Reporting Roundup: Tough Choices for Buyers 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).

To kick things off, here’s an excerpt from the NWMLS press release:

Western Washington housing indicators aligned "for spring market to remember"

“The market is struggling to provide enough inventory for anxious buyers seeking to take advantage of low interest rates,” reported Dick Beeson, principal managing broker of RE/MAX Professionals in Tacoma. Also, he lamented, considering 25 percent of the selection is distressed, “It leaves some buyers with tough choices.”

“Low supply and high demand continue to drive our market,” stated Northwest MLS director John Deely. He said multiple offers are the “rule rather than the exception” for new listings in core urban areas that are priced well. Deely, the principal managing broker at Coldwell Banker Bain in Seattle, noted a new listing in North Seattle recently drew 12 offers and the property was bid almost 10 percent above its listing price.

OB Jacobi, president of Windermere Real Estate Company, noted the month’s supply of homes in King County has dipped to about 1.2 months, well below the six-month threshold that many in the industry consider to be “normal.” Jacobi, who is also on the MLS board of directors, noted supply is at its lowest level since May 2005 during the peak of the housing boom. “The impact of low inventory levels is stiff competition among buyers, often resulting in homes selling for well over asking price,” he remarked. Also, he added, the imbalance also leads to rising median prices.

J. Lennox Scott, chairman and CEO of John L. Scott, Inc., attributes surging sales and prices to several factors, including positive job growth, historically low interest rates and fewer homes being listed. “This restriction of homes for sale is prevalent in the price ranges where more than 90 percent of activity is taking place, causing prices to rise,” he stated.

It is still worth pointing out that home prices are not really “surging,” with the non-distressed median price only up 3.8% as of January. That said, the market right now is definitely not buyer-friendly.

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

Sanjay Bhatt, Seattle Times: Inventory crunch drives King County home prices up

First-time homebuyers are jumping into the market, observers say, since housing prices hit bottom a year ago. When the median house price in King County hit $308,125 in February 2012, that was the lowest level in eight years.

But inventory isn’t keeping pace for several reasons:

Some sellers are waiting for prices to climb higher before listing their homes. Others still owe more on their homes than they’re worth.

A third group of sellers is unwilling to interrupt the cash flow they receive from renting out their homes at high rates.

Eric Pryne has retired, so Sanjay will be taking over the reigns for real estate reporting over at the Seattle Times. He’s done a good job in the past filling in when Eric has been out, and this month’s article is no exception.

Aubrey Cohen, Seattle P-I: More home sales, fewer listings driving up prices

A continuing shortage of homes for sale drove up prices in the Seattle area in February, according to a new report. But there are signs the market could be changing.

…Pending sales — which don’t all close, but can be the best indicator of recent activity — fell 1.6 percent in Seattle and rose just 0.5 percent countywide. That could reflect an abating of the sales surge or people having trouble finding something to buy.

Short article this month from Aubrey, but he still squeezed an insight in there, pointing out that sales are likely to switch from year-over-year gains to losses soon.

Kurt Batdorf, Everett Herald: County home prices surge as inventory shrinks

Shrinking home inventory once again drove a double-digit increase in year-over-year median home and condominium sales prices in Snohomish County.

“In my 37 years working in the real estate industry, I have never seen inventory this low,” Diedre Haines, regional managing broker for Coldwell Bank Bain-Snohomish County and a member of the Northwest Multiple Listing Service board of directors, said in a news release.

This month’s Herald article is little more than a minor rewrite of the NWMLS press release.

Rolf Boone, Tacoma News Tribune: Home sales, prices continue to climb in Pierce County

The Pierce County housing market put together another impressive month in February, highlighted by a double-digit increase in median prices, according to Northwest Multiple Listing Service data released Tuesday.

That’s welcome news for homeowners, but median prices still have a way to go to match the median prices set during the boom in housing.

Allen Realtors of Lakewood President Mike Larson said all the metrics he follows — transactions, pending sales and phone calls to the office — are on the rise.

“We’re finally seeing some traction and momentum and that’s fueling what we’re seeing in values,” he said.

