Reporting Roundup: The New Normal 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:

Multiple offers are “the new normal” for housing market around Puget Sound

“Multiple offers have become the new normal,” remarked MLS director Diedre Haines, the Snohomish County regional managing broker at Coldwell Banker Bain. “We have literally gone off the charts in absorption,” she stated, adding the dip in pending sales in that county “is all due to lack of inventory.”

Prices will continue to rise as current market conditions are sustained, predicts J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. Among the conditions he mentioned are historically low interest rates, pent up buyer demand, and a shortage of available inventory.

Whether the market becomes more balanced may depend on listings. Northwest MLS figures show every county in its service area had year-over-year gains in new listings during April. “Let’s hope this is the start of a positive trend for inventory,” commented Mike Grady, the president and COO of Coldwell Banker Bain, but then added, “Considering the overall market landscape, it’s likely there won’t be enough sellers to fill buyer demand, at least for the short term.”

For once I’m on the same page as at least one of the real estate agents quoted in the NWMLS release (Mr. Grady). Of course, I’m hoping for more inventory so the market becomes more balanced, while they’re most likely motivated primarily by the additional commission checks that come with additional listings, but I’ll take what I can get.

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

Sanjay Bhatt, Seattle Times: County home price back to $400,000

The double-digit percentage gain in home prices is triple the inflation rate and isn’t sustainable in the long run, [Glenn] Crellin said.

“We need inventory for the market to really stabilize,” he said.

Eastside broker Mike Chaffee said he represents a buyer who wants a house that will ensure her son attends popular Newport High School in the Bellevue School District. His buyer is well qualified, with a 30 percent down payment.

They’ve been looking for a year.

At homes in the neighborhood, Chaffee has sprinkled fliers with unsolicited offers for “top market value,” vowing to close a deal in 30 days and save the seller money on closing costs. Chaffee said it’s an example of how buyers are getting creative.

“I’m doing my best to get this buyer a house,” he said. “If I can do it without 10 other people putting in an offer, it relieves a lot of stress on the situation.”

Two people responded to the flier: One wanted $50,000 over what the house was worth, Chaffee said, while the other asked for $100,000 over the house’s market value.

His buyer didn’t bite.

Another month of great reporting in the Seattle Times. Kudos to Sanjay Bhatt for doing a great job filling the void left by Eric Pryne’s retirement.

Aubrey Cohen, Seattle P-I: King County house price back up to $400,000

“I’d been hoping to see an increase in listing activity, and I really can’t figure out what everybody’s waiting for,” Crellin said. “It’s been tight now for several months, and that doesn’t bode well for stable prices.”

It looks to me like inventory did begin to show signs of life in April. We’ll know in a few months whether we’re finally heading toward a more normal market, but I was encouraged by April’s inventory.

Kurt Batdorf, Everett Herald: Supply of homes for sale tightens in county

It’s 2007 all over again for the county real estate market as antsy buyers rush to buy what’s available in a tight supply of homes for sale.

Several factors are contributing to a “recipe for a frenzied May real estate market,” said John Deely, another member of the Northwest MLS board of directors and the principal managing broker at Coldwell Banker Bain in Seattle.

“The market pace has not subsided from previous months with low inventory and low interest rates being the primary drivers,” he said.

Wait, that does not make sense. Low inventory is driving the “frenzied market pace”? Um, no. If anything, low inventory is holding back sales.

Rolf Boone, Tacoma News Tribune: Pierce housing sales, prices continue up

The Pierce County housing market enjoyed another good month, with both sales and prices rising again and extending a streak that started last October, according to Northwest Multiple Listing Service data released Monday.

Another characteristic of the recent housing market has been fewer homes to choose from, and that continued into April as well.

Here we go again with the qualitative language, describing the market as “good” when it is clearly only good for sellers and is in fact quite frustrating for buyers. Boo.

Rolf Boone, The Olympian: Thurston home sales, prices rise in April

Thurston home sales and median prices rose in April, the fourth consecutive month of an improved housing market, according to Northwest Multiple Listing Service data released Monday.

Once again, the full story from The Olympian is only in the print edition, so all we get online is a brief rehash of the press release.

(Sanjay Bhatt, Seattle Times, 05.07.2013)
(Aubrey Cohen, Seattle P-I, 05.06.2013)
(Kurt Batdorf, Everett Herald, 05.07.2013)
(Rolf Boone, Tacoma News Tribune, 05.07.2013)
(Rolf Boone, The Olympian, 05.06.2013)

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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
    Alex says:

    I take exception to the Tim’s taking exception to the Herald’s reporting ;) Not only is it inaccurate to put quotations around “frenzied market pace” when that phrase isn’t in the article, but by my anecdotal evidence… the market does seem to be a bit frenzied at the moment, and i would have to guess that days on market would also indicate a fast pace for sales.

