NWMLS: Market Goes From Bad to Worse for Buyers

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

Northwest MLS brokers say home buyers are sprinting, but sellers are stalling

Home buyers are in “full sprint” mode while sellers are stalling, according to brokers from Northwest Multiple Listing Service. As a result, MLS members are juggling severe inventory shortages and multiple offers in many Seattle neighborhoods and beyond.

MLS figures for May show double-digit drops in inventory compared to a year ago and double-digit gains in both sales and prices. Commenting on the numbers, Northwest MLS director Dick Beeson said “The crush between the lack of inventory and desperate buyers may soon generate the next TV reality show! The stressed market is exhausting everyone in its path, with no relief in sight.”

J. Lennox Scott, chairman and CEO of John L. Scott, Inc. called 2015 “the best start ever for sales activity.” Citing MLS figures, he noted cumulative pending home sales in the four-county Puget Sound area for the first five months of the year are outpacing the previous record year of 2005. “This time,” he emphasized, “the housing market is built on a strong foundation of qualified buyers.”

You can definitely trust Lennox to know that it’s different this time. He has a great track record for predictions.

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 2015 Number MOM YOY Buyers Sellers
Active Listings 3,280 +9.2% -21.1%
Closed Sales 2,684 +14.1% +15.4%
SAAS (?) 1.21 -11.5% -20.6%
Pending Sales 3,447 +1.1% +2.9%
Months of Supply 1.22 -4.3% -31.6%
Median Price* $480,942 +0.2% +8.7%

Feel free to download the updated Seattle Bubble Spreadsheet, 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 14 percent from April to May. Last year they rose 15 percent over the same period. Only two years had more closed sales in May than this year: 2004 and 2005. Meanwhile, pending sales have hit an all-time high , but that is less meaningful since the NWMLS changed their definition of “pending” in July 2008.

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

King County SFH Inventory

Inventory did go up slightly from April to May, but still turned in the lowest ever recorded level for a May.Year-over-year inventory is still down double digits, off 21 percent from 2014. This is the largest year-over-year decrease in inventory in two years.

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

The demand trend inched slightly back toward buyers’ favor in May, but the supply curve is going from bad to worse.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

Once again I find myself surprised that this chart has fallen below double-digit territory.

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 inched up in May to a number comically close to the July 2007 peak. Literally less than sixty dollars below the nominal peak value reached nearly eight years ago.

May 2015: $480,942
July 2007: $481,000

Here’s this month’s article from the Seattle Times: Home-price boom: What $450K will buy you around Puget Sound

Check back Monday 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.

55 comments:

  1. 1

    That inventory number is just amazing. It’s not surprising because in my searches it seems like more stuff is always going pending than coming on the market. But it’s just amazing we have gotten to such a low level of inventory.

  2. 2
    David B. says:

    RE: Kary L. Krismer @ 1 – And of course that low inventory is doubtless holding down the “demand” part of Tim’s supply/demand chart.

  3. 3
    Mike says:

    Buy now, if you’re not already priced out?

    This reminds me of a post Ardell made here circa 2006 – something about how she was no longer working with first time buyers because there weren’t any left. Everyone that wanted to buy a house needed to already own one to afford another, at least in the market she was selling in.

    Has anyone noticed if there’s been a similar shift this time around? I know last year we were still getting some FTHB’s moving in to the neighborhood. Sales this year seem to be either developers /flippers or move up buyers.

  4. 4
    djqbert says:

    There are a ton of first-time buyers. We just bought our first home in West Seattle. Was just talking to a few Amazonians and Googlers who bought in Queen Anne, Ballard, and Capitol Hill. One friend just sold his startup and bought a whole building. While many articles and posts write about how the young generation is broke and unemployed, many of us are building mobile apps, starting companies, cashing fat stock checks, buying houses, and drinking $12 cocktails.

  5. 5
    redmondjp says:

    Inventory in Redmond is unbelievably low right now, even by recent standards. I’ve been checking Redfin weekly, and have been going to 1-2 open houses every week or two (several within walking distance of my existing house). This weekend there is virtually nothing to even go see (4BR SFH of any age/condition).

    I’ve never seen inventory this low since having moved here in 1995.

  6. 6
    Blake says:

    By Mike @ 3:

    Buy now, if you’re not already priced out?

    This reminds me of a post Ardell made here circa 2006 – something about how she was no longer working with first time buyers because there weren’t any left. Everyone that wanted to buy a house needed to already own one to afford another, at least in the market she was selling in.