He also said he senses more confidence among consumers, partly because the election is over. Larson admitted the national economy is not exactly rosy, citing the sequester, but the “stock market is setting records just about every day.”

It’s not clear exactly what this agent means by “we’re finally seeing some traction,” but right now the market is being pretty limited by the lack of inventory. I don’t really see how an extreme shortage of homes for sale is “traction.”

Rolf Boone, The Olympian: Thurston home sales increase in February

The Thurston County housing market continued to show improvement in February, with home sales rising nearly 30 percent in the year-over-year period, according to Northwest Multiple Listing Service data released Tuesday.

“I think the real estate recession is in the rearview mirror,” Windermere of Olympia real estate agent Gregory Moe said.

Home sales rose 29.9 percent to 200 units last month from 154 units in February 2012, the combined single-family residence and condominium data show.

The Olympian’s article is pretty short and to the point.

(Sanjay Bhatt, Seattle Times, 03.05.2013)
(Aubrey Cohen, Seattle P-I, 03.05.2013)
(Kurt Batdorf, Everett Herald, 03.05.2013)
(Rolf Boone, Tacoma News Tribune, 03.05.2013)
(Rolf Boone, The Olympian, 03.06.2013)

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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
    Blurtman says:

    “…anxious buyers..”

    They must have a house, they must!

  2. 2
    3rd Generation says:

    Nicely done, informative and worth-reading post. Thank you.

    ps: Save this quote for later, from a member of the “Always a Great Time to Buy” cartel:

    “I think the real estate recession is in the rearview mirror,” Windermere of Olympia real estate agent Gregory Moe said.

    Jeezus. Will they EVER learn ?

  3. 3
    Carl says:

    RE: 3rd Generation @ 2 – Bulls and bears are typically each right half the time. I do think the real estate recession of 2007-2012 is in the rearview mirror. But there might be one in 2014-2018. Who knows.

  4. 4

    We’re Just Arranging the Chairs on the Titanic

    Arguing who gets the lower floors and perishes first and who get’s the rich upper floors to survive a bit longer; and a few billionares get the scarce life boat seats.

  5. 5
    Erik says:

    Way to keep them honest warden(The Tim).

  6. 6
    mike says:

    At what point does the anticipation of a horrible buying experience become a major factor in deciding to rent? We may get to find out.

  7. 7
    sniffy says:

    RE: mike @ 6 – I’m already there. Just extended my lease for another year–I’m ready, willing, and able to buy…but no way am I jumping into these waters. I can wait.

  8. 8
    Erik says:

    RE: sniffy @ 7
    If you have 20% to put down and good credit, you should just buy at a trustee sale and refinance it down to the rate you want. That seems to be the best way to maneuver these waters.

  9. 9
    mike says:

    RE: sniffy @ 7

    I’m curious as to whether you looked at fixers as a potential option. Last year, we focused on homes that needed work, but weren’t quite to the point of being attractive to fix and flip companies. There seemed to be less competition for places that needed perhaps 10-20% of the purchase price in maintenance and upgrades. We ended up compromising a bit on the condition, but still got a place we love. I know things have become more competitive since then, so maybe that’s no longer a viable strategy.

  10. 10
    3rd Generation says:

    @ 3. Carl

    A broken watch is right twice a day.

    Keep thinking.

    Meanwhile, points-to-ponder from another galaxy (Southern Cal)

    Let me save you a reply. I KNOW it’s different here. Ask a realtor…

  11. 11

    RE: Carl @ 3


    The Bears have been right the largest percentage of years leading to the economic bubble(s).

    The Bulls just won’t admit it.

  12. 12
    mike says:

    RE: 3rd Generation @ 10
    Interesting point here:

    Because prices have risen so fast over the last year, some people are saying we’re in another housing bubble. While we are clearly reflating the old bubble, this time we are doing it with stable loan terms and affordable payments.

  13. 13
    Mike says:

    RE: sniffy @ 7 – SO TRUE, the issue for us isn’t being able to go in and “win” in a feeding frenzy, it’s deciding whether this is a game we really want to win. Even if bidding up might still result in a total cost that is equivalent to our rent, and might make sense in a pure economic sense, the thought of getting caught up in a bid-it-to-win-it mentality just feels dirty/dumb/risky (pick your adjective) and not somewhere we want to go.

