer of Slim Selection

With real estate’s “spring buying season” basically in the rear-view mirror, one would expect that the housing inventory shortage we’ve been seeing so far in 2012 might subside.

Unfortunately, that does not yet appear to be the case. Both in King County as a whole and Seattle specifically, weekly inventory data from Redfin shows a continued decline in selection.

Here’s how May 2012 looks compared to each of the previous twelve years, according to NWMLS data:

House Inventory in May: 2000-2012

While inventory is at an all-time low, the picture isn’t quite as grim for buyers as it was at the peak of the bubble-buying frenzy in 2005, since there aren’t as many sales now as there were then. I attribute this to the dramatically different mindsets of the 2005 and the 2012 buyer.

2005: We have to buy a home right now! Something! Anything! Homes are an amazing investment, and every month we wait we’re that much closer to being priced out forever! Let’s forget the inspection, throw down an escalation clause, and pay whatever it takes!

2012: We would like to buy a home now, but we’re going to be sure we find the right home in the right neighborhood at the right price. Homes obviously aren’t a good investment, so we can and should be choosy about what we buy. If we find something really nice we’ll do what we can to get it, but we’re not in an incredible rush.

I suspect that the calmer mindset of today’s buyer will prevent any crazy run-ups in home prices in the near to mid-term future, despite today’s extreme lack of selection on the market.

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.

113 comments:

  1. 1
    David Losh says:

    Again you should expand this chart to show historic norms of properties for sale.

    There is also a very clear possibility to by pass the MLS altogether. We’ll see more of that as these statistics become more common on the internet.

    Why pay a commission of 6% when you can sell to friends, neighbors, or relatives? You already know the value, most people always have, you know the trends for your neighborhood, so why pay a Brokerage when an attorney is maybe $1000 including escrow?

  2. 2

    By David Losh @ 1:

    You already know the value, most people always have, you know the trends for your neighborhood, . . ..

    That is totally delusional. Those who have a good idea of the value of their property and trends in their neighborhood are a clear minority.

    And apparently you’ve never heard of supply and demand. If you restrict the sale to your “friends, neighbors and relatives” you’ve greatly reduced the demand for your property.

  3. 3
    Peter says:

    Have to agree on the 2012 mindset, that’s exactly where I’m at. As I’ve said before, it’s no great tragedy for me to keep renting for a while if the right house doesn’t come along at the right price.

  4. 4
    corndogs says:

    I think the home owners that remain today are probably much less stupid than the ones weeded out in the last 5 to 6 years.. If you’ve sustained the 30% to 40% hit on your value and your still in it, you’re a fighter. I think going fwd, you’re gonna have a hard time getting a quality property from these folks at todays low-ball prices… especially now that the spiral seems to have subsided….. so, I believe there will be a run up in prices as inventory remains low. I believe it’s happening now. There is no place else to park money, property will be a good hedge against inflation, which I believe has to be coming. A rebound in housing prices is far less ridiculous than the rebound that occurred in the stock market…. quality land is a commodity just like gold… investors will buy the good deals first and then a few news articles later and some word of mouth the followers will be psychologically keyed right back into it. Prices are going up.

  5. 5

    I don’t understand why “buyers’ mindset”/psychological explanations would result in different fundamentals. If demand is high relative to supply then prices will go up. It’s true that there’s some evidence that communities are scarred by big downturns in home prices, and that will probably prevent things from going quite as nuts. But most likely if the inventory/sale ratio stays this low, we will see more buyers until prices start to rise again, unless there is some other difference between 2005 and 2012 we can point to.

    For me the big difference right now is the mix of zero down vs some down vs 20+% down vs cash buyers is the big driver. First of all, lenders are less willing to lend which is reducing the pool of buyers. Listings are down 10% from trough but the number of possible buyers is probably down much further. Second, there are two big differences between the little/no down buyers on neg-am IO option loans and a 20% down buyer on a 30 year fixed; they probably earn more than the former (might push prices up), but they are also more mindful of saving money (might push prices down). Investors/cash buyers are almost always out to get the best price.

    Finally there’s the shadow inventory/soon-to-be-foreclosed on homes. No one really knows what’s going to happen locally, but at least nationally foreclosure activity is picking up again.

  6. 6
    HappyRenter says:

    RE: Nicholas Beaudrot @ 5
    Nicholas, don’t you think one should consider also the increasing number of employees in Seattle? What if Amazon, Microsoft, Google, Boeing, etc. keep adding workers? Is there going to be more demand which will push prices higher?

  7. 7
    ess says:

    The end result of this market will drive rents higher. Another moniker for those who can’t find a house because they are “choosy” is renter. A casual review of Craigslist will reveal higher and higher rents, even in the less desirable outlying areas of King and Snohomish County. And closer in to Seattle – the rents are sky high. The real winners are long term landlords. Not only did they purchase their property years ago, and thus have positive cash-flow, but they can charge more for rent while becoming more selective as to whom they rent to. And an additional bonus — their real estate taxes are somewhat reduced as a result of lower assessments.

  8. 8
    Peter says:

    RE: ess @ 7 – oh dear, the demonization of the word “renter” has happened again. I’m sure this bubble will be different!

