NWMLS: King County Home Prices Near Bubble Peak

April market stats were published by the NWMLS yesterday. Before we get into our monthly stats, here’s a quick look at their press release.

Pent-up demand triggering record pace of home sales around Western Washington

Northwest Multiple Listing Service members notched a record high level of pending sales during April, surpassing the year-ago volume by nearly 1,800 transactions. Both closed sales and prices also surged last month as the spring market kicked into high gear.

Buyer confidence and buyer ability to purchase are fueling activity, suggested Ken Anderson, the managing broker and owner of Coldwell Banker Evergreen Olympia Realty. “Long building pent-up demand is being unleashed,” he commented.

Closed sales and prices also accelerated, according to Northwest MLS statistics. Across the 23 counties covered by the report there were 7,696 closed sales. That total represents a 24.3 percent increase from the year-ago volume of 6,190 closings. Within the four county region, Pierce County experienced a jump of nearly 38 percent in closed sales compared to a year ago, followed by Snohomish County with a 35 percent increase, prompting one MLS director to comment, “That is super amazing.”

You can almost hear the home salespeople high-fiving each other from here.

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):

April 2014 Number MOM YOY Buyers Sellers
Active Listings 3,003 +9.7% -15.2%
Closed Sales 2,352 +12.5% +16.7%
SAAS (?) 1.37 +4.7% -5.9%
Pending Sales 3,410 +5.5% +14.4%
Months of Supply 1.28 -2.5% -27.3%
Median Price* $480,000 +9.0% +11.5%

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

Unfortunately for buyers, there’s still no good news on supply. Inventory is pitiful and shows no glimmer of getting any better soon. With inventory as low as it is and interest rates still so low, I’m actually surprised home prices are only up six percent from a year ago.

Here’s your closed sales yearly comparison chart:

King County SFH Closed Sales

Closed sales rose 12 percent from March to April. Last year they rose 14 percent over the same period.

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

King County SFH Inventory

Inventory saw its biggest month-over-month increase since last May, up 10 percent from last month. However, year-over-year inventory is still down double digits, off 15 percent from a 2014.

Here’s the supply/demand YOY graph. “Demand” in this chart is represented by closed sales, which have had a consistent definition throughout the decade (unlike pending sales from NWMLS).

King County Supply vs Demand % Change YOY

Both supply and demand inched slightly back toward buyers’ favor in April, but remain well in seller’s market territory.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

Last month I said that I was “frankly shocked that this chart isn’t in the double digits.” Well, now it is. Sorry, buyers.

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994 (not adjusted for inflation).

King County SFH Prices

The median home price shot up in April to just shy of the July 2007 peak. Remember that these values are not adjusted for inflation though. Maybe later this week I’ll post an inflation-adjusted version of this chart to see where we stand.

April 2015: $480,000
July 2007: $481,000

Here’s this month’s article from the Seattle Times: King County home prices surge, just shy of 2007 peak

Check back tomorrow for the full reporting roundup.

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.

24 comments:

  1. 1
    Eastsider says:

    It would be interesting to see the percentage of first time homebuyers at the peak. Do they even exist?

  2. 2
    Cap''n says:

    Would love to see that inflation adjusted graph.

  3. 3
    sleepless says:

    Will the FED raise the rates this year? If your answer is yes, then this is pretty much the peak and it is a downwards from here on. If you answer is no, then we would, probably, see continuation of the bull market. If the answer is more QE(4), the it is the latter, but on steroids!

    Enjoy your ride!

  4. 4
    Rudolfo says:

    RE: sleepless @ – Under the current conditions, I would expect prices to rise up until the moment interest rates rise, then it may get interesting – although I do not think the first interest rate increase will be more than 0.25%.

  5. 5
    Erik says:

    RE: sleepless @
    When has home prices gone down with interest rates? I can tell you there is a loose correlation at best between housing prices and interest rates. You used your logic and you were wrong. Try again.

  6. 6
    redmondjp says:

    RE: Erik @ – You’ve got a lot to learn, Erik.

    You really think people can afford $1M houses if interest rates go up to 7%?

    Every new house in my neighborhood (just meandered all over Rose Hill tonight on my way home from Costco checking out all of the new construction) is priced in the $900s.

    It’s 2005 all over again.

  7. 7
    boater says:

    RE: redmondjp @
    History says Erik is correct. Rising interest rates have not strongly correlated with falling housing prices. It may not seem logical but I encourage you to look into it. Possibly because income also tends to rise. We keep hearing of cash buyers who would be less affected by interest rates.

  8. 8
    David B. says:

    RE: sleepless @ – Oil prices are going back up, ending the current episode of “inverse stagflation”, so I’d expect interest rates to start going up in response to increasing inflation in the coming year.

