August Reporting Roundup: No Call For Alarm 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:

Western Washington housing market stability continues with modest gains in sales, prices

“Stability” seemed to characterize the direction of Western Washington’s housing market during August, according to new figures from Northwest Multiple Listing Service.

“What we are seeing now with the market is a moderated growth in appreciation, a normalizing of sales volume, and continued health overall,” declared MLS director George Moorhead, the owner and designated broker at Bentley Properties in Bothell. “It is not a call for alarm,” Moorhead emphasized, describing it as “just a balancing and adjusting of a healthy market.”

“The current trend for strong pending activities and solid closed transaction numbers should keep the confidence level steady,” remarked Darin Stenvers, chairman of the board of directors at Northwest MLS. “Buoyed by low mortgage rates, buyers should remain optimistic about their new home purchases late into 2014,” he added.

Stenvers, the branch manager at John L. Scott in Bellingham, expects the balance of 2014 will remain at a slow and steady pace of appreciation, which should help distressed sellers. “Sellers should reevaluate the market as they may be surprised at the current values,” he suggests.

Like I said yesterday, this month’s release just seems really somber compared to the usual tone of these things.

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

Seattle Times

Coral Garnick: King County home prices in August up from year ago

J. Lennox Scott, CEO of John L. Scott Real Estate, said even though prices dropped around King County this month, the market is still hot. “We’re just talking about a few degrees lower of hotness,” he said.

That Lennox Scott. Always good for a laugh. I’m definitely going to save that quote for later. Comedy gold right there.

Seattle P-I

Aubrey Cohen: Seattle house prices down from July’s record

Higher prices and lack of inventory are contributing to a decline in sales, with closed sales down 12 percent in Seattle and 6.9 percent countywide. Pending sales, which don’t all close, but can be the best indicator of recent activity, fell 3.5 percent in the city and 2.2 percent across King County.

Some of the dropoff in sales may be due to people getting frustrated with not being able to find a home to buy, or getting outbid by other buyers, and deciding to sit on the sidelines, said Stephen O’Connor, director of the Runstad Center for Real Estate Research at the University of Washington. “People are kind of exhausted.”

Yeah, that’s the ticket. People are just tired! They just need a good nap and the market will perk right back up.

Tacoma News Tribune

Rolf Boone: July was good, August a little better for South Sound home sales

Home sales fell nearly 7 percent in August, while median prices inched up about 1 percent. The challenge? King County has only a two month’s supply of homes for sale, the combined data show.

And that’s increasingly the challenge in Pierce and Thurston counties. Although the number of homes for sale rose nearly 12 percent in Pierce County and 5 percent in Thurston County, that still equates to less than a four month’s supply of homes on the market at the current pace of sales.

But Mike Larson, president and designated broker of Allen Realtors in Lakewood, wasn’t too concerned about the lower inventory level in Pierce County because at one time a two-and-a-half month to three-and-a-half month’s supply of homes was once considered the norm.

“It’s slow and steady and trending in the right direction,” he said about the market. “Balanced and moderate is a lot better than the ups and downs we saw for years.”

This month we get a more in-depth article than we usually find on the web from the News Tribune or the Olympian.

The Olympian

Rolf Boone: July was good, August a little better for South Sound home sales
Same story in the News Tribune and Olympian again.

(Coral Garnick, Seattle Times, 09.04.2014)
(Aubrey Cohen, Seattle P-I, 09.04.2014)
(Rolf Boone, Tacoma News Tribune, 09.04.2014)
(Rolf Boone, The Olympian, 09.04.2014)

0.00 avg. rating (0% score) - 0 votes

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.

19 comments:

  1. 1
    Blake says:

    The dude abides… :-)
    The Big Lebowski Housing Market: Declining Purchasing Power And Wage Growth … With Rising Home Prices
    https://confoundedinterest.wordpress.com/2014/09/04/the-big-lebowski-housing-market-declining-purchasing-power-and-wage-growth-with-rising-home-prices/

  2. 2
    Mike says:

    Well, I was close. I predicted 10% YOY this summer and we hit 9.4%. I’m fairly sure the core 3/2 2000 sq ft houses in North Seattle gained a bit over 10% on average, although I’d say much of this gain happened by the beginning of the spring sales season. The end of the summer was somewhat weak.