  9. 9

    RE: corndogs @ 4

    I Agree Corndog

    I’d add, the inability to sell underwater loans mitigates the owners’ desire to keep up with maintenance, Hades, during the 2005 boom even the unmaintained sold for top dollar….but now, there’s no desire to upgrade maintenance for what you can’t afford to sell and qualified buyers are being picky to weed the less maintained out.

    Rents going up due to home supply inventory mitigation? Perhaps, but so is household size and susequent maintenance costs per rental unit too.

    “…Those between the ages of 25 and 34 made up two-thirds of that increase, underscoring a prime reason for a broader slowdown in household formation that economists call both a symptom and a cause of the nation’s continued economic doldrums.

    Economists estimate that there are more than 2 million fewer occupied homes in the country than there would have been had Americans continued forming households at the rate they did before the recession. The slowdown has lowered demand for housing as well as for furnishings and appliances, placing a further drag on the economy….”

    http://www.washingtonpost.com/business/economy/census-bureau-millions-more-americans-shared-households-in-face-of-recession/2012/06/20/gJQAaj3HrV_story.html

  10. 10
    patient says:

    I’m less optimistic about the average buyer. I still suspect demand is driven of what people can get funding for. The current rise in demand is likely purely driven by the manipulated extremely low interest rates, inventory plays a secondary role. Availability and cost of credit is everything. People never learn.

  11. 11
    corndogs says:

    RE: ess @ 7

    Your exactly right, I’m one of those landlords. I’m charging more and more and paying less taxes.

  12. 12
    corndogs says:

    RE: Nicholas Beaudrot @ 5RE: Nicholas Beaudrot @ 5RE: Nicholas Beaudrot @ 5 – please quantify the shadow inventory. Do you know how many houses are coming on the market and when, or are you just repeating something you’ve heard…. People have been talking about this for the last year, meanwhile inventories everywhere are way down…

  13. 13
    Peter says:

    Corndogs = Meshugy?

  14. 14
    corndogs says:

    RE: Nicholas Beaudrot @ 5
    This article says shadow inventory is at a 3 year low. Down from 6 months to 4 months. If you added the entire 4 months of crap inventory to the market now you’d still have only 6 to 7 months of inventory in Seattle and LA and other big Western cities, that’s not gonna happen but if it did the good houses would get scarfed up by pent-up demand and investors would take the rest. So I think you should X that off your list of regurgitations, that ones dead.

    http://www.inman.com/news/2012/06/14/shadow-inventory-drops-lowest-level-in-nearly-3-years

  15. 15
    corndogs says:

    RE: Peter @ 13 – nope C-Dogs = C-Dogs… I wouldn’t pick a name so ridiculous…:)

  16. 16
    corndogs says:

    “S&P also reported that the U.S. monthly first default rate fell to 0.67 percent in March 2012, the lowest level since May 2007. The first default rate is the percentage of loans that became 90-plus-days delinquent in that month for the first time, as a percent of all loans that have never before been at least 90 days or more past due”

  17. 17
    wreckingbull says:

    RE: ess @ 7 – You may wish to review this primer on how property taxes are calculated.

    http://www.kingcounty.gov/Assessor/PropertyTaxAssessments/ResidentialPTA.aspx

  18. 18
    ess says:

    RE: corndogs @ 11

    Corndogs

    My rentals have enabled me to obtain an advanced education, practice in my field, close my office when I tired of it, and travel with my wife to many interesting and exciting places all over the world at a relatively young age.

  19. 19
  20. 20
    Pegasus says:

    RE: ess @ 18 – Sorry esssssssssss but taking a trip to Gorst is not the same as going to many interesting and exciting places all over the world at a relatively young age.

  21. 21
    David Losh says:

    RE: ess @ 7

    I see the price of property continue to go down for many years to come. There is nothing in the cards that will show that crappy housing units will be worth maintaining, so why bother with it?

    If you look around today you can see thousands of housing units that need tens of thousands of dollars in repair. Neighborhoods are getting scketchier all the time. In five years I will bet that we see big time ghettos in every city.

    Property is a business that is great when times are good, but I’m seeing, and talking to, long time land lords who are having to rob Peter, to pay Paul to maintain properties.

    It costs money to make money, and the equity is shrinking.

  22. 22
    Jonness says:

    I suspect that the calmer mindset of today’s buyer will prevent any crazy run-ups in home prices in the near to mid-term future, despite today’s extreme lack of selection on the market.

    About half the population has a double-digit IQ. Thus, I expect there are a lot of home buyers out there right now. However, the smart money is currently elsewhere. The crazy price runup cannot occur until the smart money moves in, makes a profit, and starts sniffing for the exits. That’s when the dumbos move back in just in time to get left holding the bag.

  23. 23
    corndogs says:

    RE: David Losh @ 21

    When people are saying stuff like you’re saying. It’s time to buy.

  24. 24
    Pegasus says:

    RE: Jonness @ 22 – Are these the same people that voted for Obama?