    I was just meeting with my banker (we are selling our two houses to buy one) – – he said that he is working with a bunch of Facebook employees who are moving here and looking to buy… mostly first time buyers. Said one is pre-approved for a $1m condo! A lot of big tech money coming in… and not much choice. Those inventory figures are insane… We hope that one of our houses (on Cap Hill) gets a nice bidding war!
    :-)

  7. 7
    Mike says:

    By djqbert @ 4:

    There are a ton of first-time buyers. We just bought our first home in West Seattle. Was just talking to a few Amazonians and Googlers who bought in Queen Anne, Ballard, and Capitol Hill. One friend just sold his startup and bought a whole building. While many articles and posts write about how the young generation is broke and unemployed, many of us are building mobile apps, starting companies, cashing fat stock checks, buying houses, and drinking $12 cocktails.

    I wasn’t implying that the generation was broke as a lot of the $600k-$900k homes that sold in my neighborhood over the past 2 years went to FTHB’s. I’m just not seeing as many move in this year.

    There are also far fewer move in ready homes under $600K. The last few that sold below that price point were either tear downs or major rehab jobs beyond the skill or finances of a typical FTHB.

  8. 8
    boater says:

    By Mike @ 7:

    There are also far fewer move in ready homes under $600K. The last few that sold below that price point were either tear downs or major rehab jobs beyond the skill or finances of a typical FTHB.

    If you’re a first time buyer and you’re pre approved for $1M I think you’re venturing pretty far out from typical FTHB. I do think there are a fair number of people who were saving up to try and buy a home in SF transfering up here. Our homes look affordable by comparison.

  9. 9
    Mike says:

    By boater @ 8:

    By Mike @ 7:

    There are also far fewer move in ready homes under $600K. The last few that sold below that price point were either tear downs or major rehab jobs beyond the skill or finances of a typical FTHB.

    If you’re a first time buyer and you’re pre approved for $1M I think you’re venturing pretty far out from typical FTHB. I do think there are a fair number of people who were saving up to try and buy a home in SF transfering up here. Our homes look affordable by comparison.

    True, but if you’re relocating 800 miles do you really want to buy a house that needs several months of construction work done on it? Most people that already live here would rather not put themselves through that.

  10. 10
    MD says:

    Regarding the techies moving in here, it’s not inconceivable that they’d be going after $1M condos. Imagine you have a young couple, both in tech and making around $200K or more, from upper middle class backgrounds, with no debt and no worries. I can totally see that kind of buyer going for a $1M condo in a trendy part of town close to work. I’m not saying I’d do it (I wouldn’t), but I can understand why they’d do it.

    The big question for me is: if the economy goes to the crapper in the next year, do those buyers go away? Will they really care if the Fed raises rates 0.25%? Will there be layoffs at Amazon/Facebook/Microsoft?

  11. 11

    By MD @ 10:

    Will there be layoffs at Amazon/Facebook/Microsoft?

    I think the concern would be more over some of the startups. For many it wouldn’t be just layoffs, it would be the company totally disappearing. (I’m distinguishing between just laying people off and the company going totally out of business.)

  12. 12
    Erik says:

    Hooray!!!! I look at it as the market is getting better for owners as well as sellers. I really want to see inventory depleted and new comers struggle to find a place to live.

    To sellers: Keep holding onto those homes. 2024 is most likely when we’ll see another price drop. Buy a second home if you can. Price increases will accelerate as we get closer to the bursting of this bubble. If you get stuck holding the bag, you will get free rent for atleast a year and will have to give the house back. Don’t worry about paying that money back, let tax payers take care of the mess like last time. You have nothing to lose. YOLO!!!

  13. 13
    Erik says:

    RE: Kary L. Krismer @ 11
    It is likely some startups will disappear and others will expand. This offsets jobs and will net zero change in jobs. Who knows? One may explode and hire many more people.

  14. 14
    Cornix says:

    Anything under 400K in Seattle sells in a few days and is next to an active tire fire/filled with tiger pits/is infested with angry ghosts or a similar level of work needed. Being qualified for a 1 Mil mortgage would be pretty swank!

  15. 15
    The Desponder says:

    If the “what it takes to win an offer near Maple Leaf” blurbs on Redfin are any indication, in some places it is a terrible place time to be a buyer. Here are some of the agent comments listed:

    “Per the listing agent there were only 4 offers on this Maple Leaf house. Our offer escalated $100,000 over the asking price, has an appraisal contingency with buyers willing to pay up to$20,000 if it appraised low. the winning offer was $7,000 under our price but has waived the appraisal clause and a shorter closing time frame.”

    “Per the listing agent there were 12 offers on this Maple Leaf home. Seven were over $800,000 and the winning offer over $900,000 (roughly $200,000 over asking). Over offer did a pre-inspection and sewer scope splitting the cost with another buyer.”

    “Per the listing agent there were 6 offers on this home and the winning offer was higher in price with no contingencies. Our offer was $45,000 over, waived all contingencies except appraisal and modified that as well.”

