Non-Distressed Median Price Surged Again in June

As promised earlier this week, it’s time to check up on median home sale prices broken down by distress status: Non-distressed, bank-owned, and short sales.

King County Single Family Median Price - Non-Distressed, Bank Owned, & Short Sales

As of June, the non-distressed median price for King County single family home sales sits at $460,000, up 7.0% from a year earlier and up 4.3% from May. Last year the month-over-month increase was 2.4% May to June.

The bank-owned median sale price was at $229,000 in June, up 10.1% from a year earlier and down slightly from May. The short sale median price came in at $250,000 in June, up 8.7% from 2012 and up 3.1% from May.

Here’s a look at the price per square foot broken down by distress status:

King County Single Family Median Price - Non-Distressed, Bank Owned, & Short Sales

The median price per square foot of non-distressed homes was up more than the raw median again, gaining 8.3% from 2012. The bank-owned median price per square foot rose 26.4%, while the short sale median price per square foot was up just 3.0%.

Next week we’ll take a look at how sales were distributed around the county, since that has more of an effect on the change in the overall median than distressed sales, now that REO and short sales only account for 14% of the market.

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.


  1. 1
    Nick says:

    I bought $600k of real estate a year ago at 3.5%. It sounds like I recouped my transaction costs in the first year! And my payments are substantially lower than equivalent rent.

    As rates rise those of us with low fixed-rate mortgages will be increasingly hesitant to sell, reducing inventory for years to come.

    It’s hard to make the bear case for real estate. Rising rates may see more people settling for townhomes or condos, but the conditions that led to the housing crisis aren’t likely to return for a generation or two. At worst we *might* see some real (inflation-adjusted) prices contract at some point, but that doesn’t much matter since houses are financed using nominal dollars, not real dollars.

  2. 2
    JWS says:

    RE: Nick @ 1 – “As rates rise those of us with low fixed-rate mortgages will be increasingly hesitant to sell, reducing inventory for years to come.”

    I completely agree on being hesitant to sell if/when mortgage rates get back up to a historically “normal” level of 6-7%. There is no way I’ll want to move, take out a new loan, and pay an extra $500/month or more.

    $400k 30 year fixed rate mortgage @ 3.5% = $1796/month
    $400k 30 year fixed rate mortgage @ 6.5% = $2528/month

    It reminds me of people in California who have stayed in the same house for decades because Proposition 13 has them locked into ridiculously low property taxes.

  3. 3
    mike says:

    Anyone else been watching their Zestimate shoot through the roof this summer? Zillow is still predicting an 8.2% increase over the next year. Seems optimistic given the slowdown we’ve seen happening thus far. I’ll take it, but if it happens the ‘hood will be firmly in the “yuppie” price range at that point. Everything that has sold for under $400K is getting gutted or demolished this summer.

  4. 4
    Nick says:

    RE: mike @ 3 – Trulia has far more accurate estimates than Zillow. You should ignore ‘zestimates’ because they can be off by hundreds of thousands in Seattle.

    In my neighborhood, where tear-downs are common right now, zestimates apply tear-down prices to newly-built property. Trulia doesn’t make this mistake.

  5. 5
    David Losh says:

    Of course you will sell, everyone will sell, everyone will move on, because of death, divorce, or a change in circumstance.

    Your loan is totally transitory, it makes no difference in the bigger scheme of things of what might me more effective in eliminating the debt, because eliminating the debt is the goal.

    I haven’t made a big deal out of any of the things posted here about how smart some one is to buy property. If you are in the business of buying property God Bless you, because it’s a business, like any other.

    In 2008 I had the experience of working for a nice guy who worked his entire career at Bartell’s. He has his 5 rental houses for retirement, in good location, he bought well. They are close to the University, but not too close.

    We bid on two of the houses to do the work to prepare them for sale. Well, they were rentals for 30 years for goodness sakes, and our cost for repair was $50K at least for both, and we were the most reasonable bid he got.

