NWMLS: Inventory Hits New All-Time Low

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

Home buyers, sellers who stay active during holidays are being rewarded during “intense” market
Inventory remains “critically low,” but there are fewer house-hunters in the hunt during this holiday season so motivated sellers and buyers are seeing success, according to brokers with Northwest Multiple Listing Service. Its just-released statistics for November show year-over-year gains in pending sales, closed sales, and prices, but a steep decline in inventory.

“The housing market continues to be red-hot on a seasonal basis, but this winter will be even more intense given the dangerously low inventory,” remarked J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.

[Broker Ken] Anderson said buyers have remained active all year. “Every month this year our market has improved for sellers. It is really a uniquely good time,” he observed.

Scott agreed, noting “there is more pressure on new listings than we had last winter.” A higher percentage of homes is selling within the first 30 days, according to his analysis. “This is setting the stage for a frenzy market in the spring of 2016. Even if interest rates go up slightly, buyer demand and low inventory will push prices up,” he believes.

When does J. Lennox Scott not believe that home prices will be pushed up? (Answer: pretty much never.)

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):

November 2015 Number MOM YOY Buyers Sellers
Active Listings 2,302 -24.9% -37.1%
Closed Sales 1,741 -24.3% -6.9%
SAAS (?) 0.96 -8.7% -3.4%
Pending Sales 2,122 -20.7% -0.3%
Months of Supply 1.32 -0.7% -32.4%
Median Price* $499,950 +4.2% +13.6%

This is the first time in quite a while we’ve seen any green arrows for buyers in the table above. However, it’s hard to get even a little bit excited, given the all-time low inventory level. At this point there are so few homes for sale that it’s going to be difficult for sales to come in very strong.

Here’s your closed sales yearly comparison chart:

King County SFH Closed Sales

Closed sales fell 24 percent from October to November. Last year they fell 16 percent over the same period. Meanwhile year-over-year closed sales were in the red for the first time since September 2014.

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

King County SFH Inventory

Inventory fell dramatically from October to November, and the year-over-year number continued to drop as well. Last month I said I expected to see a new all-time low for inventory in January. Here we are in November and we’ve already hit it. It looks almost certain that I’ll need to adjust the scale on that chart next month.

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

For the first time in over a year, the red demand line moved to the buyer’s side of the chart. However, that blue supply line is showing no signs of moving toward back toward balance.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

Year-over-year price growth nearly doubled from +7.3 percent in October to +13.6 percent in November.

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 is still bouncing around in the same $480,000 to $500,000 range it has been in since April.

October 2015: $499,950
July 2007: $481,000 (pre-2015 high)

Here’s this month’s article from the Seattle Times: King County home prices climb amid worst shortage of inventory in a decade

Check back tomorrow 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.

84 comments:

  1. 1
    Jay says:

    The interesting observation that I have seen on Redfin recently is that there are quite a lot of houses that have been sitting on the market for days already. The lack of inventory is very specific to neighborhoods that are popular and meet all the needs for potential buyers!

  2. 2
    Erik says:

    The median price curve looks like the 2012 curve. Fantastic!! Hold onto your homes owners. Prices will increase faster and faster as we near the end of this bubble. That will be the exciting part. Holding on as long as we can and knowing this thing is gonna blow up at some point. Feels like gambling. I lost big the first place. Huge win on the second place. I wanna have zero mortgage after cashing in this last place.

    My goal has been to have a nice place without a mortgage through buying and selling at the right times. If we have another bust, it’s very possible. The trick is to sell before we bust again.

  3. 3
    Blurtman says:

    Developments are selling out up this way. Reese’s Run sold out quickly, and homes were going for $900k and above. 100+ developments are underway. Massive retention ponds are being built.

    “If you are seeking to buy or sell a Sammamish Luxury Home in an executive community,…”

    State so all the world will know: “I am an executive, and I am proud!” And don’t forget the Land Rover and Tesla. Tutoring businesses are big up this way. “The kid has got to have an edge.” Rarely are people seen outside their megamansions.

    http://www.king5.com/story/news/local/2014/08/26/sammamish-construction-homes/14653951/

    This is Blurt Man, reporting from the Sammamish Incline (Not the Plateau!)

  4. 4
    GoHawks says:

    Saw the Seattle Times article saying we are adding 6,000 new residents a month in King County. If just a fraction of those are buyers, what happens to prices in 2016 given historic low inventory levels.

  5. 5
    Erik says:

    RE: GoHawks @ 4
    I am waiting to sell for over double what I paid. It will probably only be 3 years more.

  6. 6
    wreckingbull says:

    RE: Blurtman @ 3

    She says there’s no shortage of demand for these properties as young families leave downtown Seattle in search of peace and quiet, and a yard

    What!?? This must be REIC propaganda. The suburbs are dying. I know because I heard it right here in the comment section of SB.

  7. 7
    Blurtman says:

    By wreckingbull @ 6:

    RE: Blurtman @ 3

    She says there’s no shortage of demand for these properties as young families leave downtown Seattle in search of peace and quiet, and a yard

    What!?? This must be REIC propaganda. The suburbs are dying. I know because I heard it right here in the comment section of SB.

