NWMLS: Sales Unfazed by Still-Scarce Inventory

March market stats were published by the NWMLS this morning. Here’s a snippet from their press release: Prices "spiking" as home buyers compete for scarce inventory.

“All price ranges are feeling a lift,” reported Dick Beeson, principal managing broker at RE/MAX Professionals in Tacoma. Northwest MLS director John Deely echoed that comment: “We are seeing many homes in Seattle meet and exceed pre-bubble price levels,” stated Deely, the principal managing broker at Coldwell Banker Bain in Seattle.

“The recovery continues on a slow and steady pace in most areas and surging hard in others,” concluded Darin Stenvers, vice chair of the MLS board.

I think it’s a mischaracterization to say that prices are “spiking.” I get into the reasons for this a little more below. I’m also having a hard time rectifying the “spiking” headline with the “slow and steady” comment from Mr. Stenvers. Whatever.

All righty, on with our usual monthly stats.

CAUTION

NWMLS monthly reports include an undisclosed and varying number of
sales from previous months in their pending and closed sales statistics.

Here’s your King County SFH summary, with the arrows to show whether the year-over-year direction of each indicator is favorable or unfavorable news for buyers and sellers (green = favorable, red = unfavorable):

March 2013 Number MOM YOY Buyers Sellers
Active Listings 2,972 +0.8% -40.3%
Closed Sales 1,825 +39.6% +11.1%
SAAS (?) 1.36 -3.1% -9.9%
Pending Sales 2,936 +18.9% -2.7%
Months of Supply 1.01 -15.2% -38.6%
Median Price* $392,000 +7.4% +18.8%

Feel free to download the updated Seattle Bubble Spreadsheet (Excel 2003 format), but keep in mind the caution above.

For the third month in a row now, we’re looking at the lowest months of supply has ever been as far back as my data goes (January 2000). The number of listings on the market at the end of the month was barely higher than the number of pending sales. Remember thoug that the NWMLS changed the definition of “active listing” in July 2008, so months of supply before and after that point aren’t really directly comparable, and closed sales still aren’t coming anywhere near pending sales, but barely over one month of supply is still pretty abysmal.

Here’s your closed sales yearly comparison chart:

King County SFH Closed Sales

Same basic pattern as every year, with sales surging between February and March.

Here’s the graph of inventory with each year overlaid on the same chart.

King County SFH Inventory

Inventory inched up, but remains at record lows.

Here’s the supply/demand YOY graph. In place of the now-unreliable measure of pending sales, the “demand” in this chart is represented by closed sales, which have had a consistent definition throughout the decade.

King County Supply vs Demand % Change YOY

The listings curve is moving closer to zero (flat year-over-year), but the sales curve turned back up again in March.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

More or less the same as last month at a nearly 20% year-over-year gain. Remember that this large of a jump is mostly due to a decrease in distressed sales (short sales, bank-owned) and a geographic shift toward the more expensive parts of the county.

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994.

King County SFH Prices

March 2013: $392,000
December 2005: $393,000

So far I haven’t seen any articles from the Times and P-I, but I’ll update this post later if they show up.

Update:
Seattle Times: King County house prices jumped almost 20 percent over year
Seattle P-I: Homes even harder to find in Seattle area in March

Check back tomorrow for the full reporting roundup.

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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.

30 comments:

  1. 1
    Eastsider says:

    The pending sales indicator should stay red instead of green. Active listings has dropped 40% yoy yet pending sales only drops 2.7%. How can the pending sales indicator be favorable to the buyer? Think about it…

  2. 2
    No Name Guy says:

    What’s wrong with that graph of housing prices?

    Answer: The only 3 years with higher prices in March are 2006, 2007, 2008 – right before, during and after the peak.

    Me-thinks it’s an echo boom……wanna-be buyers, I’d sit down, take a deep breath before jumping into this market.

    Ask yourselves: What fundamental economic reasons are out there to support prices at these levels? Is employment, disposable personal income, etc really there to pay for these houses*? * – on this, I’d say look, not at the payment, but at the debt / income ratio – even if you can finance it at a low monthly payment, you still have to pay the total debt at some point else you don’t OWN the property, you just rent it from the bank.

    Having money in the bank / pocket for a down and a secure stream of income from a solid economy is what supports housing pricing. How many folks out there have this now compared to previous recoveries in housing pricing?