    These tales seems like lunacy to me. Why don’t buyers expand the search out of the rut? I am sitting in a 3 bedroom, 2.5 bath home on an 8,500 square foot lot at an undisclosed location in Seattle. Our landlord bought the house after a total renovation a year ago for $311,000. I have a near 180 degree view of Lake Washington, in a sleepy-safe neighborhood. The schools suck, but there are great private school options. I can get to Capital Hill or downtown in 20-30 minutes without getting on a freeway. After living on Capital Hill for six years, I can say I had an uninformed neighborhood bias that narrowed my perspective irrationally. A buyer could take half of an offer for a Ballingfordmontwood home and find a taste of what made Seattle special 40 years ago if they looked outside the box.

  16. 16

    RE: Mike @ 3

    Never said that Mike…never did. You like to misquote me a lot. I must have gotten under your skin about something, somewhere, sometime. But I have never dropped first time buyers. My first time buyers often buy very expensive homes well below their means. So what you are saying (that you say I said) just makes no sense.

    I wrote a post about it being difficult to impossible to find a single family home for under $300,000 in the areas where I work. Maybe that translated to “no longer working with first time buyers” to you.

    People can still get a nice house for under $400,000.

    https://www.redfin.com/WA/Shoreline/2006-N-145th-St-98133/home/81917

    But under $300,000 was tough in 2006 and it is tough now and it is almost never easy because of the value of the land.

  17. 17
    Bob says:

    I view the people in this market as being no different than frogs sitting in a pot of water as it gradually reaches boiling temperature. They don’t notice the heat because it happens gradually. The realization will be sudden.

  18. 18
    Erik says:

    RE: Ardell DellaLoggia @ 16
    Mike has been rude this year. He changed his character.

  19. 19

    RE: The Desponder @ 15 – I dunno, Ballingfordmontwood has some great restaurants…

    I agree, South Seattle is a much saner alternative. And likely fits the “Zillow Talk” criteria of a neighborhood that will see higher future appreciation.

  20. 20
    Blurtman says:

    RE: Bob @ 17 – Possibly, but I guess it depends on a few factors.

    1.) How has future price appreciation factored into folks’ commitment to continue to pay their mortgage? In the last RE meltdown, folks who could continue to pay decided that it wasn’t worth it and walked.

    2.) How many buyers have paid in cash?

    3.) How many folks have bought because they can afford to, will remain employed locally, and will have income that will continue into the future?

    It is virtually impossible to time a RE market. Folks who have been sitting on the sidelines for the past several years have only seen things get worse. In 2004 a co-worker who had prophesied the RE market meltdown sold his home and moved his family into an apartment. He was right, of course, but a few years too early.

  21. 21

    By Blurtman @ 20:

    He was right, of course, but a few years too early.

    And at this point he is now wrong again. Actually, depending on the property he might have been wrong the entire time.

    It would also though depend on how much he owed (his mortgage payments) relative to his rent. If he paid significantly less rent than his PITI payments, maybe it wouldn’t have been too bad. But it would be really bad if he owned the house free and clear and converted the value of his house into cash, less closing costs, and then sucked that money up paying rent.

  22. 22
    Blurtman says:

    RE: Kary L. Krismer @ 21 – Indeed. I think it is however possible to time buying near a bottom. In that case, you have the historical record to work with. But will future Feds always take action to prop up home values?

  23. 23
    Nathan Peterson says:

    If there is a bubble, I would focus heavily on Amazon and Microsoft. Sure there is Google, Facebook, and numerous start-ups, too, but Amazon and Microsoft are the largest contributors to headcount in highly paid tech works in the area.

    Boeing is obviously up there (#1 I believe) but the tech giants are more volatile, and more likely to have a bigger shock due to the inflated salaries–especially Amazon, given its hiring spree and earnings reports.

    People don’t like to admit it, but Microsoft is a huge, HUGE reason why housing prices have increased so much here. It helped Amazon and other tech companies tap into their talent, but Microsoft has not been performing so well lately. Aside from its enterprise division (which can only do so much) if their next wave fails, Microsoft will surely have another round of layoffs, IMO, I’m almost certain it would have a larger-than-expected impact on the workforce and interest of people (with inflated salaries) wanting to live here. Some will move to Facebook/Google, but after the Windows 8 fiasco I know many of those folks were not staying in Seattle, but rather moving to SF and Austin.

    Had it not been for Amazon’s hiring spree after that time, I’m almost certain inventory levels would be a lot different right now.

    Have you checked out Windows 10, the new OS wave that Microsoft is working on? They fixed a lot of issues but created new ones. There is no stability and given how they delivered Xbox One and Windows Phone, I’m not so confident they’ll be able to make Hololens something groundbreaking. Apparently all the good employees have moved on!

  24. 24

    RE: Nathan Peterson @ 23

    It’s not so much about head count as it is number of new hires. One company hiring 100 people from out of area puts more pressure on home prices than total company “head count”. I see Microsoft contributing somewhat to the price increases, but far less than Google and some other companies with much lower total head count than Microsoft, but many more recent new hires.

    Microsoft might be more of a contributor to low inventory, with stable head count employees not needing to move or buy something.

