May Reporting Roundup: Inventory Increase 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:

Competition among home buyers "still fierce;" rising interest rates adding to fury

With inventory apparently improving, some would-be buyers are staying on the sidelines. The increased inventory is “cooling some buyers,” reported George Moorhead, managing broker at Bentley Properties in Mill Creek and a member of the MLS board of directors. “We also have buyers who are stepping back as they are frustrated with current inventory and multiple offers going well above asking price,” he added.

Okay wait. That makes no sense at all. They’re trying to claim that an increase in inventory is causing buyers to get out of the market? When the big story for the last year-plus has been buyer frustration at record low inventory? That does not pass the sniff test. I can see higher interest rates being a reason that sales might soften, but increase inventory? Nope.

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

Marissa Evans, Seattle Times: More buyers than sellers push King County home prices up

Lack of homes for sale has been the major reason behind rising home prices in the Puget Sound area.

Glenn Crellin, of the Runstad Center for Real Estate Studies at the University of Washington, said the shortage is happening for a combination of reasons. Some homeowners are waiting for prices to rise even more, while others owe more than what they could get for their home. This prevents owners from being able to sell unless they can make up the difference out-of-pocket.

Despite the shortage, Matthew Gardner, principal for Gardner Economics, said this is the kind of report he’s been looking forward to seeing. The number of listings increased 21 percent for Seattle in the past month.

“We are seeing a late increase in spring listings,” Gardner said. “It’s going to be a busy summer now.”

Whoa. Accurate insight from Matthew Gardner? Okay then.

Aubrey Cohen, Seattle P-I: Surging home prices fuel fears of a new bubble

Shoppers fighting over the few homes listed for sale in the Seattle area pushed up prices again in May, prompting fears of a fresh housing bubble, according to a new report.

“We certainly can’t sustain 15 percent annual price increases,” said Glenn Crellin, associate director of the Runstad Center for Real Estate Studies at the University of Washington.

“Traditionally, during the initial phase of a rate uptick we see a flurry of activity,” Crellin said.

After that initial flurry, Crellin said, rising rates “will tend to slow things down a little bit.” They’ll also moderate median price increases, as the same monthly payment will buy less, he added.

Here’s hoping.

I held this post until this late because I was hoping a story would appear on the Everett Herald, but so far there’s nothing. If they post one tomorrow I might update this space.


They did finally post a story: Kurt Batdorf, Everett Herald: Fewer county homes listed, so prices rise

Median sale prices on homes and condominiums in Snohomish County jumped by $40,000 in May from a year ago, due in no small part to the continuing decline in active listings.

“There are still home owners who want or need a higher equity position in order to sell their home, so they may continue to wait and watch,” said Dan Gunderson, broker with Windermere Everett.

“We currently have significantly less inventory of bank-owned and short-sale properties,” Gunderson said. “New construction is currently about 15 percent of the inventory, and we would like to see it at 20 percent. Supply is certainly a driver of the increased property values. Affordability, low interest rates and the job market in this region are contributing to the increased value as well.”

[End of Update]

Kathleen Cooper, Tacoma News Tribune: Seller’s market pushes home prices higher in Pierce, Thurston

Prices are rising as more buyers enter the market and fewer homes are listed for sale. Inventories in both Pierce and Thurston counties dropped in May, 20 percent and 16 percent respectively. Pierce County has just under two months’ supply of homes for sale, according to the NWMLS – a number so low only King and Snohomish counties beat it, with about one month’s supply there.

Reasons for owners not putting their house on the market vary but probably include people still suffering the hangover of the market collapse, now five years past.

Well, it’s been five (almost six) years since the local housing market began to collapse, but the collapse only really ended a little over a year ago.

Unfortunately literally the exact same story ran in The Olympian, so instead of the usual five reports this month, we only really got three.

(Marissa Evans, Seattle Times, 06.05.2013)
(Aubrey Cohen, Seattle P-I, 06.05.2013)
(Kurt Batdorf, Everett Herald, 06.07.2013)
(Kathleen Cooper, Tacoma News Tribune, 06.06.2013)
(Kathleen Cooper, The Olympian, 06.06.2013)

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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
    wreckingbull says:

    Once again, Crellin has displayed that his transition from NAR pom-pom-boy to informed analyst is real. He did forget one class of people who are not selling though: those on the hamster wheel. Maybe Rowdy Roddy gave him a pair of the magic sunglasses.

  2. 2
    doug says:

    well its been 5 or 6 years since the real estate market began to collapse and we are about to start collapsing again. once the truth comes out that the banks are again holding massive amounts of foreclosed houses that they cannot sell and bernanke cuts off the 85 billion a month welfare the selling in mass will commence. not to mention the crash of the dow and the break down of the triple top on all charts including case shiller real estate.

    the inventory shortage is an all out blatant lie and none of us really know how many foreclosures the banks are holding all I know for sure in my neighborhood there are 3 empty houses that have been vacant for 3 to 4 years

    the charts will correct to 1990 prices on everything dow gold real estate,,, we are about to enter a death spiral deflationary economy (germany 1920s)

  3. 3
    Erik says:

    RE: doug @ 2
    You are being melodramatic. Good adjectives, but that is not reality. Maybe you usually write novels? Maybe you are a very emotional person? “Death Spiral” seems like extra drama that isn’t necessary when you can easily view the shadow inventory for yourself.