    Nope. Sammamish is getting a Town Center and Metropolitan Market. Traffic on 228th is freeway-like at peak. The Highlands have take off and even have a sort of downtown with restaurants, coffee shops, etc. Even Snoqualmie is getting somewhat gentrified.

  8. 8
    Deerhawke says:

    Tim I am sure that you are terribly busy but I am very disappointed.

    Normally NWMLS press releases bring out your true snarkiness. And here you have J. Lennox Scott (really, what an asinine name) telling people to jump into the market before the end of the year or abandon all hope because otherwise they might be consumed by the “dangerously low inventory” vortex! It is a great time for sellers and a great time for quick buyers who are willing to be brave and buy now, now now, rather than exposing themselves to the “frenzy market in the spring of 2016”.

    These dorks threw you some softballs and you let them go by. They presented their tushes and they went unkicked.

    Really, there are times when I think a gag writer writes his copy to make J. Lennox sound sound like the Thurston Howell III of Seattle real estate.

  9. 9
    Blurtman says:

    In 1980, I fled New Jersey for Encinitas, CA. I had no plan except that I wanted to live in southern CA and the North County looked the most interesting. I used to work in a lab at a biotech company on Torreyana Road just east of the Torrey Pines Golf Course. At the time there was not much eastward. A Navy plane crashed there once and did no damage, except to the shrubs that grew there. Now for many miles eastward are instant communities.

    In 1980, the future multimillion dollar home would have been viewed as unlikely in the coastal North County town of Leucadia, a beat area with infrequent and poorly maintained sidewalks, and long hair surfer types. In Encinitas, there lived a band of Sand People, folks who would live on the beach in tents and homemade shelters. Leftover hippies, small time drug dealers, nut job dreamers. Now, the price of properties in Encinitas and Leucadia are pretty rich. And I expect the same to happen here in the long term.

  10. 10
    Erik says:

    RE: Deerhawke @ 8
    Buy now or get priced out forever!!!!

  11. 11
    Deerhawke says:

    Actually Erik, not bad advice, but I think right now is a tough time to buy. I am not saying I wouldn’t or won’t– it is just hard to find anything that doesn’t seem too expensive. I did all my buying last year and have spent this year digesting– developing or fixing up what I bought.

    As much as I think our boy J. Lennox is a pompous ass, I actually agree with him. The holidays are a good time to buy because they are always a good time to buy. There is less competition and sellers have a strange urge to finish things up by the end of the year. And given how inventory has tanked (down 42% YOY in Seattle!) it is likely that the spring bump in prices will be more impressive than ever. I think you will see median prices above $550k for King County and above $650K for Seattle by July.

  12. 12
    ESS says:

    By GoHawks @ 4:

    Saw the Seattle Times article saying we are adding 6,000 new residents a month in King County. If just a fraction of those are buyers, what happens to prices in 2016 given historic low inventory levels.

    Correct. I also reviewed that article and was stunned to observe how many new licenses have been issued over the past few years.

    The stats and equations regarding housing inventory never include the increase or decrease of population, and in this case, the percentage of new residents that are planning or hoping to purchase a residence.

    Thus it would be useful to not only have inventory numbers, but percentage of inventory as compared to population increases or decreases to determine which way that trend is going. Increased numbers of newcomers will include those who want to buy a house or condo, thus putting a strain on an already tight market.

    And that strain will be made worse or better (depending on which side of the ownership equation one finds oneself), when local or state government gets involved to “alleviate the situation” .

  13. 13
    GoHawks says:

    RE: ESS @ 12 – Agree ESS, population numbers would be a very helpful to have. Tim, is that something that can be added?

    Essentially we are adding a town’s worth of people the size of Redmond every 9 months.

  14. 14
    Erik says:

    RE: Deerhawke @ 11
    I agree. I don’t know your business, but theoretically holding onto property seems like a good idea to me.
    The next few years will likely have strong price increases and selling is expensive. If us bubble folk can sell at the right time, there is a lot of money to be made from this bubble.

  15. 15

    From article: “At this point there are so few homes for sale that it’s going to be difficult for sales to come in very strong.”

    Tim, good job recognizing that fact.

    Hopefully those considering getting into the real estate agent biz will understand that having record for the month and near record ever median prices by itself isn’t really that good of news for real estate agents. Although on the bright side, the lack of inventory does greatly reduce the expenditure on gasoline. ;-)

  16. 16
    Green-Horn Real-Estate Investor says:

    RE: GoHawks @ 4

    OK, if we are adding 6000 net new households per month, that’s 72K a year.

    How many net new housing units are they constructing each year?

    In my neighborhood they do tear down a few houses and build 4 or 5-pack townhomes.
    And in central areas of Seattle they’re building some apartments…

    What is the trajectory for additional housing supply in the market?

    What kind of detailed data on price developments and projections for specific neighborhoods and districts are available real estate professionals?