  14. 14
    David B. says:

    RE: Mike and Sniffy – My sentiments exactly. There’s this mythology about home ownership and this hidden premise that if you’re a renter you’re somehow a loser. There’s no shame in renting if, for whatever reason, upon serious introspection you come to the conclusion that renting is better for you

    And one of the uses for renting is as a way to wait out a difficult market so that when you do buy, you can have a better chance of getting something that you are truly satisfied with. Which is critical when buying, given how transaction costs make it much more expensive to move once you own your home.

    Myself, I haven’t *completely* given up on finding something to buy, I just realize it’s *very* slim odds at this point, given that it would have to be so obviously a virtually perfect match that I could decide to make an offer quick enough that I’d be the first to do so.

  15. 15
    redmondjp says:

    RE: David B. @ 14 – As a 15-year homeowner, I applaud your attitude. There is no free lunch, and home ownership can require much more of your time than being a renter. I can’t even add up how many weeks (probably months at this point) of really nice weather that I have spent working on my house or yard over my ownership period – time that, as a renter, I could have been out hiking or doing something else more enjoyable.

    If you can afford a new home with low yard maintenance, that’s one thing. I couldn’t then or now, so I bought a 1977-built fixer, and 15 years later, it’s still a work in progress (if I had won the employment lottery and worked at M$ back in the 1990s, this would definitely not be the case, but oh well).

    This weekend is going to be nice. What will I be doing (besides taking the kids to the park)? Mixing up about 5 gallons of broadleaf weed killer and getting a jump on the dandelions! That’s not all for my yard – I help do maintenance at two of my elderly neighbors’ homes, and they both have huge yards. I really, really do not like dandelions, Sam I am!

  16. 16
    me says:

    I really wonder about the mentality of the active buyers these days. I do the analysis occasionally, but inevitably a 500k purchase loses out against my 1k rent (incl utilities).

    What kind of appreciate/inflation would it take to make that worthwhile? And what kind of event would need to occur for that to happen? And what in the world would make anyone think that in that case they’d like to be tied to a specific geographic locale instead of able to easily move in search of income?

  17. 17
    David Losh says:

    RE: me @ 16

    I know it sounds like I flip flop a lot on the issue of buying a home. I believe Seattle Washington is one of the best places to own property, and that goes for many of the surrounding areas.

    Some of the houses have excellent value, others are very questionable.

    Like Ardell’s below, or above I-90, I think Ballard is divided above, and below 65th, between 15th, and 24th NW. The style, condition, and price also make big differences.

    Most neighborhoods can be carved up, but there is always that exceptional house, that just sits there because it might just be in the wrong place.

    Over all I think Seattle is every bit a metropolitan city that is under valued. Looking at downtown condos I think is a great example, because some buildings are great with great units, and good livability. I wish Seattle had less of a homeless population, but South Lake Union is kind of a good example of a place that fits livability.

    The last point you raise is extremely valid. In tterms of jobs I think Seattle is a prime place for International trade, especially with Asia. We are still growing in terms of jobs. We see a lot of people who have moved here from across the country to get jobs, in medicine, technology, finance, trade, and Boeing’s diversified manufacturing. All of these jobs lead to other jobs in products, and services.

    So, I don’t mind owning property here. Even if I had to feed it as a rental, I think in the long run Seattle will be a good investment.

    You still need to be smart, because I think there are a lot of trash properties that should be torn down to make way for something better. I have no love for Pioneer Square other than it would be a great place for condos, and offices. Ballard I don’t really get, but there are some solidly built homes there, most are just trash. Fremont has already been trashed by town house developers; just because you build it doesn’t mean it has value, other than the dirt.

    But I will throw this out, that I go into houses that sit on the market, maybe with a price reduction, that are worth having. Some are across 145th, especially, but some are in the most desired neighborhoods. It depends on the location, price, and condition.