    Here is an awesome post that tim had in 2011. I figured out how to repeat his process and I do it occasionally to see what may be coming up.

    See doug, there is no reason to compare us to Germany in the 1920’s or describe are economy as a “Death Spiral.” All you gotta do is go to redfin and select the right options and view for yourself. :)

  4. 4
    Erik says:

    RE: Erik @ 3
    If there is any secret on how to make this work is to make sure that no range is set. Make sure that price ranges from “no min” to “no max.”

    If I worked at Redfin, i’d make sure the price range was ignored automatically when searching foreclosures as opposed not showing any foreclosed homes at all. When nothing comes up, it makes the user think that it isn’t possible to search foreclosed homes. I don’t work for redfin and I don’t know how to change the code to make that happen. Maybe someone knows someone at Redfin that could pass the word along?

  5. 5
    whatsmyname says:

    “We certainly can’t sustain 15 percent annual price increases,” said Glenn Crellin, associate director of the Runstad Center for Real Estate Studies at the University of Washington.

    Oooh, then we certainly can’t sustain 16.7% MONTHLY inventory increases. What kind of idiots use sustainability arguments about movements within cyclical patterns?

    Doug @2: 1920’s Germany was hyperinflation; the opposite of deflation. Was it even three weeks ago you were exclaiming that there was NO reason to believe additional inventory would come onto the market? You are the perfect shoe shine boy.

  6. 6
    mike says:

    RE: doug @ 2 – How much supply do 3 or 4 long term vacant houses represent? A week’s worth? A full month? Are the houses even inhabitable at this point? You have to figure that a large # of the homes that have sat vacant for years are not really viable inventory. Most will need substantial work to get them ready for sale.

    There are 2 main problems I see with the “shadow inventory will crash housing prices” argument at this phase in the game. First, most of the current shadow inventory is occupied. If an when it becomes active inventory, there will be no net increase in available housing units since the current occupants have to go somewhere. Second, even in the case of the vacant shadow inventory it would all need to hit the market at once to have a chance of actually depressing prices. There isn’t any good evidence that there exists large #’s of vacant, saleable, inhabitable homes being held back by banks. I’d be convinced if there was a visible army of workers maintaining all these properties, but I don’t see that happening on a large scale.

  7. 7
    David Losh says:

    The CEO of Lennar Homes said in an interview yesterday that we needed a million homes constructed per year to keep up with the growing population, but we only built 500,000 per year. For him he sees a shortage of housing.

    He mentioned apartment construction, and I know that is separate from building homes. I think he is a McMansion kind of builder because he also mentioned that we don’t have enough land to develop.

    In terms of shadow inventory, I don’t see that as a factor either. Mike, I think is correct that the majority of these shadow homes are already occupied by hamster wheel owners who are waiting for the day the bank comes in to take the property. I think REOs, and auctions have been going pretty well also.

    What I do see is that you, as a home buyer, would have to be very selective in what you buy in order for it to be an investment for you. I still think there are properties worth owning, but there may be a difference between investment, and a life style choice.

    We may well be at the end of an era for your home being a safe investment in the future. Interest rates, and investment strategies have changed the way the game was played. Case Shiller, along with all the online Real Estate tools have also changed the way people look at properties. It seems to me asset prices, like housing, have become as volatile as gold.

  8. 8
    ChrisM says:

    RE: David Losh @ 7 – CEO of Lennar Homes states “we don’t have enough land to develop.”

    Someone take that man on a tour of Eastern Washington & Oregon!

    Erik – FYI, the redfin foreclosure map is also (understandably) missing the homes where the banks drag their feet taking the house into foreclosure. I’m watching an oddball mobile home trailer park property that has languished in foreclosure process for almost two years. As I’ve said before, we’ll know housing is returning to normal when banks earnestly commence foreclosure at 90-120 days.

  9. 9
    Erik says:

    RE: ChrisM @ 8
    Good to know ChrisM. When an owner quits paying on their home, when does the home show as a foreclosure on Redfin? Also, do foreclosures on Redfin include Trustee Sales?

  10. 10

    “we’ll know housing is returning to normal when banks earnestly commence foreclosure at 90-120 days.”

    I completely agree with ^Chris M although I think the foreclosure timeline on a deed of trust was extended past 120 days now under the Foreclosure Fairness Act.

    Q: Does anybody have access to a database that might show us how many homeowners are deciding to sue their lender to stop foreclosure and trying to take the foreclosure process through the judicial system v. the non-judicial trustee sale?

    Judicial foreclosures could also be used by banks/lenders to foreclose if there’s a title/MERS problem and they want to clear title.

  11. 11
    mike says:

    RE: Erik @ 9 – It doesn’t. Not until the lack of payment triggers a notice of trustee sale filing. Plenty of homes have delinquent mortgages with no “official” record outside of the loan servicer’s files.

    Trustee sales are just the last step in the foreclosure process and they’re generally scheduled when the notice is filed, so by default they’re included.

  12. 12
    corndogs says:

    The Tim says….. “I can see higher interest rates being a reason that sales might soften, but increase inventory? Nope.”

    Really? If I saw inventory increasing beyond seasonal variation I’d start to become cautious in regards to buying. It would be an indication that prices may level off or drop in the near future. Do you not understand supply and demand? or are you just assuming no one else does?

  13. 13
    sam says:

    Coming close to first half of the month, the King county inventory is going down (atleast by a 100)

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