    From what I’m hearing from rental property managers in all price points, rent increases are a big driving force pushing people into the home purchase market. So possibly Microsoft employees who have been here awhile but are renting, yes. But those people are less likely to over bid than a new hire.

  25. 25
    Nathan Peterson says:

    RE: Ardell DellaLoggia @ 24 – Absolutely true. This is why I focused on Amazon’s hiring spree. Facebook and Google offices were mostly setup here to steal talent from Microsoft and Amazon (and it’s working) so they are not so much bringing new people to the area, but transferring headcount from those employers.

    And interestingly, none of my former colleagues went to work for Google/Facebook in Seattle. They wanted to work at the HQ’s in Silicon Valley or satellite office in New York or Boston — or start a completely different company and live in a mansion in Austin.

    Sure, others are hiring quite a bit, but Amazon and Microsoft are bringing much more in at inflated salaries (and retaining them–for now, at least) making them a huge influence and volatile.

  26. 26
    greg says:

    By Nathan Peterson @ 23:

    If there is a bubble, I would focus heavily on Amazon and Microsoft.
    .

    People don’t like to admit it, but Microsoft is a huge, HUGE reason why housing prices have increased so much here.

    This.

    I believe locals are grossly underestimating just how tough a transition Microsoft is in right now.

    They are currently doing fine, but like other tech companies in the past the end can be shockingly fast and scary in its scale.

    MS will be making tens of billions of dollars of revenues for years to come. but they may well see increased costs and compressed margins leading to lower profitability and deep restructuring .

    The impact on the eastside of Seattle and Seattle itself is hard to over state. MSFT accounts for a huge percentage of all jobs in wa state, some claim as high as 7 or 8% due to the huge numbers of jobs supported by the behemoth. Much of the eastside is completely dependent on Microsoft money. every restaurant, every health club , car dealer struggles to maintain profits when Microsoft sneezes. The big round of local lay offs a few years ago crippled car sales as employees battened down the hatches and put monies aside in case they were next.

    Image what it would be like if they decided to downsize locally ! Currently most new growth has been outside the USA because it is cheaper and close to talent. There is very reason to believe that more development work will shift off shore , cheaper labor, cheaper site, low tax and massive amounts of money they cant move back to the USA due to taxes.

    MS has sold billions in bonds rather than move monies to the USA, at what point may Satya decide to bring it home to Hyderabad….

    I am not claiming MSFT is dead or dying, but merely the risk of buying inflated housing in King county might be higher than some believe.

  27. 27
    redmondjp says:

    RE: greg @ 26 – Well said, Greg! I’ve been thinking along these exact same lines for the past ten years. Microsoft is now IBM circa 1980s. Yes, they will be around for a long time, but the big question is: how big will they be, and where will their employees be located?

    All I can say is, every City of Redmond employee should be over on 156th kissing the sidewalk daily, as without Microsoft, they would be in a world of hurt. Redmond use to be flush with electronics hardware design & assembly companies that have either closed up or gone offshore, but this has largely gone unnoticed due to the significant increase in software jobs that has more than made up for the loss of hardware jobs.

    The elephant in the room is the annual stealth job cuts that happen at Microsoft, leaving thousands of local people without jobs every year. I know somebody right now going through it. Your existing job goes away, and they give you a few months to find a new one. If you can’t, you are strongly encouraged to quit (they will not lay you off so you cannot get unemployment). The ace up their sleeve is that they have given you two successive bad annual performance reviews, so they can use that as justification to fire you if you don’t agree to quit with a few months’ pay. I think they refer to this as a ‘soft landing.’

  28. 28
    greg says:

    RE: redmondjp @ 27

    I agree .

    MSFT has been getting rid of higher cost employees and hiring lower cost ones to replace them. There is a whole bunch of tricks being used to avoid the spotlight, but at the end of the day the employees don’t have a lot of choice.
    To retain the departure monies the employees are forced to sign an NDA, to gag them. IF they refuse they don’t get the package and have to cross their fingers that their old boss will step up and give a good reference , because HR will not.
    I know lots of people who left MS simply because they did not like the atmosphere of impending doom, and monthly stories of good employees and whole teams being cast to the wind.

    Google could not have picked a better spot than Houghton, it has sucked in lots of higher end highly skilled people and left MS struggling to fill the knowledge holes created. Google’s leadership must be laughing their collective butts off over MSFTs 1980s thinking ref critical employee retention.

    key devs have been leaving for at least 5 years now, and being replaced with humdrum employees.

  29. 29

    RE: Nathan Peterson @ 25

    I don’t know enough about Amazon. My perception based solely on the fact that I buy little crap there is that a larger % of their employees are not high salaried. I could be completely wrong about that. Most of my clients work at Microsoft or Google (both Eatside and Seattle) and rarely do I run into an Amazon employee. Once in a blue moon, as they say.