  9. 9

    RE: boater @ – One reason there isn’t a strong correlation is that during periods of inflation, people consider real estate to be “safe” or a hedge against inflation.

  10. 10
    ESS says:

    Will prices continue to go up or down? Who knows for the short term, but real estate prices have increased over time.

    Seattle and the surrounding area is not an expensive market compared to most major west coast cities. Try buying a comparable home in Los Angeles, San Diego, San Francisco or Vancouver BC. for the prices in Seattle and area, and it will be virtually impossible to do so.

    There are a few differences between the 2007 bubble and the current situation. In 2007, rent was half the price as compared to a mortgage for a similarly priced home. That equation has changed in 2015. These days with low interest rates and tax policies, it could be actually less money to own a home or condo than to rent a similar unit.

    Furthermore, there was not the shortage of both properties for sale or rent as there is currently. That is contributing to both the increases of housing prices and rents.

    Are there risks associated with buying and owning a home? Sure there are, and each purchase should be made in conjunction with analyzing and weighing both the risks and the rewards associated with that endeavor. There are no risks in renting, but neither are there any rewards. A typical Seattle renter will have spent over 150,000 dollars in the next decade for a housing unit with nothing but the appreciative thanks of the landlord to show for it.

    Much of life’s activities is a weighing process between risk and reward, renting Vs owning is just another example of that. So it will be interesting to watch how this market unfolds over the next three to five years, as it has been in the past as both a homeowner and rental property owner.

  11. 11
    Shoeguy says:

    By Cap”n @ :

    Would love to see that inflation adjusted graph.

    Compared to wage inflation since the peak….

  12. 12
    Deerhawke says:

    The Seattle central core neighborhoods have seen a tremendous run-up in prices since late 2011 and especially during this past year. The 1120 sf Ballard rambler featured in the Seattle Times article (listed at $559 and sold at $717,000) may be the exception, but the rule is not far behind. Pricing in the attractive close-in neighborhoods within a short commute to job centers is now above mid-2007 levels.

    I think that during the next stage (already under way) people will realize that they have more alternatives than they originally thought. We know that if the price of coffee doubles, consumers pay the extra for a while but then engage in substitution and start to drink more tea instead. I think that when people grow discouraged after being outbid on houses in the core neighborhoods, they will start to adjust their expectations. Can’t afford Wallingford or Greenlake? OK, then, what about Greenwood and Loyal Heights? Can’t afford Bryant or Wedgewood? OK then what about Maple Leaf, Pinehurst or Cedar Park? Or better yet, what about getting a way better deal in Edmonds?

    The Seattle Times stats by region are interesting. The big double-digit percentage gains were not just in super-hot Seattle (+15.3%) but in long spurned areas in Southwest King County (+15.2%) and Southeast King County (+13.8%). We are past the tipping point and now the big percentage gains will be in the outlying areas that really got hammered during the recession.

  13. 13
    Shoeguy says:

    By Erik @ :

    RE: sleepless @
    When has home prices gone down with interest rates? I can tell you there is a loose correlation at best between housing prices and interest rates. You used your logic and you were wrong. Try again.

    We are in uncharted waters right now.

    House prices have been rising for the last 30 years because interest rates have steadily declined from 12% to 4%. Incomes have been stagnating, and actually dropping for the last 15 years.

    We have never seen a situation where interest rates rise, house prices rise, and incomes drop in our history. People buy the monthly house payment, not the price of the house, so it is going to be fascinating to watch all three happen at the same time, and then watch the inevitable fallout.

    Redmondjp is correct. There is no way that house prices would be where they are today if interest rates were 7%. It is universally agreed upon that rates have to rise, and incomes are going nowhere fast, so it is reasonable to assume that we’re going to enter into a housing market with today’s incomes and higher interest rates eventually, so someone’s opinion will be vindicated, and the math isn’t on Erik’s side.

  14. 14
    Mike says:

    By redmondjp @ :

    RE: Erik @ – You’ve got a lot to learn, Erik.

    You really think people can afford $1M houses if interest rates go up to 7%?

    Every new house in my neighborhood (just meandered all over Rose Hill tonight on my way home from Costco checking out all of the new construction) is priced in the $900s.

    It’s 2005 all over again.

    Crown Hill/Greenwood /Licton Springs pricing in Redmond. Sounds like a bargain. You can get quite a bit more house out there in the ‘burbs. $900’s can get you into the 3000+ sq ft range out there, not so even in some of the run down neighborhoods North of 85th in Seattle. FWIW, nothing was priced that high in those neighborhoods in 2005.