  3. 3
    David Losh says:

    OK, sales stay the same, but inventory is at it’s lowest level.

    Going with the supply, and demand theory Real Estate Brokers like to throw around then prices must be increasing.

    My question is why would anyone be foolish enough, with all that is going on economically, buy into this market?

  4. 4
    doug says:

    An Excellent time to buy and as low as houses will ever be in the Seattle area (location, Location, LOCATION). Prices will rise very fast from now until the end of this year and beyond as the US Dollar strengthens. Make no mistake rents are also going way higher
    and so are interest rates.

    If you are looking to buy THE TIME IS NOW.

  5. 5

    […] Here’s some interesting Seattle real estate stats.  Demand, meet scarcity. [via Seattle Bubble] […]

  6. 6
    SG says:

    To me the current situation feels natural. Prices increasing with higher demand and lower supply (for whatever reason). Then, why were prices increasing leading up to the bubble during 2002-2007 with what seems like abundant supply (at least in comparison to the present).

    @Tim, do you already have a chart of the total number of active listings and closed sales for each month going back to 2000? On the same chart that is…..the gap between the curves indicating the difference in demand and supply.

  7. 7
    toad37 says:

    RE: No Name Guy @ 2

    We have a psycho Fed Chairman that will stop at nothing to create inflation. It has nothing to do with fundamentals my friend.

  8. 8
    top says:

    Better get myself some Bitcoin so I don’t price out forever.

  9. 9
    Mike says:

    RE: doug @ 4 – meh, I think we’re in a transition period where rental investment boomed after buyers disappeared, but the resulting rental inventory hasn’t hit yet. There is a lot in the pipeline and its going to hit the market soon. (Ballard, anyone?)

    Not sure what effect if any this will have on SFH sales, as its a different market on many levels. Maybe increased rental selection will reduce some pressure to buy, but even the high end rentals are cheaper than owning. It’ll be interesting to watch.

  10. 10
    drshort says:

    RE: toad37 @ 7

    Inflation would support/ justify higher home prices, no?

  11. 11
    drshort says:

    RE: No Name Guy @ 2

    I don’t have a strong argument about whats driving up prices now, but this is very different than 2004 – 2008. Today we’re seeing a very high number of cash buyers and those financing are very well qualified. Low loan standards drove the prior boom. This is something different.

  12. 12
    David Losh says:

    RE: drshort @ 11RE: drshort @ 10

    We do have a stronger dollar compared to what I view as a crap currency market. That doesn’t indicate inflation.

    We do have very solid loans which is a very good thing for the Mortgage Backed Securities market, or those markets that count mortgages as secured assets. All those toxic loans, or those in default are bringing higher, and higher prices at auction, for cash.

    All of those cash purchases are a sure bet for any future loans, no matter what happens to Real Estate prices. Rental income is climbing, which is a good indicator for getting higher rents.

    Now let’s step back, and look at Bernanke has created. Bernanke has created debt.

    We have cash everywhere. Cash is in commodities, and assets, like Real Estate. It’s cash sitting. There are returns on the cash based on market condition, but the consumer also has debt.

    That cash, that is sitting, is the result of low interest loans. Those commercial loans also have balloons, short term, that cash needs to give a return on those low interest loans.

    The mortgage standards are better, the rental income is better, the stock market is for sure better.

    Commodities have to be sold, they have to be sold to pay back the low interest financing, and they have to be sold to the consumer, who maybe a little cash strapped. The rental income which is good today is being supplied by a lack of housing units for sale, at a reasonable price. Builders are still building apartments. There are housing units available still that are cheaper than buying.

    Bottom line is that all of that cash we see in bank reserves, commodities, assets, like Real Estate, is based on short term low interest financing. We just shifted those liar loans, those toxic mortgages, to much bigger players.

    The Fed gave away Billions, or Trillions of dollars to banks, and financial markets directly in the form historically low interest loans.

    I see slow, systematic deflation in commodities. The cash in Real Estate is going to be much harder to deflate at this point, because we have a gold rush here in the United States. We have a capital flight from around the world to here. The cash in Real Estate is going to be more secure. I have a lot of faith in West Coast Real Estate being stable, but it will decline in price.

    The consumer is cash strapped. The consumer needs better paying jobs. The only way any of this this new found cash gets paid back, or has a return, is from the end user, the consumer.

