NWMLS: Inventory, Sales, & Prices All Gain in May

May market stats were published by the NWMLS this afternoon. Here’s a snippet from their press release: Competition among home buyers "still fierce;" rising interest rates adding to fury.

Commenting on the latest report, brokers said the fast pace is frustrating some buyers — and surprising sellers with unrealistic expectations. One broker cautioned against an overheated market. “We do not want a market that escalates too fast and topples again,” commented Frank Wilson, Kitsap district manager at John L. Scott Real Estate and branch managing broker for its Poulsbo/Kingston office.

Yeah, most real estate agents just want that first part. If the bit about toppling could be avoided that would be great.

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):

May 2013 Number MOM YOY Buyers Sellers
Active Listings 3,759 +16.7% -25.4%
Closed Sales 2,516 +20.0% +22.4%
SAAS (?) 1.37 -4.4% -1.7%
Pending Sales 3,236 +6.0% +8.6%
Months of Supply 1.16 +10.1% -31.3%
Median Price* $417,500 +4.4% +15.3%

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

As forecasted Monday in our stats preview, inventory gained some more ground from April to May. May’s 16.7% month-over-month increase in listings is actually the largest on record as far back as my data goes (January 2000). Last month I said that “we can’t really jump to any conclusions from a single month of data,” but now that we’ve got two months showing the same trend, I’m more optimistic that inventory is on the rebound.

Here’s your closed sales yearly comparison chart:

King County SFH Closed Sales

Closed sales hit their highest level since June 2007, making it all the more impressive that inventory was able to stage such a large increase.

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

King County SFH Inventory

There’s still a long ways to go before we can call inventory “normal,” but at least we’re finally heading in the right direction.

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

Sharp increase in both the listings and sales curves over the last couple of months.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

Another spike up as the median home price gained $17,500 in a single month.

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

King County SFH Prices

May 2013: $417,500
April 2006: $419,500

Here are today’s articles from the Times and P-I:
Seattle Times: More buyers than sellers push King County home prices up
Seattle P-I: Surging home prices fuel fears of a new bubble

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.

28 comments:

  1. 1
    The Tim says:

    Totally off-topic comments moved to the Weekly Open Thread, per the comment policy.

  2. 2

    May’s Federal Deficit Loose Monetary Policies Hard at Work Lowering Interest rates.

  3. 3
    David Losh says:

    Even though inventory is low it looks like prices, and sales are up in the pre bubble years, and climbing.

  4. 4
    Erik says:

    RE: David Losh @ 3
    I sure hope they keep climbing until next summer so I can sell for a large profit.

  5. 5
    magnolia44 says:

    Are we there yet…. are we there yet.

    This is out of control and will not last. Sadly we wont sell into the strength. Too much blood sweat and tears in this house… and oh yeah 2 kids born. Time will tell…cheers!!

  6. 6
    Kristian says:

    We just cancelled the house hunting, just as I recall doing in 2005. Looking forward to 6% interest rates and some reasonable prices.

  7. 7
    Kyle says:

    So from 1993 to now we have about 5% CAGR. Seems about right to me (don’t ask me why though). As the fed gradually raises rates over the next couple of years, affordability comes more in line with historical levels (like Tim’s charts showed the other day). My guess is prices continue to increase at a slower pace and stabilize in a year or two.

  8. 8
    Chuck C says:

    By Kristian @ 6:

    We just cancelled the house hunting, just as I recall doing in 2005. Looking forward to 6% interest rates and some reasonable prices.

    Yes! I still keep tabs on the market, but for now i agree – keep the powder dry, make better investments elsewhere, and wait for interest rates to skyrocket (however long that may be). How can today’s buyers be so stupid? It’s the end game that counts….

  9. 9

    RE: Chuck C @ 8

    LOL Chuck

    The Ones With Recent Skin in the Game Downthumb Good Financial Planning Bloggers Who Want to Keep Above Water from May’s Over Priced Anomalous Data

    The ones of us free and easy don’t bother with the “Blogger Downthumb Button” much.