    I’m thinking more Google and Microsoft employees on a % basis make six figures and up than Amazon employees. Do you know? Not everyone at Microsoft makes 6 figures and up…most Google people do…and Amazon I’m thinking has to have a high % of employees making less than 6 figures. What’s your perception?

  30. 30
    Jeff says:

    RE: Ardell DellaLoggia @ 29 – My impression from looking through Glassdoor is that Amazon and Microsoft salaries are fairly similar, although Amazon employees earn more from stock. Facebook and Google pay more in salary and total compensation. The reason you may not be seeing as many Amazon or Facebook folks is that all of their offices are in Seattle while Microsoft and Google have a substantial Eastside presence. Having lived on Capitol Hill for about 10 years now, I’ve definitely seen an influx of Amazonians with money to this neighborhood. While a lot of Amazon’s employees worldwide are lower paid, those in Seattle working at headquarters seem to do pretty well for themselves.

  31. 31
    Macro Investor says:

    For the city and real estate markets, high tech jobs are obviously very positive. But for individuals, high tech jobs are extremely risky. These companies treat every product and feature as if they are trial balloons. One day it’s the focus of the company. The next day forget it — gone. The total number of jobs may remain stable or even increase. But YOUR JOB is about as stable as quick sand.

    That said I’d be very leery of buying some $1 million condo just because TODAY I can afford it. Why not protect yourself by living frugal, investing and retiring early to a stress free life like our friend Software Engineer. I know, I’m taking batsh1t crazy here. Better to spend it all now on food and drinks.

  32. 32
    boater says:

    By Macro Investor @ 31:

    For the city and real estate markets, high tech jobs are obviously very positive. But for individuals, high tech jobs are extremely risky. These companies treat every product and feature as if they are trial balloons. One day it’s the focus of the company. The next day forget it — gone. The total number of jobs may remain stable or even increase. But YOUR JOB is about as stable as quick sand.

    That said I’d be very leery of buying some $1 million condo just because TODAY I can afford it. Why not protect yourself by living frugal, investing and retiring early to a stress free life like our friend Software Engineer. I know, I’m taking batsh1t crazy here. Better to spend it all now on food and drinks.

    Yeah just doesn’t match the reality for software engineers for the last 10 years.

    First most SWEs are flexible enough and competent enough to switch projects easily.
    Second the demand for competent SWE is so high and has been for the last 10-20 years that even in the unlikely event you were laid off you can find another job fairly quickly.

  33. 33
    Basho says:

    Houses in the close-in areas of the Seattle metro area are a commodity that has both inelastic supply and inelastic demand (like crude oil).

    Increasing prices (and decreasing prices) don’t significantly change the behavior of buyers, sellers, and builders (at an aggregate level). With inelasticity, comes price volatility. As with crude oil, I doubt anyone can accurately predict how prices will behave in the future.

    If 20,000 $100K+ jobs disappeared tomorrow, how would prices respond? If 20,000 $100K+ jobs appeared tomorrow, how would prices respond? I doubt anyone knows.

    The only thing I’d be confident concluding is that no one should expect year over year changes in housing pricing to be clustered in a narrow range (e.g 2%-8%). I would expect some years of 10%+ appreciation and some years of 10%+ depreciation.

  34. 34
    Deerhawke says:

    The thread started with the monthly stats — inventory dramatically down, sales and prices up strongly. Along the way it became a discussion of sorts on what kind of things could affect the local economy so that a bet on real estate might be a bad bet. It seems that the only thing people could see could affecting inventory was the implosion of a major local employer like Microsoft or Amazon.

    I am not an insider in the high-tech area, but my impression is that Microsoft is a cash cow that is stronger and more entrepreneurial under Satya Nadella. I have a lot of background in retail and everyone I know in that world feels that Amazon is getting stronger, more diverse, more entrenched and downright scarier.

    Can nobody think of another reason why we might get a major change that tames this market?

    In other words, are we going to be in the same position in the spring of ’16 as we are now? Inventory down by double digits again? Prices and sales up double digits?

  35. 35
    boater says:

    RE: Deerhawke @ 34
    Only thing I can think of to really tame the market is when prices hit the upper bounds of whoever is currently buying. That’s the point where we should stop seeing such aggressive price appreciation. When prices show some stability I think you’ll see a substantial increase in inventory because people won’t be afraid to sell then buy in a .5-2 year timeframe. Right now the math for remodel vs relocate strongly favors remodel.

  36. 36

    RE: Deerhawke @ 34

    My concern for several years has not been that the companies creating the price increases will implode, but that some of them are too potentially transient.

    Microsoft owns their main campus (as far as I know). Google rents their space in Kirkland. On the North Seattle bid outs, a lot of that is coming from new hires who are coming to work in companies that rent vs own space. Amazon the exception.

    In a downsizing of a company on a major scale due to woeful economic and unexpected events, they usually pull their employees from rented space and move them to owned space.