    He’s old, and can’t manage any more. He has been through three property management companies, but that was penciling either, because the properties still need work.

    So he took on property of the rental market, did the work, or hired a guy to do the work, and what he did added no value. Paint doesn’t add value after 30 years of ownership.

    Bottom line is that property has income, and out flow. Saving money on rent by having $600K in debt would have to really, really pencil well.

    The bear case for Real Estate is there are other investment opportunities that are easier to turn.

  6. 6
    Macro Investor says:

    Tim — “surged again”???

    It looks like the non-distressed median fluctuated between $400-425k over the length of the chart. Now — for the first time — it broke out to $460k. Not much of a difference.

    Let’s see how long it lasts before using such hyperbole.

  7. 7
    Nick says:

    RE: David Losh @ 5 – Pencil well? When you’re in a higher tax bracket, the mortgage interest tax deduction makes the math very easy.

    Not sure your story had a point, by the way. I’m sure your landlord acquaintance made phat stacks over that 30-year period.

  8. 8
    mike says:

    RE: Nick @ 4 – I don’t put too much weight into individual Zestimates, just the trends shown. For my neighborhood, Trulia seems to be significantly overestimating the fixers/tear downs.

  9. 9
    David Losh says:

    RE: Nick @ 7

    He did make fat stacks, but he has to pay for the privilege.

    His renter paid the mortgage plus low rents so they could be retained longer. The pay out to the bank was twice the asking price, and he still ,paid taxes. By his account his properties lost about $500K in value between 2006, and 2008, but it was all funny money anyway. He’s OK, and still has the rentals though he could have cashed out and invested in his other managed accounts to come out much better.

    He’s a smart guy, and I’m sure he will get the bug to sell again this year.

    You’ll also notice that the mortgage interest deduction is up for discussion in Congress. I also rely heavily on that deduction, but your low interest rates makes the advantage a little lighter.

    Now if you’re married like me there are additional expenses, like the patio we are having installed today. Or the fence we need next week, or fixing the powder room down stairs before we put in a full bath. Oh yeah, we need a paint job according to corndogs.

    The house needs to pencil, and then sell it for a profit, or loss, as you may choose.

    Most home owners sell at a loss. They sell in an inflated dollar environment only to pay out that much for the next place, plus paying more for the over all cost of goods.

    I’d go on, but the bears, if you read the comments, make some pretty compelling arguments.

  10. 10
    Chris says:

    I just re-fi’ed out of an FHA loan (3-7/8%) which was assumable. It might be worth holding on to those if interest rates were to go out of control, however, for us the monthly FHA fee was just too high (we were essentially paying a “tax” for the privilege to hold an assumable loan that I felt like wasn’t justified).

  11. 11
    Chris says:

    RE: JWS @ 2

    You’re actually paying $1,000 more:

    $400k 30 year fixed rate mortgage @ 3.5% = $1796/month: Interest: $1,167
    $400k 30 year fixed rate mortgage @ 6.5% = $2528/month: Interest: $2,167

    The interest is for payment #1 of 360, so obviously they eventually meet up, but early on not only are you paying $732 total out-of-pocket per month but you lose another $268 that doesn’t go to principal (principal really being money transferred from one’s own balance sheet account to another)

  12. 12
    Mike says:

    RE: Chris @ 10 – when we bought I calculated the difference between FHA 3.5% down and conventional 20% down. With MIP and higher principal balance, conventional 20% down gave an a tax free annual yield of roughly 15% on the additional down payment funds. Not a risk free yield, but probably worth more than having an assumable mortgage.

  13. 13

    RE: David Losh @ 9

    Yes David

    And God forbid we get a divorce, even though in all probability its a likely outcome, like moving and death.

    Many middle aged singles I know [BTW, single households are the vast majority in Seattle], get in relationships [not married] and move in their girlfiend’s house, but keep their house anyway, just in case.