  10. 10
    David B. says:

    Actually, what’s happening is a lot like what I was hoping would happen: modest (so far) price increases coupled with an increase in inventory, as higher prices motivate fence-sitters to list their properties. I’d rather pay a little more and have a better selection from which to choose.

  11. 11
    David Losh says:

    RE: Erik @ 4

    As I understand it you own a condo in Kirkland. I don’t see the upside to that no matter what Zillow might tell you.

    I expect equilibrium in the market place. Places like Kirkland that got bid up before the first bubble, then percolated up in this second bubble will fall back to some normal, that I expect to be lower than it is today.

    There are places that I think will shake out to having some solid gains in prices.

    To use Tim’s house as an example, it has had solid increases in comparable property prices in the past couple of years. Maybe you don’t like the area, but the numbers are the numbers.

    If you are looking for gains in the Real Estate market you would have needed to be more selective than what your neighbors education level is.

  12. 12
    Erik says:

    RE: David Losh @ 11
    Yeah, I can see that my value will increase less over the long term because the area has less potential. Prices are already kinda high. I want my place in kirkland to be a means to begin investing like a professional. Corndogs made the point that flipping houses is a second job and investing in positive cash flow rentals is a way to create wealth. I want to sell my place in 8 months for hopefully $100k profit. After that I was thinking of buying a multiplex in Renton Highlands and renting in a nice area of Seattle if I can afford it. I’d even be open to buying a multiplex in Everett because I see a lot of potential there.
    On zillow, my place is only worth 150k and i owe 86k. Zillow is taking using comps in the area that have an 80k special assessment. The condos down the road are selling super cheap because the condos with the special assessment are selling cheap. By comparing similar sales, I suspect I can get about 200k.
    If I have $100k, how much do you think I can buy? I probably don’t wanna put it all down on something because I’d like more money as issues may arise (vacancies, repairs).

  13. 13
    Erik says:

    RE: David Losh @ 11
    What i’m saying is that I agree if this was a longterm investment, but that is not what this is for me.

    Kristian – I saw Robert Shiller commenting on the effects of increased interest rates. He was saying that historically when interest rates are down low like they are now and they increase to more normal levels, it doesn’t effect prices. I may have misunderstood, so I will revisit it, but I wouldn’t bank on prices decreasing when interest rates go back to normal levels.

  14. 14

    By Erik @ 13:

    RE: David Losh @ 11
    What i’m saying is that I agree if this was a longterm investment, but that is not what this is for me.

    Kristian – I saw Robert Shiller commenting on the effects of increased interest rates. He was saying that historically when interest rates are down low like they are now and they increase to more normal levels, it doesn’t effect prices. I may have misunderstood, so I will revisit it, but I wouldn’t bank on prices decreasing when interest rates go back to normal levels.

    RE: Erik @ 13
    I don’t see how interest rates can not effect home prices. Most people borrow money to buy houses. Let’s say you make 100k per year, and based on today’s interest rates you qualify for a mortgage to buy a 500k house. What if interest rates rise by 2%? There are going to be a whole lot less people out there qualified financially to buy that home.
    Also, prices are rising now. Sure, the low inventory has a lot to do with it, but don’t you think the low interest rates are also adding to those price rises?
    I don’t know that one can say that it all works out perfectly evenly, that prices will fall exactly proportionately to the rise in interest rates. But I can’t see that it would have no effect. if you have a link to Shiller’s statement, I’d love to see it.

  15. 15
    Tim McB says:

    RE: Ira Sacharoff @ 14

    Here’s the closest thing I can find on Shiller stating interest rates don’t matter:

    http://www.theatlantic.com/business/archive/2011/07/how-rising-interest-rates-affect-home-prices/241504/

    Yale economist and S&P/Case-Shiller Home Price Index godfather Robert Shiller agrees. “There is not a tight fit at all between the two: high mortgage rates do not translate automatically into low home prices,” he says.