  3. 3
    wreckingbull says:

    The comment section is moribund these days. Are we tiring of these stories, or did a certain condo-flipping personality drive us all away?

  4. 4
    Andrea says:

    RE: wreckingbull @ 3

    I was thinking exactly the same, why so few comments? In the stock market this would happen when both bulls and bears are tired. That’s the sign of a top and of a bottom. Maybe we are really at the top? Only time will tell.

  5. 5
    fubarrio says:

    “Maybe we are really at the top?”

    and they say they don’t ring a bell at the top….(ding ding ding!)

  6. 6
    boater says:

    For me it’s getting old hearing the same 5 people over and over. Ditch Eric and SE and it might be worth reading and responding.

  7. 7
    redmondjp says:

    Q: What do you do when your newly-built $1.3M house (estimated profit of $600K) near Microsoft doesn’t sell after three months?

    A: Why, you get a different real estate agent, of course!!!!

    (you really can’t make this stuff up)

  8. 8

    RE: boater @ 6

    SWE Negotiating a $26K Foreclosed Flipper for Cash in Kansas City

    I won’t tell you where, some of you crafty folks might buy it out from under me.

    $200 closing costs and $457/yr property tax. Its my daughter’s rental that foreclosed by the old landlord. Makes its next door listed/staged $40K home on a park-like wooded 1/2 acre [with ample green belt in the back yard] look expensive in comparison. This $26K “bank owned” flipper has a new roof, steel fence around the 1/2 acre, three bedrooms, an exercise room and central air conditioning included….about 1400 SF. Imagine what trading a Seattle home down there could get you, especially a “no auction required” foreclosure….LOL

    Erik is a savvy investor too.

  9. 9
    whatsmyname says:

    I think Mike is right, and it’s worked that way for a couple of years now.

    I don’t know how we can blame comment quality on Erik; he hasn’t posted here in over a week. Not much from the other 4 either.

    If inventory is 2 months supply and under 5,000 houses at the top of the market, what will the bottom look like?

    I’m not tired.

    How was the $600,000 estimated profit on the $1.3MM house estimated?

    Also, this is a real question from the previous thread: When the green arrow directional indicators are strongly favorable for buyers, does that mean it is a favorable time to buy or a favorable time to wait and not buy?

    If that seems stupidly easy, try forming an explicit written response. Then follow up with when or how that chart would tell you when the time to buy is right.

    And don’t forget to enjoy the weather.

  10. 10
    redmondjp says:

    By whatsmyname @ 9:

    How was the $600,000 estimated profit on the $1.3MM house estimated?

    From King County Records:

    Lot with existing house (all underground utilities already present and stormwater connection at the curb) purchased for $237.5K. Demolition permit value of $20K. New construction permit value of $419.2K. Total investment $676.7K round up to $700K (new fence, landscaping, etc).

    I suppose it’s possible that it cost a lot more than $420K to build the house, but it’s a big, simple rectangular-box home that is easy to construct – far more architecturally simple than most of the Street of Dreams home that I have been through in the past 30 years. No multiple gables and roof valleys, no stone or brick facade, no custom hardwood interior trim, or other expensive features.

    I suggest that the new agent try some different staging (there have been open houses every weekend all summer long). Or maybe the feng shui of the bathroom is wrong (the following quote from http://fengshui.about.com/od/fengshuiforbathroom/f/bathroom-feng-shui-energize-cures.htm):

    “What you need to understand is that bathrooms will always have a draining energy, no matter where they are located.”

    All expert opinions aside, I always try to keep the draining energy strong in my own bathrooms.

  11. 11
    Shoeguy says:

    Go back and look at the charts in 2007. There were a couple of months that summer where the housing market was “stable” as well.

  12. 12
    whatsmyname says:

    RE: redmondjp @ 10 – Hmm, based on the lot cost, I would expect total price closer to $800 than $1.3. I didn’t see a reference to this property; can you divulge the address?