  15. 15
    Erik says:

    RE: Shoeguy @
    Look at the crude commenter known as corndogs. He is consistently correct when it comes to housing prices. Most of what he does is takes history and says the same thing will repeat. No need to dive into the details. This has all been seen before. At that time people probably thought it was a unique situation too.

  16. 16
    redmondjp says:

    RE: Mike @ FWIW, nothing was priced that high in those neighborhoods in 2005.

    That’s what has me really concerned. On the one hand, it’s still a bargain compared to SFO. OTOH, I’ve seen reports here and there about subprime lending getting cranked up again, and we all know how that movie ends . . .

  17. 17
    Mike says:

    By redmondjp @ :

    RE: Mike @ FWIW, nothing was priced that high in those neighborhoods in 2005.

    That’s what has me really concerned. On the one hand, it’s still a bargain compared to SFO. OTOH, I’ve seen reports here and there about subprime lending getting cranked up again, and we all know how that movie ends . . .

    Nothing was priced that high because the houses being built there during the bubble were far more modest. Houses built in the 05-07 era are now selling for more than they were back then, but that’s still $600k-ish, not $900K. So what we’re really seeing is gentrification – builders adding much larger, nicer homes in these areas than before.

  18. 18
    redmondjp says:

    RE: Mike @ – No difference in my neighborhood between ’05 and now on the size of houses being built – all have between 3K and 4K sq. ft. with high-end fixtures and finishes. There are no starter houses being built any longer. You have to go out to Orting to find those.

  19. 19
    Mike says:

    By redmondjp @ :

    RE: Mike @ – No difference in my neighborhood between ’05 and now on the size of houses being built – all have between 3K and 4K sq. ft. with high-end fixtures and finishes. There are no starter houses being built any longer. You have to go out to Orting to find those.

    That’s an important distinction. The $900K houses in the area I’m referring to are smaller – usually under 2800 sq ft. There are some starter homes being built as well, typically around 1300 sq ft in the $500K-$600K range, although these are on small lots and some are attached. During the bubble you could get nearly double that square footage for $600K, and a starter town home would run in the high $300’s.

  20. 20
    Drshort says:

    “It is universally agreed upon that rates have to rise”

    How long have people been saying that? Japan has been under 1% since the 1990s.

    And 7% interest rates aren’t going to happen without 4% inflation which will push up home prices.

  21. 21
    Cap''n says:

    RE: Drshort @

    That’s the beauty if you bought in early 2012. While rates are low, enjoy 10 perecnt plus YOY appreciation. Once rates rise, sit back and enjoy the 3.375 rate on the 30 year and let the hedge on inflation take care of the rest. I do feel bad for buyers in the current market though. I would rather dump money into a remodel than try to sell and locate a move-up house in the close-in areas, at least in the current market. Not sure how accurate the Redfin stats are at the neighborhood level, but spots like greenlake, phinney ridge, and ballard are showing extremely high down payments, even with the current prices. That makes me think that those buying homes are not the “typical” buyer that can’t handle increases in prices or interest rates. The location(s) matter. Once you adjust for inflation, prices are not anywhere near the peak. And when you adjust for wage inflation to assess purchasing power, the rich people who are buying these homes are making more than ever and benefitted from wage gains that did not appear for lower income earners, like Erik.

  22. 22
    Mike says:

    RE: Cap”n @ – It’s interesting when you look at places like Maple Valley where the average down payment is in the 2% range according to RedFin. A predominance of VA and FHA loans driving it down that low? In the competitive close in markets where a large # of homes are selling with multiple offers over list it’s hard to imagine more than a small % of offers get accepted with little down.

  23. 23
    Cap''n says:

    RE: Mike @

    Agreed. What’s not clear to me is whether Redfin counts all cash sales in their average down payments. For the areas showing average down payments 30 percent plus, is the average so high because a few all cash payments skew the result? Or are those excluded. If excluded, then there are a lot of buyers out there who are not buying mortgage free but still have bundles of cash. I think home values will keep rising until we get closer to the vancouver/sf/etc prices people keep referencing.

  24. 24

    RE: Mike @

    ” It’s interesting when you look at places like Maple Valley where the average down payment is in the 2% range according to RedFin. A predominance of VA and FHA loans driving it down that low?”

    In the last dozen recorded sales Maple Valley $300,000 or less you have 5 all cash, 2 over 100% financed as VA price plus closing costs, 2 FHA but one was for low credit reasons or high ratios as it wasn’t minimum down, one 3% conventional, one 5% conventional and one 10% conventional. I stopped at a dozen working my way up from the bottom for Maple Valley. But that should answer the question.

    ” In the competitive close in markets where a large # of homes are selling with multiple offers over list it’s hard to imagine more than a small % of offers get accepted with little down.”

    Need a zip code and price range to do that one.

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.