    But later he says:

    Yet Shiller also says that, in theory, rates could affect prices. He points, in particular, to the period around 1982. At that time, he notes that the Supreme Court ruled that mortgages could not be assumed by a new buyer. So with very high prevailing rates, many homeowners who had already locked in low interest rates could not afford to move. But that, in conjunction with the recession, still only pushed home prices down a little. This is the most salient story about interest rates and home prices in the last century, he says.

    The chart provided in the article gives some insight to his comments. As always he seems to hedge his bets on both sides of the fence. For some commentators, that’s just to cover their behinds so that they can say they’re right regardless of the outcome later. But in his case, he is the type that sees the big complex hot mess and gives explanations for different senarios. A sort of humble analysis.

  16. 16
    Erik says:

    RE: Tim McB @ 15
    Yeah, I couldn’t find what I thought I saw. Sometimes I just type in Robert Shiller on youtube and watch random videos. I quickly looked, but i was unable to find the video I thought I saw again.
    It seems like most people do NOT think rising interest rates will drive down home prices because that hasn’t historically been the case. To wait for that to happen would be a mistake in my opinion. I wouldn’t buy right now based on limited selection. As the economy recovers, interest rates should increase balancing out home prices. That seems like a pretty good idea if you were trying to initiate economic recovery.
    Waiting for interest rates to increase to get a lower price is assuming that buyers buy based on affordability. It’s pretty obvious that is not the case in America.

  17. 17
    Peter Witting says:

    RE: softwarengineer @ 9

    The Ones With Recent Skin in the Game Downthumb Good Financial Planning Bloggers Who Want to Keep Above Water from May’s Over Priced Anomalous Data

    Dear SWE – I’ve always wanted to know why do you capitalize so many of your words! Are you on some sort of mobile device that capitalizes every word for you? Or some obscure software code syntax that carries over by habit?

    Genuinely curious…
    Peter

  18. 18

    RE: Erik @ 16
    Great comments, Erik. I agree completely that simply assuming that prices are going to fall because interest rates rise is a mistake.
    But it also seems that you’re contradicting yourself a little when you say “Most people do not think interest rates will drive down home prices…”.
    Most people are wrong most of the time. If you listened to most people, you’d have bought a house in 2006, when most people were saying that prices were never going to drop again.
    You’re an intelligent guy. Why would you be affected by what most people think?

  19. 19
    Erik says:

    RE: Ira Sacharoff @ 18
    I used the wrong terminology. What I meant was “Most experts that I respect do not think interest rates will drive down home prices…”

    I was looking at Forbes and they said something similar. I wasn’t referring to the mass of yahoos that buy based on how their feelings.

  20. 20

    Why All The Down Thumbs for SWE????

    The Zillow CEO agrees with SWE totally:

    http://www.cnbc.com/id/100795579

    Hey Ira, good blog BTW; you have an open mind like Zillow’s CEO.

  21. 21

    RE: softwarengineer @ 20

    44% of Homeowners in America’s Homeowners Currently Underwater per Zillow’s CEO

    That means, with Seattle area’s high prices we’re more like 60-70%?

    You know its gotta be much worse where prices are higher….

  22. 22
    JWS says:

    In my opinion the speed of the interest rate increase will determine how much of an impact it has on home prices. If rates slowly creep up over the next few years to the 5-6% range (for a 30 year fixed) then I don’t think it will cause home prices to significantly decline. A steady rate increase will slow down price appreciation (or cause stagnant prices), but I doubt it will cause a widespread price decline.

    A drastic rise however may be a different story.

  23. 23
    Frau von E says:

    I wish I knew what to do now. We bought at the peak in 2007, sold at a loss in 2009 and have been renting ever since. In January, we decided to look again and have watched prices rise and have seen just about everything we’ve liked sold within days. We’re very picky, so we’ve gone at this slowly and have not wanted to make an offer unless something was as close to perfect as possible. Plus, there’s no room in the budget for big renovations or anything like that. We’re looking in a large geographic area, covering our old favorites on the Eastside, as well as new-to-us areas in the South End in search of lower prices and a single family home. (Our low budget puts us at townhouses only on the Eastside.) I’m ready to give up and just rent again. My husband hasn’t yet given up on the dream of owning and not having to deal with landlords who prohibit pets etc. As interest rates rise, the decision may be made for us as our ability to afford buying erodes further. I’m a longtime reader of this blog—I’d say since 2008 or so, obviously I started too late to save us from making a mistake the first time!! What would you do?