    RE: Shoeguy @ 11
    Let’s look at August:
    Twice the inventory in 2007 supporting the same number of sales – twice the MOS.
    2007 sales consistently below the prior 4 years – Borrowed demand overhang vs. not.
    That’s a lot to overcome.
    And not in the charts:
    Rates were nearly twice and high, and houses were much less affordable.
    Fall freeze in 2007 bond markets and near collapse of financial markets – (If that happens this year, I will move to your side); any evidence that it will?

    2007 Result: Inventory expands to 20% above benchmark, then declines to 50% of benchmark, and stays there. If this were the top, and the bottom hadn’t been as fun as you thought it would be, this would be a lot less fun.

  13. 13
    wreckingbull says:

    By whatsmyname @ 9:

    Also, this is a real question from the previous thread: When the green arrow directional indicators are strongly favorable for buyers, does that mean it is a favorable time to buy or a favorable time to wait and not buy?

    If that seems stupidly easy, try forming an explicit written response. Then follow up with when or how that chart would tell you when the time to buy is right.

    The cute little arrows are trend indicators, not traffic lights. But you knew that, of course.

  14. 14
    whatsmyname says:

    By wreckingbull @ 13:

    The cute little arrows are trend indicators, not traffic lights. But you knew that, of course.

    So what do the trends indicate?
    You seem to have missed the question.

  15. 15
    redmondjp says:

    By whatsmyname @ 12:

    RE: redmondjp @ 10 – Hmm, based on the lot cost, I would expect total price closer to $800 than $1.3. I didn’t see a reference to this property; can you divulge the address?

    BINGO. The also-new house next door (on the corner, with much better access) just sold for around $900K this spring.

    It’s on 148th Ave NE, just north of the RedWest Microsoft campus. I call it ‘The house that Ikea built.’

  16. 16
    Mike says:

    By whatsmyname @ 14:
    So what do the trends indicate?

    After following the market for the past 10 years, “these trends” may end up indicating a minor market shift, the same way Eric’s extremely unlucky, extremely lucky and current purchase decisions have, in one way or another been indicative of a market trend. The primary factors driving the market aren’t ever reflected in short term statistics, though the short term stats might indicate a major market shift, it won’t be apparent for some time.

    Honestly, I think Eric’s purchase history is a better indicator than these buyer/seller arrows. His latest purchase to me indicates that credit has recovered to a level where most market participants have “shaken off” the shackles of the downturn, but aren’t in a position to over invest the way they did in 2005. To me this says price gains are going to moderate quite a bit in the coming years, with some areas ‘out appreciating’ and others potentially slipping. As some areas start to slip, short term averages are going to swing heavily in buyers favor according to the arrows. Will it be a “good time to buy”? Maybe.

  17. 17
    Erik says:

    RE: Mike @ 16
    I live in a vacation resort. This place is freaking awesome!!! I think I will make another big profit, but if I break even that’s cool too.

  18. 18
    Erik says:

    RE: boater @ 6
    Sorry to hear that boater. You can skip reading my comments… It is elective to read or not. I have my favorites too, and I skip over some commenters.

    Could you be more specific about what you don’t like about swe’s and my comments?

  19. 19
    Erik says:

    RE: wreckingbull @ 3
    Easy old man or I will flip another condo in your face and brag about my profits again. This time around it is wayyyyy easier since I have stacks of cash laying around. I just pay for a consultation with my designer and start shot calling. If I keep it 2 years, I expect to make another $100k or better. I would like to beat the 128k I made last time, but I don’t expect to. If I make enough money on this one, I want to start doing even higher end condo remodels. I would love to do a million dollar condo remodel on lake Washington. Just add a couple built in espresso machines and put some tv’s in the walls and call it a day.

    Go back to your computer and start writing code for your boss before he sends you into early retirement.

    I have seen Tim say not to flip condos. Condos are the best thing to flip because condo owners are lazy and they are willing to overpay if their condo is already pretty. These buyers will pay anything so they don’t have to do actual work. Plus, in condos, the association takes care of most the plumbing, and monitors the electrical so it isn’t crazy out of date. My new place has a new square d breaker box, new windows, and new doors. Condos are way easier to remodel too.

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.