  25. 25
    corndogs says:

    RE: David Losh @ 21 – I’m a long term landlord, if you’re borrowing from Peter to pay Paul, you must not have a positive cash flow and you’re thus probably not a ‘long term’ landlord. Your equity has no bearing on your operation unless you sell it. With low interest rates you should be able to knock your payments down, this down turn has no effect on me whatsoever, except, I could’ve sold when they were high… but that wasn’t my goal… I always intended to keep my properties.

  26. 26
    2kt says:

    RE: David Losh @ 21

    Sorry, but you really make no sense, dude.

  27. 27
    Jonness says:

    RE: Pegasus @ 24 – LOL! I got a real kick out of your reply.

    On a more serious note, I’m thinking a lot of smart people don’t even vote, because they see through the rigged two-party election system and realize both candidates are nothing more than canned spam.

    We get two complete morons and are told to make a choice. Each one is clueless, so it opens them up for easy critique. Then we use some propaganda to brainwash the sheep from birth to pick whatever party their parents told them was the correct choice. Then the mudslinging begins, of which there is a never ending supply of ammunition. Eventually, nobody even cares about a single issue that matters to the overall fate of the country. They are more concerned about what religion the candidate is, how tall he is, and how much hair he has on his head.

    Personally, I don’t want to sleep with the president, so I would rather see a guy get in there that has enough moral strength to balance the budget.

  28. 28
    David Losh says:

    RE: 2kt @ 26

    Sorry dude, but the high price of rent makes no sense.

    Why are people paying these over inflated rents?

  29. 29
    David Losh says:

    RE: corndogs @ 25

    The people I’m referring to own the properties free, and clear. None of them ever intend to sell.

    With the land use, and building codes that we have today I see the abilty to build millions more housing units than we could ever use.

    The government keeps pushing housing because they get $90K? in estimated tax revenue per unit. Then the Associations of Mortage, Builders, and Real Estate Commissions have an even larger advertising budget, based on creating jobs, and collecting fees.

    Once we build out what there is on the books there is another thousand arcres of density that is still waiting.

    I don’t see an end in sight for supply, but I do think consumers are tapped out. I don’t see people paying premiums in the near future for a place to call home.

    It may not have happened to you, but for some land lords they are having vacancies once the rents get to a certain point. Once more rental units come online people will choose newer, or cheaper, and will save where they can.

  30. 30
    Bingo says:

    RE: David Losh @ 29

    So, the people you are referring to own their property free and clear but have to rob Peter to pay Paul because they can’t make a buck renting their property? You say the reason they can’t make money renting their properties is because some where down the line there will be more rentals and there are thousands of acres of land that can be developed in the future? The other reason they can’t make money is because new construction requires $90K in fees to the government and that creates larger budgets for various entities to spend promoting housing?

    If that’s the case, they shouldn’t be in property management. They should be earning .1% in T-bills if they are that inept.

  31. 31

    RE: Jonness @ 27 – I feel like I’ve fallen into bizzaroland. One day Losh says something I agree with and the next it’s Jonness.

    BTW, there is an old economic theory that it doesn’t make sense to vote. The chance of one vote making a difference is very slight, and whether an individual votes or not usually doesn’t affect the decision of even a handful of others to vote. Exceptions would be perhaps a politician or other famous person not voting. They could influence a lot of others and that could affect an outcome of some very close election.

  32. 32

    RE: David Losh @ 29 – By David Losh @ 28:

    RE: 2kt @ 26

    Sorry dude, but the high price of rent makes no sense.

    Why are people paying these over inflated rents?

    Take a micro-economics course.

  33. 33
    sally buttons says:

    RE: corndogs @ 25 – Smug for breakfast. Very little nutritional value. Long term.

  34. 34
    sarah says:

    Re: David @29

    I’m one of those people who are paying overinflated rents right now. I sold my house last year before looking because I didn’t want to be stuck in a position where I was paying two mortgages in this uncertain economy. Yes, the rents are more than they should be but frankly, they are still cheaper than what my mortgage would be for the price of house I’m looking for.

    One could make the argument that I am ‘throwing money out the window’, but if I was in a house right now, I would be throwing my money at interest, fees, taxes and insurance.

    I’ve lived in this rental now for about four months and I understand why people are having that debate to rent vs. to own. It is a lot simpler to rent – my landlord is very responsive to maintenance issues and less hassle and money for maintenance (I think the rule of thumb is that home maintenance and repairs account for about 1% of the home price).

    The bottom line is that until I see home prices consistently increase with an increase in inventory (so that I know I’m not being fleeced) and find something I love, I’ll continue renting. While there are definitely incentives right now, it doesn’t make sense for me to find a home I half love just because ‘the time is right’, take a huge mortgage to buy (because interest rates are low) and remodel it, and then be indebted for 30 years. I’d also like to see some signs that the economy is doing better also, so that I can foresee some inflation down the line indicating that the home is still a good investment. What I have learned from the housing downturn is that home prices can fall, so until I see these indicators, it is worth my financial peace of mind for me to pay my relative overinflated rent.

  35. 35
    David Losh says:

    RE: Bingo @ 30

    That is the point, money can be made elsewhere. Property, and asset management is a job. While you are ramping up your portfolio it is all gravy. Once you hit whatever your limit is it becomes a job with limited income.