    My conclusion is that this cash will shift into production of reasonably priced goods, and services that the consumer can afford, and is willing to pay cash for. Until the middle class starts building a velocity of money the economy will deflate. That cash needs a return, and it is based on historically low interest rates, so there is room in there for price reductions.

  13. 13
    No Name Guy says:

    RE: drshort @ 11

    You’re absolutely right it’s different. In a worse way. Then again, IMO your wrong, in the sense that it’s all the same.

    Its different in that the economy sucks right now compared to last time.

    It’s absolutely the same in that this is yet another, although far larger, manufactured, pump-n-dump by the fed.

    The last housing boom was fueled by cheap / free money from the fed post dot com melt down. Remember when it started back in the dark days of ’02-04, when the stock market was bottoming? Remember how low rates were, pushed down by the Fed? Well, it took a few years for the momentum to build and we know how it ended.

    Here we are again. Cheap money from the fed. No yield on savings. All those cash buyers are buying houses since there’s no where else to go for yield. Bonds? Nope. CD’s? Nadda yield there. Stocks……well, we know those are pumped at near peak pricing (check out the Shiller PE10 thing). Rental housing is all that’s left……and if you didn’t get in in ’09 or 10, it’s too late.

    There’s another similarity – Blackrock, et al are getting handouts, with the bulk sales of bank owned to them at fat discount pricing. Watch ’em dump these turds at inflated prices on the retail suckers, much as the Vampire Squid (Goldman, et al) dumped toxic MBS crap on unsuspecting people at the height of the boom in ’06 and ’07. Add to that anyone with eyeballs can see the foreclosed homes in their own ‘hood being held off market. I could point to several within a few block radius of where I live. I suspect my ‘hood isn’t unique in that regard. Inventory is being manipulated to push up prices in a vain attempt to get the current owners to feel the “wealth effect” and start spending again.

    Oh and then there’s the word these last few days where our overlords in the Fed Govt (e.g. Mr. President) are whining about wanting to make loans more accessible to lower qualified borrowers. Are you kidding? Hello……McFly (knocks on head). Where did we see that before? Yeah, Mr. Barney and Mr. Schumer and their ilk around ’05 and ’06.

    Yup…it’s different, in all the exact same ways. Same as it’s ever been.

  14. 14
    David Losh says:

    Well said, but I’m going to add that Fanny Mae is in the black this month, and if we can just squeeze out a few more loans they may be solvent enough to pay back some of the money they owe. Then we will be doing something the same as it ever was, but with a BS, global, economy.

  15. 15

    By drshort @ 11:

    RE: No Name Guy @ 2

    I don’t have a strong argument about whats driving up prices now, but this is very different than 2004 – 2008. Today we’re seeing a very high number of cash buyers and those financing are very well qualified. Low loan standards drove the prior boom. This is something different.

    What’s driving up priices is the extremely low inventory. In 2004-2007 it was the extremely lax lending standards. While these are different, what they have in common is that they seem manufactured. The real estate market doesn’t tend to turn on a dime. At least for the next six months or so, we’ll probably continue to see rising prices. But that doesn’t mean it’s a good time to buy. Because the underlying fundamentals don’t support 20% YOY price increases.
    Within the city of Seattle alone, there are 11,000 apartment units under construction, 2200 of them in Ballard alone. While that is a separate market: If you’re thinking about buying a house, you’d be more likelyto feel desperate and buy if finding an apartment was also difficult. If there’s a glut of available apartments( and there will be), potential home buyers will be more likely to delay their purchase if the inventory of homes for sale stays low but there are many more available apartments for rent.

  16. 16
    David Losh says:

    RE: Ira Sacharoff @ 15

    I only have two comments left!!!, but Ira is making another excellent point.

    The numbers on renting are getting better, even if a mortgage payment were half the price. The debt load from that Real Estate purchase is way high for the potential future sales price.

  17. 17
    corndogs says:

    RE: Ira Sacharoff @ 15 – I think your analysis is flawed. I have never heard of a person rushing to buy a house because they couldn’t find an apartment to rent, I don’t think people do that as a general rule.. people just look for an apartment further away until they find something affordable. If Seattle rent gets suddenly affordable, you’ll just be pulling renters in from the outlying cities.