    It’s hard to remove yourself emotionally from owning a home, but if step back, and remember, this is a huge financial decision, you might find something that works for you to build equity in.

  18. 18
    Dave says:

    As a renter who is a potential buyer, having sold my last house back in 2008, I say: “Why buy a house now?” Inventory is very low. Folks, there really isn’t much to look at out in my neighborhood. Too many potential sellers are underwater. They can’t short-sell because the tax break on their short-sale ‘income’ has expired with the end of 2012. People are simply stuck in place. Inventory is low because people can’t sell. It ain’t rocket science folks.

    The federal government is slowly but surely withdrawing the real estate industry subsidies that have propped up housing prices and kept the ‘zombie’ banks alive, barely. Interest rates can’t go any lower. Will the banks pay me to buy a house? Will the taxpayers subsidize my purchase of a home? Already, nearly every new mortgage is socialized into taxpayer-subsidized, quasi-public corporations. This is a short-term policy with no legs. The whole house of cards is going to come down and pretty soon too, probably within a couple of years.

    The last thing I want to be holding is a mortgage to a house I can’t sell, locked into a high-priced area such as the Puget Sound. Sure, it is a nice place to live for now, while I am still working, but eventually I will take my cash and buy a choice chunk of arable land and build a really nice, sustainable home back in the Midwest and have plenty of disposable income left over to fund a very comfortable retirement.

    I feel sorry for the young people I work with who have bought homes in the Puget Sound area in the last few years. They are now underwater, can’t move to follow better jobs or advanced education, and they can’t walk away either. They are stuck in a high-priced area and will be stuck for the rest of their lives. I see that reality starting to sink in. I am talking about highly qualified young professionals, doctors and nurses, who now feel trapped by the homes they put their life savings into, only to see their down-payment evaporate. I am thankful that my own children have resisted the temptation to become ‘home-owning’ slaves to the real estate industry. Better to rent, live economically, save your money, and pay cash to build when you are really ready to put down solid roots.

    Buy a condo in Seattle? I don’t think so! LOL

  19. 19
    Tony says:

    RE: Dave @ 18
    Well said Dave!

    When interest rates normalize and affordability goes out the window that median price King County home at $427k @ 3.75% & 20% down jumps from a $1585 monthly payment to $2277 @ 7% and $2754 @ 9% (range of interest rates in the 1990’s).

    I have to assume if the monthly payment were to jump 74% that it would cause price compression. Only buy today if you never plan on moving!

  20. 20
    Captain Kirk says:

    I have to agree that high demand among anemic supply isn’t a recovery. While I believe we’re out of the woods, it’s not a healthy market by any means. It’s desperation for buyers. I have a friend that just had his first kid and simply *had* to have a house in Seattle now. So after 8 offer attempts with paying $500 pre-inspections and waving appraisal against 6+ other offers all 5-7% higher than asking price, he finally got a place. I think people are pressured to buy now because they fear interest rates will cause them to pay more in the future and they’re just so sick and tired of waiting after all these years. There hasn’t been a sale in my neighborhood in almost a year. Most people bought well before the bubble, but they aren’t selling because where are they going to go? There has to be a supply out there for you to go in order to sell your house. And then there’s the people who are trying to leverage the low supply to try and extort more money for their house. One house we were looking at back in 08′ didn’t sell in the low 500s. Now they put it on the market for $650k with no upgrades during that time. I wouldn’t pay more than 525k for it. We’ll see how it sells. It’ll be interesting to see what the spring and summer bounce produces.

  21. 21
    Dave says:

    Sooner or later, the Fed QE program will end and interest rates will bounce back up. As rates increase, the sales prices for homes will necessarily drop precipitously. Cash will again be king. There will always be people who own their homes outright who can sell and still make a bit of profit but the majority will find selling to be an uphill and very expensive battle. The home resale market will capitulate and there won’t be anything the Fed of gov will be able to do about it. Until then, RENT!

  22. 22

    […] at Seattle Bubble, Tim Ellis does a great job of summing up first quarter reports on housing supply and price in […]

  23. 23

    Where do I go about accessing data regarding sales, average listing times etc?

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