    The people I’m looking at are the people with a set portfolio, who have done this for thirty plus years, who have a set number of units that generate a set income. Those properties need to be maintained, managed, and have the expenses paid.

    Once you stop adding inventory you’re stuck with what you’ve got. Rents aren’t keeping up the life style that older investors want.

    The next round of development in housing units, like we just saw with town houses, will be smaller, more effecient, and cheaper.

    The big problem all around is consumer debt, student loans, and mortgages that exceed the value of a property. The new people entering the job market are in debt. The first wave of new wage earners have already been burned by the housing market.

    Land lords are coming to grips with the idea that people may bite the bullet short term to pay high rents, but once they are settled they will move to some better situation, maybe with a longer commute, but renters have options, lots of them.

  36. 36
    David Losh says:

    RE: sarah @ 34

    Perfect example, you will tolerate the higher rent, for now, but you are well aware of the cost difference between taking on a 30 year debt, and renting.

    It all adds downward pressure on the price of housing. The consumer has limited resources, but there is a ton of housing supply with many more options coming in the short term.

    We’re at a stair step down.

  37. 37
    2kt says:

    RE: David Losh @ 28

    Because there are more of them, dude; it’s that simple.

  38. 38

    RE: Nicholas Beaudrot @ 5

    Nicholas You’re Obviously an Intellectual Type on Seattle Bubble

    You’ll draw downthumbs like crazy if you mention undocumented shadow inventory of bank owned foreclosed units in Seattle. Non-intellectuals prefer being ostridge types with their heads in the ground….they consider undocumented anything OK, even if its likely organised crime in America.

  39. 39

    RE: softwarengineer @ 38 – You’re commenting on a post that got 2 thumbs down, and assuming that both of those are due to mentioning shadow inventory, where he notes that we don’t know what will happen locally? I’m not seeing that generating a thumbs down.

    Now maybe the claim that listings are down 10%, when really they’re down over 50% from the peak, that might generate a thumbs down. But really, that type of thing could be anything.

  40. 40

    RE: David Losh @ 28

    I Agree David

    Once Seattle area condo conversions to rentals kicks in [it took a few years after the S & L Collapse of the late 80s], granny bar the door….the current tight supply can turn into a glut overnight.

  41. 41

    RE: Kary L. Krismer @ 39

    True Kary

    But everytime I mention the undocumented shadow inventory in Seattle, I’ve gotten thumbs down in groves. Its probably just coincidence ;-)

  42. 42
    interested says:

    RE: Kary L. Krismer @ 31 – Kary maybe because voting should be considered an obligation. That is what was taught in my family. I could give a hoot who someone votes for — even if it is someone I disagree with, however how about just a tad of civic duty. How about putting down the big gulp and taking a walk down to the polling station. When people don’t care that is when things really go South. But instead people want to whine and complain about how bad the system is instead of trying to change it — oh yeah that’s right that is not easy and us Americans have gotten use to easy — e.g. the real estate bubble.

  43. 43
    ChrisM says:

    RE: softwarengineer @ 41 – I think you could post 1+1=2 and get a down vote (not from me..)

  44. 44
    David Losh says:

    RE: 2kt @ 37

    More of what, or who?

  45. 45

    RE: David Losh @ 44 – More people wanting to rent. He’s referring to the demand side of supply and demand. Demand is increasing, and apparently faster than supply, so prices are rising.

    Again, you should try taking a micro-economics course. I think you would find it interesting.

  46. 46
    Blurtman says:

    RE: softwarengineer @ 40 – I am tracking the San Diego RE market, which seems to have heated up. But what happens when supply is no longer manipulated, and the real inventory backlog is released at a more rapid rate, maybe all at once? Are we back into more underwater homes and more defaults again?

  47. 47

    Heard a rumor today that one of the Fs is holding onto 2,000 REOs in WA State until issues surrounding the Foreclosure Fairness Act are worked out and then they’ll be listed.

  48. 48

    RE: Kary L. Krismer @ 39

    Sorry, to clarify, I meant that listings are down 10% compared to trough (i.e. 2005), not peak. In other words, the last time we saw listings this low we were in the middle of housing fever. So I am trying to understand how with fewer listings and a nearly identical months of available inventory we aren’t seeing prices increase. There has to be some other fundamental that is different (or prices are about to take off again) and I don’t follow real estate closely enough to understand what indicators I should be looking at.

    That’s why shadow inventory might — might! — matter. In 2005 the huge backlog of unforeclosed on homes did not exist. It doesn’t have to be huge to have an impact on prices — it just has to be larger than what existed in 2005. On the demand side, fewer borrowers are qualifying for loans, the borrowers who do qualify are demonstrably more sensible about money, and banks are more skeptical on appraisals. There could be other factors as well but again I don’t really know what to look for.

  49. 49

    By Nicholas Beaudrot @ 48:

    RE: Kary L. Krismer @ 39 – Sorry, to clarify, I meant that listings are down 10% compared to trough (i.e. 2005), not peak. In other words, the last time we saw listings this low we were in the middle of housing fever. So I am trying to understand how with fewer listings and a nearly identical months of available inventory we aren’t seeing prices increase. There has to be some other fundamental that is different (or prices are about to take off again) and I don’t follow real estate closely enough to understand what indicators I should be looking at..