  2. 2
    Erik says:

    RE: Alex @ 1
    We all make mistakes now and then.

  3. 3
    whatsmyname says:

    ” Um, no. If anything, low inventory is holding back sales.”

    Holding sales back? Monthly inventory for the last year has been lower than for all of the past five years. Sales in each of those months have been higher than those for that month for all of the past five years. Check out the charts on Seattle Bubble.

  4. 4
    Erik says:

    Maybe Tim got one of his coworkers to write this weeks reporting roundup? Maybe he has more important things to do these days than blog with us? I hope this isn’t the beginning of the end of seattlebubble. I’m starting to get that feeling because we are seeing decreased quality, next we will see lower frequency, then it ends. That’s how it happens. If this is the beginning of the end, I have learned a lot about the fundamentals of real estate thanks to tim and the bloggers on this site. I was even able to learn something from the notorious villain Kary through his senseless yammering.

  5. 5

    But Tim is right. Absolutely there is a frenzy, but who sells more groceries: The corner store or the Safeway? If inventory were larger, sales would be larger too. The low inventory is not causing people to buy houses, in fact it’s causing some buyers to give up.
    Yeah, the drop in prices and drop in interest rates got more people interested and there are more buyers out there. But if you’re looking for a house in Ravenna or Sammamish and have put in offer after offer and keep getting outbid, you don’t think that’s going to have a discouraging effect?

  6. 6
    mike says:

    RE: whatsmyname @ 3 – This isn’t a sustainable trend. Declining inventory eventually leads to a sales decrease, we’re just not there yet. Seattle seems to be close though.

  7. 7
    whatsmyname says:

    RE: Ira Sacharoff @ 5 – What a terrible, terrible metaphor. Are you suggesting that the limited shelf stock and higher prices of Seattle are causing the masses to take their home-buying business to the big store down the road? What big store is that???

    Where were your discouraged buyers in 2011 when there was plenty of inventory? It is scarcity that has got their attention. People who consistently get outbid aren’t the market anyway. Just the mirror image of the guy with the overpriced house and no offers.

    More houses are being sold. That’s the fact.

  8. 8
    Erik says:

    RE: mike @ 6
    Decreased inventory leads to increased prices, which in turn leads to increased inventory dum dum. The first person that can give me what my place sold for in 2007, would drive me to sell immediately. I would leave tomorrow.

    Just ignore Ira tonight What’s my name. I think he’s having a tough night. I don’t think he actually read what was published and the comments Tim made. He’s usually pretty solid, but then again, so is Tim. I think the weather is throwing these guys off or something…. (shaking my head in disgust).

    He is saying Tim is right when a couple of our friends above pointed out where he isn’t right. I came into this wanting to slam the bloggers that were disrespecting our leader Tim. Unfortunately, I was unable to slam them because I actually read it and had to agree with them

  9. 9
    whatsmyname says:

    By mike @ 6:

    RE: whatsmyname @ 3 – This isn’t a sustainable trend. Declining inventory eventually leads to a sales decrease, we’re just not there yet. Seattle seems to be close though.

    I think you are confusing sustainable with static. In a market economy, the mechanism for relieving an inventory/demand imbalance is called price. It creates changes to both supply and demand. You know this.

    Edit: Nevermind, I see Erik’s already been there.

  10. 10
    3rd Generation says:

    “5. Ira Sacharoff
    May 7, 2013 at 10:26 pm | Permalink

    But Tim is right. Absolutely there is a frenzy, but who sells more groceries: The corner store or the Safeway? If inventory were larger, sales would be larger too.”

    OMFG. What logic. Unbelievable.

  11. 11
    Feedback says:

    Tim, you’re right. You’re smart. Thank you again for saving us from a world of wrong, dumb men.

  12. 12
    mike says:

    RE: whatsmyname @ 9RE: Erik @ 8 – As long as the price buyers are willing and able to pay is below the level sellers want, there’s no reason to believe more inventory is going to come on the market. It’s entirely possible that we’ll see a scenario develop where the majority of sellers looking to move have already sold their homes, regardless of what the buyers are doing.