    When Microsoft impacts prices near main campus that does not bother me as even if they cut their workforce dramatically, main campus would still always be filled.

    When Google started impacting the price of Everest in Kirkland specifically, and parts of Houghton, it bothered me that they rent vs own, as shifting to main campus for them would be sending everyone to the Googleplex which they own vs rent.

    Even without a change in the companies earnings or success rate, pulling employees out of rented vs owned space is my fear. Companies will do that from time to time with no rhyme or reason or concern for the impact on the surrounding area home prices. So home prices around company owned land is more stable theoretically than company rented space.

    That is my greatest concern.

  37. 37
    Blurtman says:

    RE: boater @ 35 – Yup, but if mortgage rates ever go up appreciably, non-cash buyers will hit a payment wall as well.

  38. 38
    Deerhawke says:

    Generally when you have a medium sized player, they might get bought out by a bigger player and the jobs relocated elsewhere. That is what basically happened with Amgen– and for Seattle that was not even a bump in the road.

    Now that Expedia is relocating there, that is a wash regionally, but is bound to put upward pressure on Seattle core prices.

    In the case of Google, they are the big dog. They buy out other companies not vice versa. They are here in Seattle when in theory it would be easier to control things by keeping everything in Mountainview. But they are here to pick up talented MS people and to keep a periscope on what is happening in cloud computing. I am not really that worried about them moving jobs away.

    Interest rates are a concern, but there is likely to be a delay on Fed increases to accomodate the EU.

    Short of another 911 or the big Northwest earthquake, I think it is going to be a seller’s market for quite some time to come.

  39. 39
    Blurtman says:

    RE: Deerhawke @ 38 – Or the Rapture. Could lower demand, as sellers and certainly realtors are more likely to be going to hell.

  40. 40
    Deerhawke says:

    Well, I think you have it backwards. All the good people are supposed to go away and all the bad people will be left behind in misery. So, it could create more demand and less supply. And that is the basis of the misery.

  41. 41
    boater says:

    RE: Deerhawke @ 38
    You are absolutely correct that in Google’s case they would have preferred to have everyone in Mountain View but they hit a wall. Talented folks in Seattle and other major cities do not have to move to work on fun challenging places and would not move just to join Google. The major companies (Google, Microsoft, Facebook, etc) had to open satellite offices to compete with each other for the top talent.

    Own vs Rent is irreverent for companies like Google, Microsoft and Facebook. It takes them ages to figure out where they want to move to. Once they do they spend huge amounts of time/money to build the campuses out to match their philosophies. Even if they could move the office keep in mind they opened the office in the location to attract the talent that would not move. They can’t move too far or the talent will not follow.

  42. 42
    Mike says:

    By Ardell DellaLoggia @ 16:

    RE: Mike @ 3

    Never said that Mike…never did. You like to misquote me a lot. I must have gotten under your skin about something, somewhere, sometime. But I have never dropped first time buyers. My first time buyers often buy very expensive homes well below their means. So what you are saying (that you say I said) just makes no sense.

    I wrote a post about it being difficult to impossible to find a single family home for under $300,000 in the areas where I work. Maybe that translated to “no longer working with first time buyers” to you.

    People can still get a nice house for under $400,000.

    https://www.redfin.com/WA/Shoreline/2006-N-145th-St-98133/home/81917

    But under $300,000 was tough in 2006 and it is tough now and it is almost never easy because of the value of the land.

    I had no idea you’d take that assertion as offensive in any way. Sorry.

  43. 43

    RE: Mike @ 42

    I never quite understood the “first time buyer” label. I don’t see much difference between my first time buyer clients and my clients who have bought and sold before. I usually don’t make that distinction or treat first time buyers any differently than anyone else. Many of my first time buyer clients know a lot more about many things than buyers who may have bought a house many years ago. The first time buyers are often more up to date with how the current market functions.

  44. 44

    There is a Disconnect on the Rationale of the Blogs

    On one hand they reference a listing base historically low, then allege that there are plenty of new employees that are Millenials coming to Seattle? Plenty of $700K-$1M homes for this deluge of new employees to fight over?

    I need to see something in writing with numbers on the influx of new employees hitting Seattle buying from a historically low listing base. In retrospect the truth sounds more like a few new tech employees are moving to Seattle to fight over the scarce listing stock. Some are renting too.

  45. 45

    RE: softwarengineer @ 44

    Not fewer listings for the same number of buyers, as in North Seattle for the first 5 months of 2015 there are 2,464 properties sold and last year during the same time there were 2,418 properties sold.

    Not a significant difference but also not showing that there were fewer properties to be had this year over last. 2013 there were 2,460 sold and in 2012 there were 2,109.

    I did not separate housing types for the above stats. They include single family, townhomes and condos.