    Thanks for clarifying–or maybe I didn’t read close enough.

    If you really wanted to make that comparison, you wouldn’t use 5,000 listings today to compare to 5,500 listings in 2005. For today’s number of actives you would use 4,200 or so–the non-distressed listing actives.

    I think you are right about the reason prices are not skyrocketing–there are fewer buyers now than back then.

    Numbers from above graph and NWMLS, but not compiled by or guaranteed by the NWMLS.

  50. 50
    corndogs says:

    RE: David Losh @ 29

    Yeah, but the people who build new multifamily stuff are not stupid, they wait deligently for the right time. Must of us who rent units aren’t as worried about the rent amount as keeping it rented to someone who’s not a tool. That’s ultimately more valuable than a few thousand here and there by jacking up rents. I have people late on rents and a few evictions but nothing too bad.

  51. 51
    Peter Witting says:

    RE: Kary L. Krismer @ 31 – That theory applies on the national scale. On the local level, with a much smaller voting population, the value of each incremental vote is greater. However, I value my vote because it is mine to cast.

  52. 52
    tim2 says:

    Hmmmm. According to the Tim post the inventory is down, long after the effects of the Spring Bounce should have subsided. Hmmm. Inventory down. Hmmm. Supply down. Let’s see, we will flip open our Econ 101 (macro-econ) book. Ahhh. Chapter One. Supply and Demand. “When the inventory of a product is constrained or reduced for what ever reason, and the demand remains the same (or even increases) the the exerted pressure of more consumers chasing fewer products results in a price differential.” What does that mean, price differential?

    What does that mean? What will happen?
    Could it be, hmm. Nah. or it is, hmm, perhaps….
    …. we already hit bottom in February / March????

  53. 53
    corndogs says:

    RE: tim2 @ 52 – I think the list price bottomed in Jan and the sell price in March. Go to Redfin and plot King. Pierce, Snohomish, Multnomah Counties as well as LA and San francisco. List prices are up consistently 10 to 15 percent and sales price is following…. It’s typical for this time of year but stronger upsurge than usual.. lower inventory does seem to be having an effect. If the sell price trajectory lags the list price trajectory by two months as it has been will see some substantial gains. Pending sales are strong.

  54. 54
    David Losh says:

    RE: corndogs @ 50

    I agree that builders of multi family are smart. Banks have been smart. Prices, and rents are increasing.

    These are big players with cash reserves to play the market.

    I’m betting that when they are done they will own the Real Estate market place here.

    What I’m saying is the small investor, with less than twenty housing units, will be forced to compete in a market they never had to compete with before.

    The people I talk to look for the right renter, or pay a property manager to find the right renter.

    The really good renters can afford to buy, and some do. The tools are still moving around from place to place trying to get a better deal.

    Just like with the bubble when people were buying into the idea that property value was going up, investors today are buying into the idea that the Real Estate market will go back to “normal.”

    I’ll say again that I think Real Estate, as an investment is done for the small investor, and that major players will take over.

  55. 55
    Peter says:

    RE: tim2 @ 52 – I think demand is a lot softer than most people think. There’s a certain segment of the buyer population who is still willing to get into bidding wars and insert escalation clauses into their offer and write nice notes begging the seller to sell to them, but there’s a lot of people who will just walk away from all that and keep looking.

  56. 56
    tim2 says:

    Peter @55,

    Nah, you see the supply side is down, but the other side of the equation, the demand side is up. The economy is growing in Western Washington, therefore more jobs, therefore more buyers with jobs. So more people chasing fewer products. The correction is over and we are “back to the new normal”.

  57. 57
    Peter says:

    RE: tim2 @ 56 – I hear demand for magical pink ponies is up too.

  58. 58
    corndogs says:

    RE: tim2 @ 56

    I’m banking on it. Just bought a bank repo for 500K in December. Was previously valued at 1.2M in 2007.

  59. 59
    Pegasus says:

    RE: Peter @ 57 – The good news is that we have about another two months before the price pumpers have to go away in shame again. Its an annual rite and they forgot they did the same thing last year and the year before and….Admittedly this year is a bit stronger and its an election year but some of this hype is ridiculous. As I have pointed out before that the supply and demand numbers are simply returning to those seen in earlier years in a more normal market. We still have to unwind those 42,000 mortgages in Washington that are behind in their payments with about half of that number 6 months or more in arrears and most of those right here in Western Washington. On a per capita basis we look worse then California, slightly worse than New York and about even with Illinois, Arizona and Maryland. We are in better shape than Florida.

  60. 60

    By Peter Witting @ 51:

    RE: Kary L. Krismer @ 31 – That theory applies on the national scale. On the local level, with a much smaller voting population, the value of each incremental vote is greater. However, I value my vote because it is mine to cast.

    I don’t think there’s been a single election I’ve voted in, no matter how local the issue, where the result was decided by less than 10 votes.