    Looking at my own neighborhood, a few weeks ago there were active listings priced in the $300-$500K range. Now the cheapest one is above $670K. Any buyer whose budget maxes out at $600K doesn’t have a single house to chose from, so no sale takes place. I think we’re seeing this play out in many areas, not just my neighborhood.

  13. 13

    By 3rd Generation @ 10:

    “5. Ira Sacharoff
    May 7, 2013 at 10:26 pm | Permalink

    But Tim is right. Absolutely there is a frenzy, but who sells more groceries: The corner store or the Safeway? If inventory were larger, sales would be larger too.”

    OMFG. What logic. Unbelievable.

    Okay, okay, maybe it was a bad analogy and that led to my point being misunderstood.
    So let me put it another way:
    Scenario A- Interest rates are low, prices have dropped, and inventory is low.
    Scenario B- Interest rates are low, prices have dropped, and inventory is high.
    In which scenario would result in higher sales? I still think that Scenario B is the correct answer.
    Prices, inventory, and sales all influence each other. In 2007, prices had been going up for a long while( which caused more inventory), then ,with a lot of inventory and sales slowing, people were saying ” This time it’s different, proces are going to keep going up, we’ve got Amazon, we’ve got Microsoft, bla bla bla.” And then prices went down, and then sales continued to go down, and eventually inventory dropped.
    Right now, with such low inventory, it has led to higher prices. Sales are up too, but I think sales would be higher if inventory were higher, because it would be more able to meet buyer demand. I am out there representing buyers who are going up against a dozen other offers when they make their bids.Some are successful, some not. If inventory were higher, there’s a much greater chance there would have been more sales.

  14. 14
    yosef says:

    Rates being low sets the stage for a price jump not impacting affordability that much. And with more people moving to the area eventually prices have to tick up if nothing else changes. Some buyers will decide it’s not worth the wait – they find a house they want and pay a bit more to get it in at today’s rates. Prices get pulled up. Trend could end in a few months, or in a few years, I have no idea. But it seems like basic economics going on here. Why more owners aren’t putting their houses on the market now that it’s better for sellers, I don’t know. Maybe cause you gotta live somewhere and if your house goes up so does the other one you’d move to.

  15. 15
    Chipmunk says:

    I am a buyer looking to purchase a house in some of the more desirable neighborhoods that are seeing competitive multiple bids. I have made 8 reasonable offers (all above ask price with more than 20% down), three with pre-inspections done–all of which I have lost. I’ve fired my previous agents, one from Windermere and another from John L Scott because they keep goading me to make higher bids without any concrete reason (which by the way makes me think if real estate agents were as complicit as those corrupt bankers in the 2007 disaster). Now I’m with a far more reasonable and smart agent who is from a boutique firm. I strongly believe that Redfin is going do to those stuffy elephants — Windermere, Scott, and Coldwell — what the likes of Travelocity and Expedia did to brick-and-mortar travel agencies. I really think you should take what is being predicted by these big-wig real estate agencies with a grain of salt because what these guys are really interested in are their commissions and an overpriced overheated market that protects their jobs.

    By the way, to all those fat-cat agents who wish me good luck with a sly grin when I am stepping out of a staged house, I wish your gullible clients the very best because they will need it in 5 years time.

    I must stop now because I sound bitter…. I assure you I am not angry or disheartened. Up and forward!

  16. 16
    whatsmyname says:

    RE: mike @ 12
    One reason to believe that more inventory is going to come onto the market is that more inventory is coming on to the market – and has been, which would be more obvious if it weren’t for the fact that apparently more buyers are willing to pay the prices that sellers want.

    People who are priced out of your neighborhood do have other choices. That’s how price increases spread across the market. I want a Lambo, but it doesn’t look to be in the cards. I am sure that there is a guy out there who would take that information and choose to ride the bus; I will buy a car anyway.

    RE: Ira Sacharoff @ 13

    Your Scenario A is 2013.
    Your Scenario B is 2011.
    The rate of sales is higher in scenario A. I can’t speak to “correct”; but them’s the facts.
    See the response to mike above.

  17. 17
    wreckingbull says:

    By Chipmunk @ 15:

    I must stop now because I sound bitter….

    Seriously, take your own advice and hold out until the market equalizes. Anyone that tells you this is the “new normal” has a very short memory or is not too bright. Your recent experience is a warning shot across your bow, and I would heed it.