  14. 14
    Topdog says:

    RE: softwarengineer @ 13
    Excellent point software engineer. Seattle women are known to be great housekeepers. They kick you out, keep your house, instead of just leaving.

  15. 15
    ChrisM says:

    RE: Chris @ 10 – ” just re-fi’ed out of an FHA loan (3-7/8%) which was assumable”

    I was planning on going FHA the next time around, but then I heard the rules have changed for how the assumption would be approved – basically, the new buyers would have to undergo a more stringent underwriting approval process before the assumption would be permitted??? I don’t know details, but will have to find out more. Basically, it sounded like in reality, in a high-inflation environment the FHA loans would *not* in fact be assumable due to dirty tricks.

    But this could be FUD – does anyone know for sure on how FHA loan assumption would work when rates are at 12% and you’ve got a 3.5% loan you’re trying to hand off to someone?

  16. 16
    Matthew says:

    It’s hard to make the Bear case for real estate? How about this:

    The Fed Reserve is pumping 40+ billion dollar per month into MBS purchases to backstop the entire housing market.

    There is no real increase in wages in this country. Unlike previous housing market recoveries, this recovery has not been predicated on higher inflation based on an increase in higher wages. Instead, we have an artificial recovery based on artificially cheap money/mortgages.

    Interest rates increased by a full percentage point or more on the mere SUGGESTION that the Fed Reserve will stop backstopping the market. These artificially low rates have created artificially high housing prices. Purchasing power and affordability have already tanked in the last month.

    If rates surged one point based on a possible tapering, where will they be once the Fed actually does stop buying MBS? 5%? 6%? With no increase in incomes or wages, why would anyone assume we should see an increase in housing prices in the immediate future?

    Like I’ve said before, I will believe in a real estate recovery/bull housing argument, once I see no future government intervention in the market. If the market was healthy, the Fed wouldn’t be the largest purchaser of MBS right now.

    The Fed is the market. That fact alone should scare you.

  17. 17
    Matthew says:

    Mortgage refi’s are down 50%, new loan applications down 15% already since the spike in rates. I talked to a lender the other day and she told me it was the most difficult time she has ever seen in her 20 year in the biz.

    I’d sit back and let this thing play out before I start claiming victory if I were you, housing bulls.

  18. 18
    JWS says:

    RE: Matthew @ 17

    Your points about Fed intervention, wages and rates are all valid. In my eyes the price increases we’ve seen in housing over the last year are not sustainable. However, I don’t think we’ll see a big decline in prices in the near future (even when the Fed stops the bond purchases). Flat to small decline, sure I don’t think that’s out of the question.

    Do you expect housing prices in King County to drastically decline? Will we reach a lower level than the previous lows in 2011/2012?

    In my opinion those who bought at the lows a year or two ago with super low rates will be very happy with their decision for years to come.

  19. 19
    Erik says:

    RE: JWS @ 18
    We are happy with our decision, but we’d like to get the opportunity to make another good decision. We want to sell high and buy low again.

  20. 20
    David Losh says:

    RE: JWS @ 18

    I expect prices to go back, and start over from about 2003. That was the last place the trend line made sense from 1998 going foreword.

    We might, and I mean might see some appreciation from that point, but I doubt it.

    The reason I expect that is you are leaving two time bombs in the mix that never seem to get addressed.

    One is government debt, which could be resolved with some pain, and suffering. More important to me, and has been since 2008, is the personal debt load of the consumer.

    In addition to rising interest rates for mortgages all interest rates will rise. Interest on consumer credit will rise, especially I think on unsecured debt.

    With every report of a rise in Consumer Confidence we see a rise in consumer debt.

    The only saving grace for housing right now is that banks are in control of inventory, and large builders are in control of adding housing units. We’ll see low inventory for some time at the rate we are going, but the consumer is going to lower the demand.

  21. 21
    Matthew says:

    I think Losh has it right. 2003 price levels then a bounce along the bottom for a decade or so.

    Sequestration is just a mild warm-up for what is yet to come.

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