  61. 61
    IvyLeague says:

    RE: Peter @ 8 – Not so much a bubble as a dead cat bounce perhaps? Prices here are still way out of whack with average incomes and I have serious doubts as to whether MS and Amazon will keep the unemployment numbers low(er). I suspect that in addition to the shadow inventory, a lot of would-be sellers are holding off “just until the market recovers” – presumably to somewhere between clinically insane and completely batsh1t price levels. I think all the FBs (F’d Buyers) that were susceptible to the bubble mentality have done been suckered already. Leaving only people like myself – good income, credit, first time buyer with a desire to own for practical and sweat equity reasons(I grew up building houses with my Dad and would like to put those skills to work). Problem is, I won’t touch this (or any other) market until prices are in line with fundamentals(i.e. max 3x purchase price to annual income ratios). Plus the sheer number of new (and still empty) rentals coming online in the Edmonds area makes me VERY skeptical that rents will rise significantly – pure supply and demand.

    Thing is, I can keep paying rent (on a d@mn fine place at a pretty reasonable price I might add) longer than underwater house owners can stay solvent while they wait for the pink unicorn to come back.

    As I see it, he only real unknown is how much fresh money the Fed will print thus raising inflation. It may not matter though since real wages – and thus people’s house buying power – haven’t gone up in decades.

  62. 62
    krs says:

    You market-bottom callers are almost giddy. The market is already slowing. Can’t wait to see how giddy you feel in September when prices start heading down again.

  63. 63
    wreckingbull says:

    RE: tim2 @ 56 – Oh no you di’ent!!. Did you just use the term ‘the new normal’? Charles Kindleberger taught us decades ago that this is the first symptom of bubblicious behavior.

  64. 64
    tim2 says:

    Wreckingball@63
    Ha. Did it for your effect. Oh yes I did!!
    New normal. New normal. New normal.
    Stop and think about, does it mean the same thing on the way down that it did on the way up?
    Ahh, see inflection point. If you think 2005, 2006 was normal, which you don’t, well we both know that wasn’t normal. But if you think the tumbling prices from 2007, 8, 9, 10, 11, 12 are normal going forward, well thats where we disagree. Therefore, wha la, (how do you spell that?) new normal… Welcome to the new normal, bouncing along the bottom, but bottom it is.

    Now.
    Peter@57
    Stay out of the market, son. These early stages are not for the faint of heart. Little bumpy in the beginning, so hold on.

    Corndog @59
    Good for you. Sounds like a reasonable deal.

    Pegasus@59
    You miss the fundamentals. The big driver has to do with demographics (there is a bulge in people in the household formation age and there are jobs. Households plus jobs. Thats what it takes baby. Households and jobs.

  65. 65
    David Losh says:

    RE: corndogs @ 58

    No investor would do that.

  66. 66
    corndogs says:

    RE: David Losh @ 65

    My net worth is in the millions. I wanted it, that’s what people with money do. You just keep living in your apartment with your kitty litter box.

  67. 67
    Pegasus says:

    RE: tim2 @ 64 – Where are the jobs Timmytwo? Demographics prove that fewer and fewer people can afford one even if they wanted a house. The normal pack that would be first time homeowners are laden with college debt and have no jobs. You can’t buy a home with foodstamps. The population base as it becomes heavily changed as the boomers mature are not looking to buy a house. Younger people are extremely less likely to be employed. Who is going to buy those 42,000 homes that are in default in this state? Investors maybe but we have seen how “investors” get stuck, too.

  68. 68
    corndogs says:

    RE: tim2 @ 64

    Thanks tim2, I’ve done my research all along and I waiting 9 years since I bought my last property because of this market. I’ve had to be a renter myself while I waited it out. We love the place.

  69. 69
    corndogs says:

    CorndogsRE: Pegasus @ 67 – what’s your source for the 43000 homes? What’s the rate that they’ll hit the market. How does it compare to the current rate?

  70. 70
    David Losh says:

    RE: corndogs @ 66

    That isn’t what people with money do.

  71. 71
    David Losh says:

    RE: corndogs @ 69RE: corndogs @ 68

    Enough said….

  72. 72
    whatsmyname says:

    What’s all this talk about slim selection? The Altos charts that Tim posts in the market stats sidebar says that Seattle inventory has grown by 50% since January. We see that chart every day. Why don’t we talk about that one instead?

  73. 73
    wreckingbull says:

    By tim2 @ 64:

    Households plus jobs. Thats what it takes baby. Households and jobs.

    Uh, aren’t you forgetting the most important thing it takes, timmytwo? It takes government manipulated interest rates. How long do you think this can continue? What happens when rates move back up to 6 percent? 8 percent? I’ll give you this: The manipulation might succeed for a while, but it can’t go on forever.

  74. 74
    corndogs says:

    RE: David Losh @ 71RE: David Losh @ 70http://www.zillow.com/homes/8223-goodman_rb/ This is where I live. Where do you live apartment boy? ‘nough said.

  75. 75
    Pegasus says:

    RE: corndogs @ 69 – Federal Reserve is the source of those numbers. The bad news is that those are only the Fannie and Freddy loans…..Some are already listed for sale, some will be modified, some will be short-saled, some will be foreclosed and become a REO and then resold. I do not have a breakdown of each category. The fact that over 20,000 homes are more than 6 months in default and that most of those are in Western Washington should concern people with brains. Those that don’t keep chanting “bottom” loudly. As to how fast they hit the market is really unknown since we live in the Twilight Zone where some of these are never hitting the market and others are being back-doored out of the inventories and never listed publicly. Although these numbers present a major problem when the listed inventory is only 5000 in King Co. the numbers are decreasing. The question is….how long can they be held in limbo before they have to be dealt with? Think about it….we are in far worse shape on a per capita basis than California and they have experienced bigger declines than here…….