    As I have said many times, the talk about low inventory has more to do with less standing inventory at month end because homes sell more quickly, than it has to do with fewer homes being available to purchase. If people are buying more homes or at least an equal number of homes, it goes without saying that there weren’t fewer to purchase.

    Required disclosure: Stats in the post are not compiled, verified or published by the Northwest Multiple Listing Service.

  46. 46
    Octavius says:

    I’ve heard from a few people over the last couple of years, that there is a lot more bureaucracy today to get a mortgage loan (compared to 2000-2007). Curious how significant a factor this plays in the thinking of potential sellers — perhaps they are worried about qualifying for a new loan, and so are reluctant to sell, since it means they’d have to buy again (for most anyway).

  47. 47
    Octavius says:

    By Ardell DellaLoggia @ 45:

    RE: softwarengineer @ 44

    As I have said many times, the talk about low inventory has more to do with less standing inventory at month end because homes sell more quickly, than it has to do with fewer homes being available to purchase. If people are buying more homes or at least an equal number of homes, it goes without saying that there weren’t fewer to purchase.

    Question about this conclusion. Couldn’t it also mean that there was more for sale previously, but not all that was listed for sale, sold. In other words, just because today sees as many sales as previously, doesn’t mean that today has as much for sale, it could mean that a higher % of what is for sale, is selling. Meaning… not everything that is listed, sells, and the % of what goes unsold could be going down.

  48. 48

    RE: Octavius @ 47

    Yes and a big factor is each year it seems that more sales happen outside of the mls, and that could be skewing the numbers as well to the low side of sold each year. But SWE asked for real data and what sold inside the mls is the only real data I can easily access. It’s possible for me to do the numbers in the County closings vs in the mls, but it’s harder to define the property by class in Seattle without mixing in commercial or semi-commercial/multi family properties.

    I don’t include commercial or multi family in my stats and staying strictly “residential” is easier to be accurate in the mls vs on the County closings level.

    I find in real life that many buyers complain about “low inventory” after they paint themselves into a corner by eliminating most of the homes that exist from their search. Their list of what they don’t want in some areas, like homes built before 2000 with a 7 rank or lower elementary,as example, can exclude almost all of the houses that exist.

    If it doesn’t exist in the area they are looking, it can’t be for sale. That is low inventory to them. Not enough of what they want to choose from.

  49. 49
    CRiver says:

    No doubt that the market is tight right now but I do wonder how much of the “low inventory” story is really a story of “high churn”? The first chart shows that closings are at close to record highs while the inventory chart that everyone focuses on is at rock bottom. Right now houses are selling at a rate only surpassed in 2004-5 when “flipping” was the new rage — unlike now where I don’t think a lot of stuff is selling only to come back 6 months later with a new coat of paint and poorly installed plumbing fixtures.

    Based purely on checking Redfin 2-3 times a week and seeing what comes on and off it doesn’t seem like there is really a shortage of inventory, but rather that there is a shortage of stale inventory. Would be really curious to see how how new listing rates for houses added the market each month have been trending. My impression is that what we have is really not a shortage of sellers compared to historical norms, but an excess of very impatient buyers. If that is the case the month-end inventory numbers might give the impression that nobody wants to sell, when the real issue is that right now everybody wants to buy. Not sure it really matters but I do think the claims that there is “nothing to buy” out there are a bit of an exaggeration assuming that buyers are willing to move fast and their ducks in a row.

    Tracking the number of new listings per month relative to historical averages would also be illuminating in that you could then see how long it would take to potentially build inventory back up if you dropped the number of closings each month back down to a more typical rate, say 2012 when the recovery was starting up but the market wasn’t’ crazy yet.

  50. 50
    Octavius says:

    By CRiver @ 49:

    My impression is that what we have is really not a shortage of sellers compared to historical norms, but an excess of very impatient buyers.

    Good point. To take this a step further, I don’t think it is that local buyers have become impatient, but rather companies like Amazon, Microsoft, Expedia, T-Mobile, Google, EBay, etc, are bringing in hundreds if not thousands of new, 6-figure, buyers to this area every month. Those buyers might seem impatient because they are moving here and looking for places to live. So… supply might not be lower than previous years, but demand is higher, which means the demand and supply curves are now intersecting at a higher price. Saying that “supply seems low” is another way of describing what people are seeing on the price chart that shows where supply and demand now intersect.

  51. 51
    Mike says:

    By Octavius @ 50:

    By CRiver @ 49:

    My impression is that what we have is really not a shortage of sellers compared to historical norms, but an excess of very impatient buyers.

    Good point. To take this a step further, I don’t think it is that local buyers have become impatient, but rather companies like Amazon, Microsoft, Expedia, T-Mobile, Google, EBay, etc, are bringing in hundreds if not thousands of new, 6-figure, buyers to this area every month. Those buyers might seem impatient because they are moving here and looking for places to live. So… supply might not be lower than previous years, but demand is higher, which means the demand and supply curves are now intersecting at a higher price. Saying that “supply seems low” is another way of describing what people are seeing on the price chart that shows where supply and demand now intersect.