  18. 18
    mike says:

    RE: Corndogs @ 17 – If you want to stay in a certain neighborhood, moving further away isn’t an option. Once the rental rates aren’t significantly cheaper than a mortgage payment, buying looks like a better option.

    At some point, forking out $2000+ on rent just to end up moving again in a year makes owning a better alternative even if it costs more.

  19. 19
    Saulac says:

    RE: Corndogs @ 17 – I have never heard of a person rushing to buy a house because they couldn’t find an apartment to rent, I don’t think people do that as a general rule..

    So you are saying no one, and not all, would buy because they cannot find rentals? Would be hard to disprove that statement. Just listen to your friendly real estate professional “Rent only going up…buy now..”

  20. 20

    RE: Corndogs @ 17
    I’m not suggesting that people are going to buy a house because there’s nothing available to rent. I’m suggesting the opposite. There’s a lot of people out there who would like to buy a house. Because inventory is very tight, it gets frustrating for potential home buyers to go up against 15 other parties for the same lousy house.
    That’s why I think the pendings are down this month YOY. Because there’s been a real home buying frenzy is a lot of neighborhoods the last few months, some potential home buyers are taking a step back. And if there’s a brand new glitzy apartment building just being finished in Ballard? You don’t think that’s going to delay the home buying impulse in some people for another six months or a year?
    Inventory responds to demand. That’s why by 2007 inventory was extremely high, because prices had climbed so high for so long, everybody wanted in on that gravy train.
    If the demand is high right now, where’s the inventory? And if the demand is not really there, why did March prices go up 18. something percent year over year? What am I not getting?

  21. 21
    macDog says:

    Amazon is driving up the price of everything in the urban core of Seattle. You ain’t seen nothing yet when the thousands of recent hires from the past couple of years will be fully vested in their stock options. Cash is dripping out of their noses and it has to go somewhere.

  22. 22

    By macDog @ 21:

    Amazon is driving up the price of everything in the urban core of Seattle. You ain’t seen nothing yet when the thousands of recent hires from the past couple of years will be fully vested in their stock options. Cash is dripping out of their noses and it has to go somewhere.

    They could exercise some common sense and just blow it on hookers and cocaine.

  23. 23
    mike says:

    By Ira Sacharoff @ 22:

    By macDog @ 21:

    Amazon is driving up the price of everything in the urban core of Seattle. You ain’t seen nothing yet when the thousands of recent hires from the past couple of years will be fully vested in their stock options. Cash is dripping out of their noses and it has to go somewhere.

    They could exercise some common sense and just blow it on hookers and cocaine.

    This should really revitalize the areas around Aurora.

  24. 24
    No Name Guy says:

    Great points Ira. Housing is housing. As I’ve said before, with all the new rentals coming on market in the next year or two, rental prices will come down and therefore the pendulum will likely shift again toward renting versus buying as the smart economic choice.

    Oh, and one huge point I forgot to add to my post at 13: The biggest thing that is different now versus 2006-2008 is debt. As in then we were merely up to our chest in it. Now, we’re having to swim in it. Debtclock has us at 16.78 trillion currently. 9.62 trillion is what it shows when the 2008 button is clicked (both as of this time, 4/6). Do the math on how much it takes to service those debt loads, especially when, not if, the The Bernanke loses control of interest rates and they revert to something like market driven. And those are just the Federal Government debts. Never mind student loans, cars, credit cards, bankrupt states and cities, etc.

  25. 25
    whatsmyname says:

    By Ira Sacharoff @ 20:

    If the demand is high right now, where’s the inventory? And if the demand is not really there, why did March prices go up 18. something percent year over year? What am I not getting?

    Look at the inventory graph. Excepting October, November, December, it’s been month to month flat despite rising sales levels. Except for those three months, new inventory is matching the sales increases, and coming in as quickly as it goes out. I think Ardell was alluding to this about a month ago.

  26. 26
    ARDELL says:

    RE: whatsmyname @ 25

    Correct. “Inventory” for the month includes everything that came on market, pending plus active. Not simply those not sold on a given day at month end.

    I was a little worried about an appraisal on a house that will close soon, but only becomes the comps to support the new high prices for the neighborhood were all pending vs closed sales.The quick to pending sales that pushed up the prices in the neighborhood were all still pending when mine listed and went pending quickly. My chosen asking price was based on those quick to pendings vs older closed sales.