  76. 76
    wreckingbull says:

    By whatsmyname @ 72:

    We see that chart every day. Why don’t we talk about that one instead?

    Because inventory always jumps after January? Inventory delta since January is not really a useful statistic.

  77. 77
    Pegasus says:

    RE: corndogs @ 74 – Haha. That is what I thought. Glad someone got a really good deal. Unfortunately most properties listed for sale are not. Why did you change your posting handle?

  78. 78
    wreckingbull says:

    RE: corndogs @ 74 Either you are bluffing, and that is not your home, or you just revealed your true identity, so we can associate it with your asswipe comments. Nice work either way!

  79. 79
    corndogs says:

    RE: Pegasus @ 75 – you guys have been talking about the shadow inventory on here for a year. This Bloomberg article says shadow inventory is the lowest since 2008. How do you reconcile that with your data. http://www.bloomberg.com/news/2012-06-14/home-shadow-inventory-falls-to-lowest-since-2008.html

  80. 80
    corndogs says:

    RE: Pegasus @ 77 – what was it before? pioneer? I have only been on here a few times, so I forgot my handle. I said the bottom was here though at the end of the year, I’m sticking to it.

  81. 81
    whatsmyname says:

    By wreckingbull @ 76:

    By whatsmyname @ 72:

    We see that chart every day. Why don’t we talk about that one instead?

    Because inventory always jumps after January? Inventory delta since January is not really a useful statistic.

    It is if you are making a point about the usefulness of purported “statistics”.

    Do you imagine that the inventory numbers in the MLS statistics have increased 50% since January? 40%? 30%? Or did you miss that? Even the base numbers in this series are very different from the MLS numbers we usually discuss. From where are they derived? Do they have any meaning? They are posted here every day. Are the CSI numbers any better? Would you notice if they weren’t?

  82. 82
    corndogs says:

    RE: wreckingbull @ 78 – Are you saying you’re dangerous? Don’t get what your trying to say?

  83. 83
    Pegasus says:

    RE: corndogs @ 80 – Look, I have John Daniels here right now and will not be able to clearly answer that until tomorrow….

  84. 84
    Pegasus says:

    RE: corndogs @ 79 – Straight from the recent Federal Housing Finance Agency release a few weeks ago. It is a pdf file so Google “Foreclosure Prevention Report First Quarter 2012
    FHFA Federal Property Manager’s Report” and you should find it. They listed the states separately for the first time. Go to page 19 for all of the states nums. I should have said this was a Federal Housing Finance Agency report instead of a Federal Reserve report.

  85. 85
    corndogs says:

    RE: Pegasus @ 84 – I see a report with a bunch of states on there that are in trouble. Didn’t see Washington State. I see CA ID NY FL etc,,, am I missing something ? http://www.fhfa.gov/Default.aspx?Page=172

  86. 86
    Pegasus says:

    RE: corndogs @ 85 – Your link takes me to all of their pubs. Download the FHFA First Quarter 2012 Foreclosure Prevention Report. Page 19 lists all the states in the graph. Takes those numbers and divide by the population of each state(I did it, you can).

  87. 87
    corndogs says:

    RE: Pegasus @ 86http://www.fhfa.gov/webfiles/24011/1q12_fpr061512.pdf this one? no Washington mentioned!

  88. 88
    Pegasus says:

    RE: corndogs @ 80 – J Hammy

  89. 89
    Pegasus says:

    RE: corndogs @ 87 – Right report. Page 19 has a graph of all 50 states “Delinquent Loans by State”. Washington State right there with the other 49.

  90. 90
  91. 91

    By whatsmyname @ 81:

    By wreckingbull @ 76:

    We see that chart every day. Why don’t we talk about that one instead?

    Because inventory always jumps after January? Inventory delta since January is not really a useful statistic.

    The Altos numbers are a bit of a mystery. That inventory number might make sense if it includes all of the active and pending houses and condos in Seattle. The number of active listings in Seattle proper have declined from January, bot for SFR and SFR + condo.

    I remember several months ago their median number didn’t make much sense, and it doesn’t seem to now either. A median under $350k for Seattle? Even if you include condos that’s way too low.

    Maybe Tim has an explanation for what it is?

  92. 92
    David Losh says:

    RE: Pegasus @ 88

    You’re right it’s the Hammy guy, good catch.

  93. 93
    Dorothea says:

    RE: corndogs @ 66 – that is a rude and unnecessary comment.

  94. 94
    corndogs says:

    RE: Kary L. Krismer @ 91 – kary, id be interested to get your input on the shadow inventory. Based on the total number of 34000 statewide this pencils out to about 3.6 months of inventory. Doesn’t seem like much to me. What’s your take?