  18. 18
    mike says:

    RE: whatsmyname @ 16 – Inventory is coming on the market in some areas but not in others. There’s still the issue of how far out of their desired geographic area they’re willing to travel before deciding to wait it out. Simply put, if a builder (could) put up 50 median priced houses in Greenlake and 50 in Kent, which would sell faster? If the builder decided instead to build all 100 in Kent, would any of the Greenlake buyers decide to move there? Sure, overall inventory went up but it isn’t necessarily going to lead to a greater match between buyers and sellers. The issue I see is the inventory isn’t increasing in the places more people want to buy – those areas are still decreasing meanwhile the low hanging fruit (homes priced at or below the median) gets picked off even quicker.

  19. 19
    Mike (different one) says:

    RE: mike @ 18 – Totally agree 100% with this. The jobs that pay above the area median are all being created in the urban cores along 520. The roads and transit options in this town are bad on a good day with no reason toexpect they will improve. New infill is far from family friendly (row houses on the east coast tend be floor through for a reason, not the town town homes we have here). The result is that we have two very different markets in the region with relatively affluent buyers all focused on a small area with limitted inventory, let alone inventory for sale. If you’re busting your butt 60hrs a week down in SLU there needs to be a giant price discrepency before you want to give up the few remaining hours of your week driving home to Kent or Kenmore.

    And so it is that there are relatively cheap homes that don’t move because they people that would live there haven’t seen wage growth in decades and 15 miles (but an hour in traffic) away there are vastly more expensive homes that are moving in bidding wars.

  20. 20
    whatsmyname says:

    Big M Mike,
    You make an excellent case as to why a limited geographical portion of the market has a very urgent premium appeal to a particular portion of the population which can pay over-median prices. I agree entirely

    What this does not explain is why anyone would then expect to find non-premium (read median) pricing in that highly premium and limited segment of housing stock, or how the dearth of median priced housing in that portion of the housing stock would indicate a freeze-up for the market as a whole.

    Once that is clear to me, I will be happy to collaborate with mike on a paper as why the lack of success in my 30 year search for a simple median priced home with ballroom and Hunts Point waterfront means that the market is about to stop. (To make the point more forcefully, I would even pay 20% over median.)

    small m mike,
    Despite lack of inventory where everyone you would want to know wants to live, the continued growth in the number of sales likely means that some people are still willing to live among the great unwashed. Otherwise, I like your thinking. Can you help me convince a local auto dealer to do a median price sale with 50 Fords and 50 Lamborghinis. I know I can help him sell some cars fast. Now, that’s what I call a match between buyers and sellers.

    This is my fifth post so you get the last word.

  21. 21
    corndogs says:

    RE: mike @ 18 – There is historically low inventory in Kent and Kenmore with escalating prices. Where are these areas with large inventory you guys are talking about?

  22. 22
    corndogs says:

    RE: whatsmyname @ 16RE: Ira Sacharoff @ 13

    Ira’s been baffled by the concept of supply and demand all along. The problem is that understanding the space/time continuum requires a 4D processor. Ira, like most realtors is rolling with a 2D processor. That’s why they work in the goldmine but never get the gold. Since a person can not understand that which they can not experience this exercise is futile…

    I agree with whatsmyname except I’d say scenario B never exists.

  23. 23
    Erik says:

    RE: Corndogs @ 22
    Hilarious. I have always thought the same thing. Realtors work in a field of money, but many are unable to capture that money.

  24. 24
    mike says:

    RE: Corndogs @ 21 – If you look at King County as a whole, the Renton/Kent/Auburn areas have the most new SFH construction by a wide margin, with the Issaquah/North Bend area in a distant second. All of North Seattle has around 30 active or pending new SFH sales, whereas the SKC area has 600+. That’s 20 times the amount if inventory being added.

  25. 25
    David Losh says:

    RE: Chipmunk @ 15

    I think it’s funny that press releases from Real Estate sales people get republished as a point of discussion.

    Of course Real Estate sales people want every one to buy, or sell right now in a fit of urgency, and will use any excuse to make the buyer, or seller make some move that will generate a commission.

    I honestly think most of the people still hawking the commission sales aspect of Real Estate are the same people who need to recoup losses they had from the 2007, to 2010 selling seasons. It’s like gamblers who can’t push away from the table. They took losses, and are now trying desperately to recover.

    Sell, if you have the financial ability to capitalize on this hysteria, but wait to buy. There is no economic reasoning for buying a piece of dirt today.

  26. 26
    Erik says:

    RE: David Losh @ 25
    Absolutely. I think the hysteria will last another year though. When the fed starts raising the interest rates, i think it may lead to more hysteria and ultimately cheaper prices.

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