    Mine was the 4th in the string of 5 to come on and go pending quickly. That they were all 5 pending on that one day at month end does not make inventory zero. It makes it 5 minus 5. As of today 3 of the 5 are still pending and only 2 are closed.

    There are actually EIGHT total in a small 1/4 mile radius sold since the first of the year with 4 currently pending and 4 closed and NONE “for sale”. You could say inventory is low to non-existent because today there are none for sale, but 8 homes to choose from since 1/1/2013 is not “low inventory” really, is it?

  27. 27
    corndogs says:

    RE: Ira Sacharoff @ 20

    “If the demand is high right now, where’s the inventory?”

    Ira, you seem to have some general misunderstanding about what inventory is …. Inventory is the ‘number of houses currently available for sale’… Do you understand that?… If so, you should also understand the obvious fact that a high demand does not lead to a larger ‘number of houses currently for available for sale’.

    “That’s why I think the pendings are down this month YOY”

    Pendings aren’t down because buyers are taking a step back. They are down because there is nothing to buy.. When the inventory is as low as it is now, it no longer makes sense to assess demand by making YOY comparisons of sales levels because sales are now being limited by a lack of sellers willing to put their house up for sale. Corndog told you folks last year that as inventory dropped it would eventually have a negative effect on the number of houses sold, that does in fact appear to be the case now….

    “Inventory responds to demand. That’s why by 2007 inventory was extremely high, because prices had climbed so high for so long, everybody wanted in on that gravy train.”

    Inventory grew in 2007 as investors started dumping their holdings. Again you seem to think high demand corresponds to high inventory.. that’s not how it works.

    Inventory is diminished now as investors have been buying back in.

  28. 28
    corndogs says:

    RE: Ira Sacharoff @ 20

    “If the demand is high right now, where’s the inventory?”

    Ira, you seem to have some general misunderstanding about what inventory is …. Inventory is the ‘number of houses currently available for sale’… Do you understand that?… If so, you should also understand the obvious fact that a high demand does not lead to a larger ‘number of houses currently for available for sale’.

    “That’s why I think the pendings are down this month YOY”

    Pendings aren’t down because buyers are taking a step back. They are down because there is nothing to buy.. When the inventory is as low as it is now, it no longer makes sense to assess demand by making YOY comparisons of sales levels because sales are now being limited by a lack of sellers willing to put their house up for sale. Corndog told you folks last year that as inventory dropped it would eventually have a negative effect on the number of houses sold, that does in fact appear to be the case now….

    “Inventory responds to demand. That’s why by 2007 inventory was extremely high, because prices had climbed so high for so long, everybody wanted in on that gravy train.”

    Inventory grew in 2007 as investors started dumping their holdings. Again you seem to think high demand corresponds to high inventory.. that’s not how it works.

    Inventory is diminished now as investors have been buying back in.

  29. 29
    corndogs says:

    Bill Clinton taking credit for expanding the Community Reinvestment Act that forced banks to create sub-prime mortgages. http://www.youtube.com/watch?v=WTZIB6Sika4

    Graph of Home-ownership rate skyrocketing after expansion of the act and then crashing below pre-Clinton levels after the housing bubble burst…..

    http://www.businessweek.com/articles/2012-08-29/real-homeownership-rate-at-nearly-50-year-low

    Great program Bill! we wouldn’t have modern day Detroit without you. Along with Teddy Kennedys immigration reform in 1965 you also helped give us modern day Compton… another Democrat created utopia…

    And Barack… thank you too for your early help in Chicago back in 1995. You’ve helped make modern day Chicago the crown jewel of the Mid-west… that’s some change to believe in baby… http://dailycaller.com/2012/09/03/with-landmark-lawsuit-barack-obama-pushed-banks-to-give-subprime-loans-to-chicagos-african-americans/

  30. 30
    mike says:

    RE: Corndogs @ 29 – Surely you realize by now that the overwhelming majority of subprime loans were not issued by banks subject to the CRA. IIRC, of the top 30 subprime lenders by volume operating in 2006, 29 were not subject to the CRA because they were not deposit taking institutions. Those 29 were able to make subprime loans not because the gubb-mint told them to but because the private market wanted the MBS.

    You seem to have fallen for a piece of political propaganda.

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