  95. 95
    Dirty Renter says:

    By softwarengineer @ 38:

    RE: Nicholas Beaudrot @ 5
    Nicholas You’re Obviously an Intellectual Type on Seattle Bubble…

    That’s why he posed like ‘The Thinker’!

  96. 96

    Pegasus and Kary, Thanks for the FHFA links. Did you see that there are 10,000 NEW DEFAULTS for Wa State? and 28,000 seriously delinquent….OMG. Yes, it’s only Fannie and Freddie but that’s a nice sample size.

    Well, this morning CR once again explains the inventory problem and nails it.

    http://www.calculatedriskblog.com/2012/06/housing-inventory-and-negative-equity.html

  97. 97
    corndogs says:

    RE: Dorothea @ 93 – ill try to be nicer. Thankyou.

  98. 98
    corndogs says:

    RE: Dorothea @ 93 – ill try to be nicer. Thankyou.

  99. 99

    By corndogs @ 94:

    RE: Kary L. Krismer @ 91 – kary, id be interested to get your input on the shadow inventory. Based on the total number of 34000 statewide this pencils out to about 3.6 months of inventory. Doesn’t seem like much to me. What’s your take?

    I don’t think it’s all that clear what the 34,000 is. Could those include properties where there’s already a workout in progress? Also, how many are the subject of a bankruptcy reorganization? That is a good remedy for many who have 80/20 mortgages.

    Also, it’s not really clear where most of those are located–which county.

    Finally I would note that there are always properties in trouble. Having some historical data would be useful.

  100. 100
    krs says:

    RE: corndogs @ 66

    I agree with Dorothea@93. Not only is the comment rude and unnecessary, but I seriously doubt that it’s even true.

  101. 101
    corndogs says:

    RE: Kary L. Krismer @ 99 – right…. a number is just a number we’d need to see how its changing over time. Hopefully someone on this thread can quantify the past and extrapolate the future for us.. it’d be useful.

  102. 102
    wreckingbull says:

    By krs @ 100:

    RE: corndogs @ 66

    I agree with Dorothea@93. Not only is the comment rude and unnecessary, but I seriously doubt that it’s even true.

    What? You don’t believe him? Sort of like when he tried to tell us a few weeks ago that he has a 35 minute commute to Seattle?

    http://goo.gl/maps/rNCB

  103. 103
    Peter says:

    RE: wreckingbull @ 102 – I thought everyone who posted in the comments section was a multimillionaire and I was the only one still changing the oil in my Yugo myself.

  104. 104

    By Peter @ 103:

    RE: wreckingbull @ 102 – I thought everyone who posted in the comments section was a multimillionaire and I was the only one still changing the oil in my Yugo myself.

    You have only yourself to blame for that. You should have been following the investment advice posted here!

  105. 105
    2kt says:

    RE: David Losh @ 1

    Dave, this makes no sense at all. But please, keep trying.

  106. 106
    whatsmyname says:

    No need to fret. Altos Research says Seattle has more inventory now than it did last July.

    And they have the word “Research” right there in their name.

  107. 107
    David Losh says:

    RE: 2kt @ 5

    The multiple got to be as large as it because people make believe they need it.

    Real Estate agents are kind of a lost art, but they also don’t need the multiple.

    In a market that is going up in price sellers may not want to leave money on the table, but we are in a declining market price.

    If you want to continue to play games with a leveraged purchase of a quarter, to half a million dollars, go ahead. The fact is that the buyer is in the driver’s seat now, they just need to make the best deal they can, and the multiple is doing nothing to help with that.

    We didn’t always have a multiple, we didn’t always have online Brokerage, but the Real Estate market place still functioned.

    It’s simple, if we were selling stocks nationally, or internationally an exchange, or multiple would be useful, but if Real Estate is local, where’s the advantage to the buyer?

  108. 108

    By David Losh @ 107:

    It’s simple, if we were selling stocks nationally, or internationally an exchange, or multiple would be useful, but if Real Estate is local, where’s the advantage to the buyer?

    Exposure. But for the NWMLS listings would not get the complete exposure they get on broker sites such as Redfin or JLS, and instead it would be more like Trulia or Zillow where you had to go to several sites to get all the listings.

    That lack of exposure could be a benefit to the buyer though, just like how only having one picture on a listing can benefit a buyer. MLS systems exist because they are good for sellers, not because they are good for buyers.

  109. 109
    apartment boy says:

    RE: Pegasus @ 75
    Thank you corndog….you provided my new name.
    I’ve been debating going back to the very first moniker I used on Keith’s blog many years ago…Keyser Soze, a favorite character of mine.

  110. 110
    Peter says:

    RE: Kary L. Krismer @ 104 – Kary, I *did* listen to the investing advice from the commenters here. How do you think I ended up with the Yugo?

  111. 111
    interested says:

    RE: apartment boy @ 109 – you are worth billions but you can’t remember your id? on a blog you post to? and then someone else has to come up with an id for you? YOU must have cornered the market hmm was that what corn dog referred to?

  112. 112
    apartment boy says:

    RE: interested @ 111
    Worse yet, I stole ‘Dirty Renter’ from Ben’s blog.

  113. 113

    […] market can choose to take their homes off the market. (We have seen this a bunch in markets like Seattle and Denver in […]

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