    Which is why move in ready, remodeled homes in core neighborhoods are getting bid up 10-20%+ while fixer uppers on the same street are selling for asking price or a tiny bit over. It’s telling that the 1100 sq ft Ballard house that went for $717K with a $560K asking has several other larger listings nearby that sold at or close to list. They just weren’t in the kind of fresh turn key condition that leads to a bidding war. People are paying top dollar for fully remodeled modern homes because they don’t want to take on a project house.

  52. 52

    By Mike @ 51:

    Which is why move in ready, remodeled homes in core neighborhoods are getting bid up 10-20%+ while fixer uppers on the same street are selling for asking price or a tiny bit over. It’s telling that the 1100 sq ft Ballard house that went for $717K with a $560K asking has several other larger listings nearby that sold at or close to list. They just weren’t in the kind of fresh turn key condition that leads to a bidding war. People are paying top dollar for fully remodeled modern homes because they don’t want to take on a project house.

    Well first, I have a big problem with any analysis that is based off of comparing sale price to list price. That makes about as much sense as those buyers who in weaker markets only wanted to offer 90% of whatever the list price was on the property. The house could have been listed for 20% under value and they still wanted to offer 10% less. List price is just a number picked by a seller–nothing more.

    I would agree that you’re more likely to get more buyers bidding on a house that is in better condition. But I’ve seen some properties sell which were in a very dated condition but priced as if they were updated. And yes, more bidders is better than fewer bidders, but it doesn’t mean that the fixer or dated houses are not going for very good prices in some hot neighborhoods.

  53. 53
    Mike says:

    By Kary L. Krismer @ 52:

    By Mike @ 51:

    Which is why move in ready, remodeled homes in core neighborhoods are getting bid up 10-20%+ while fixer uppers on the same street are selling for asking price or a tiny bit over. It’s telling that the 1100 sq ft Ballard house that went for $717K with a $560K asking has several other larger listings nearby that sold at or close to list. They just weren’t in the kind of fresh turn key condition that leads to a bidding war. People are paying top dollar for fully remodeled modern homes because they don’t want to take on a project house.

    Well first, I have a big problem with any analysis that is based off of comparing sale price to list price. That makes about as much sense as those buyers who in weaker markets only wanted to offer 90% of whatever the list price was on the property. The house could have been listed for 20% under value and they still wanted to offer 10% less. List price is just a number picked by a seller–nothing more.

    I would agree that you’re more likely to get more buyers bidding on a house that is in better condition. But I’ve seen some properties sell which were in a very dated condition but priced as if they were updated. And yes, more bidders is better than fewer bidders, but it doesn’t mean that the fixer or dated houses are not going for very good prices in some hot neighborhoods.

    Just looking at list price is misleading, I’d agree on that. The bidding wars that are significant are the ones where the sale price isn’t supported by comps. The point I was making is that in the same neighborhood you’ll see properties sell with little fanfare at a price that is supported by comps, and other properties go into a bidding war and sell out of line with comps. The difference is usually based on condition. I’m just not seeing very many properties that are in poor or outdated condition getting bid up well above comps to anywhere near the degree as sleek, renovated turn key properties.

  54. 54
    Octavius says:

    By Mike @ 51:

    By Octavius @ 50:

    By CRiver @ 49:

    My impression is that what we have is really not a shortage of sellers compared to historical norms, but an excess of very impatient buyers.

    Good point. To take this a step further, I don’t think it is that local buyers have become impatient, but rather companies like Amazon, Microsoft, Expedia, T-Mobile, Google, EBay, etc, are bringing in hundreds if not thousands of new, 6-figure, buyers to this area every month. Those buyers might seem impatient because they are moving here and looking for places to live. So… supply might not be lower than previous years, but demand is higher, which means the demand and supply curves are now intersecting at a higher price. Saying that “supply seems low” is another way of describing what people are seeing on the price chart that shows where supply and demand now intersect.

    It’s telling that the 1100 sq ft Ballard house that went for $717K with a $560K asking has several other larger listings nearby that sold at or close to list.

    Pardon if this is a dumb question, but I’m new to this site. Where is this 1100 sq ft Ballard house you refer to? Is this in this article? (I missed it). I’m curious about the details. Regards

    [Edit]
    I was able to find the house that I think you are referring to using Zillow:
    http://www.zillow.com/homedetails/7033-9th-Ave-NW-Seattle-WA-98117/48673145_zpid/
    That is quite a price for a 3bd, 1ba, and 1 off street parking spot. I wish there were some pics in the listing, I’m quite curious how pristine this house was.

  55. 55
    Mike says:

    RE: Octavius @ 54

    Redfin has the listing pictures both before and after the remodel.

    https://www.redfin.com/WA/Seattle/7033-9th-Ave-NW-98117/home/495028

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