  24. 24
    mike says:

    By softwarengineer @ 21:

    RE: softwarengineer @ 20

    44% of Homeowners in America’s Homeowners Currently Underwater per Zillow’s CEO

    That means, with Seattle area’s high prices we’re more like 60-70%?

    You know its gotta be much worse where prices are higher….

    You know, it’s amazing how much data you’ve seen that directly contradicts that premise, but you don’t seem to be the type to let data get in the way of your beliefs. Nor do you seem to differentiate between facts and predictions for that matter.

    The 44% rate is among homeowners with a mortgage, not all homeowners. More expensive areas generally are more expensive in part because they didn’t decline as far in the first place. That you somehow equate higher house prices with higher % of negative equity shows a huge disconnect in your thinking vs actual market observations. On the other hand, maybe it’s just a sign of lazieness on your part when it comes to taking an objective look at the available data.

    Bottom line, you’ve either distorted or ignored a good portion of the available market data to fit your view, and you make it clear whenever you try and reference these statistics.

  25. 25
    David Losh says:

    Interest rates are different from Mortgage Interest Rates.

    You’re all looking at Real Estate as a stand alone “investment,” when it is only a piece of a puzzle in your financial plan.

    So, saving up a down payment on a property with a 1% return, or less, is less attractive than a savings rate of maybe 3%. At 3% you may think longer about plunking down your hard earned money on a property. If returns on other investments become more attractive Real Estate will get less attention.

    We are on a Real Estate blog, a bubble blog, so that is the focus here, but in the bigger scheme of things Real Estate isn’t what it used to be. If you are looking at the last run up in pricing as some sort of investment strategy, you’d be wrong.

    Real Estate rose in pricing for a wide variety of reasons, one of which is the low returns on savings rates, or other less volatile investment vehicles. Big dollars went into apartment construction, REITs, rental income, and of course we have had that appreciation in property prices, but that appreciation hasn’t been based on any tangible economic data.

    Wages are suppressed, unemployment is still up, debt is a growing concern, from my perspective, because people continue to spend without having real wealth until they cash in.

    People in the stock market may well cash in. Property owners may well cash in.

    So I think a change in strategy has been in order since the Fed began blatantly attempting to manipulate the financial markets.

    I ask all the time what people think the next big investment will be; energy? health care? metals, stocks, bonds, or something I haven’t thought of, because in my opinion Real Estate has changed forever.

  26. 26
    Macro Investor says:

    By Kristian @ 6:

    We just cancelled the house hunting, just as I recall doing in 2005. Looking forward to 6% interest rates and some reasonable prices.

    Low interest rates ARE A TRAP. The best time to buy real estate is when rates are historically high, not low. Then you have a very good chance of making money as affordability returns. This is what I call a good investment. Flipping, or anything else you want to do, will be much easier because the affordability wind is at your back.

    Buying when rates are low may feel good at first. As rates return to normal, buyers will sit on the fence and we will have the same dead market that we had for the last few years. Sellers won’t want to lower their price. Few buyers will qualify for loans. Home owners will be stuck. Fine if you are young and can wait a lifetime, but not so good if you need to move for some reason, or just get bored and need an change.

    This is 100% guaranteed to happen. Only question is when.

  27. 27
    Kyle says:

    RE: David Losh @ 25

    Invest in a 3D printer and you’ll be printing money in no time

  28. 28
    whatsmyname says:

    By Kristian @ 6:

    We just cancelled the house hunting, just as I recall doing in 2005. Looking forward to 6% interest rates and some reasonable prices.

    Be careful what you wish for. Also, consider this: According to these charts, If you had pulled the trigger in 2005, you would have had lower than current prices, better selection, opportunity to refinance at lower than current rates, and 8 years amortization under your belt.

    But who knows? Maybe you can make it up buying the bottom in 2021.

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