  17. 17

    RE: Green-Horn Real-Estate Investor @ 16

    1) “4 or 5 pack townhomes” are usually limited by zoning requirements to streets that are on or a few streets in from a major arterial and do not impact the most interior sections of neighborhoods.

    2) Pricing in this market is being driven more by buyers than sellers and the makeup of those buyers is somewhat unknown. How many are full families being relocated vs single professionals, as example.

    3) Housing “units” whether they be rentals or to be purchased as owner occupied runs the risk of over-building in units that are too small for full families to consider. I might say likewise too large for single professionals to consider, but largely that data point is pushing rents up vs home and condo prices.

    4) The “bubble” that will pop may be caused by a change in the mix of buyers and their decisions vs a reduction in the number of buyers. Local buyers tend to buy very differently from newcomers. Newcomers are more driven by school rankings and proximity to work than long term area residents. This is causing bidding wars as newcomers using the same considerations are focusing on the same parameters. Long term area residents are more open to secondary neighborhoods both in Seattle and The Eastside where the home prices are not bidding up to the same extent as the more obvious “best places to live” neighborhoods.

    5) At the moment we are at a bit of an impasse with a huge disparity between the primary markets and the secondary markets. Newcomers to the area are getting overly frustrated with the lack of supply in the areas they want to be in a house they want to buy. Will they move to the secondary neighborhoods? Will they not buy at all and rent instead? Future pricing will largely depend on which buyers choose. At present there are still too many wanting to buy the same thing in the same place at the same price. I think that will change because it has to change. Every multiple offer situation (the most recent I saw was 7) leaves 6 people without a house. Will those 6 people try a different area? Bid on the next house in the same area along with a few new to the market buyers creating 9 offers vs 6? Will they quit and rent for 12 months diminishing the buyer pool?

    When the future of the market and future pricing in that market is in the hands of the buyers vs the sellers it is much less predictive. If they choose to rent instead in large numbers out of frustration with the ever climbing prices and losing out in bidding wars, and they take on 12 month leases which is the most common lease arrangement available, you could see 12 month change. At the beginning of that 12 months, if they can shift out of the buying market in large enough numbers, they can create a temporary downtown or more correctly a slowing of the upward acceleration of prices. But when they all come back in at the same time…the cycle will repeat itself.

    A general recession could dramatically change the number of newcomers into the market. Without a general recession any modest weakness in price will be short-lived. With a general recession…and to some extent who becomes our next President could create that outcome, there will be a big POP. Perhaps not back to 2011 prices but at least back to end of 2013 prices…and very quickly.

    There is no benefit to predicting future prices in the 4th quarter EVER. We are about 30 to 45 days away from the beginning of the new cycle. This is true every year except that from what I am seeing the new cycle will open up with a bang in 1st quarter. That will sustain through end of May along the same projectory lines as this year. Watch for a short season or an elongated season. If the market stays strong into the 4th quarter as to prices same as this year, then lacking an unforseen event in the overall markets take this year for each zip code as to price increase on a % basis and repeat it for 2016.

    There was a slight chance that the Presidential Election Cycle would cause a change…but it hasn’t. It still could. but I doubt it.

  18. 18
    HappyRenter says:

    RE: Erik @ 5
    Curiosity: In the last blog at comment 42, you claimed that there will be another 9 years of price increases. Here, you say it will be another three years until the bubble pops. It’s hard to predict when it will happen, but I think that three years is more likely than 9 years.

  19. 19
    HappyRenter says:

    RE: Deerhawke @ 11
    Personally, I think that it is not worth it to jump onto the band wagon now. Look at how the gold bubble popped and there are theories that we still have not reached bottom in gold price (at least valued in US dollars).

  20. 20

    RE: HappyRenter @ 19 – Personally I think it’s best not to invest based on what random people say on the Internet. Unless maybe you’re using it as a contra-indicator. ;-)

  21. 21
    Erik says:

    RE: HappyRenter @ 18
    Most Common Bubble interval = 18 years
    Top of last bubble = 2007
    2007+18=2025
    Subtract 1 year for safety factor…
    2025-1 = 2024

    The more years you subtract from the 2025 bubble top that is most common, the more safe the bet is.

    I am very comfortable with 3 years based on our lack on inventory and where it feels like we are at in recovery. With low inventory we are not about to burst yet.

  22. 22
    ESS says:

    Speaking of renting rather than buying as a result of any real or imagined bubble, it will be interesting times for those who rent according to the article below

    http://www.marketwatch.com/story/renting-isnt-getting-any-cheaper-analysts-say-2015-12-09

  23. 23
    HappyRenter says:

    RE: Kary L. Krismer @ 20
    This is why I said “personally”, i.e., what works for me right now.

  24. 24
    Blurtman says:

    You are seeing new homes selling for over $900k in Sammamish, and more are on the way. Somebody has the money to snatch up these GEMS, no matter what sayeth the sayers of Nay.

  25. 25
    HappyRenter says:

    RE: Erik @ 21
    Somebody in a previous blog, I think Ardell, pointed out that the inventory is low because of the large number of closed sales. What comes on the market, sells. The first chart in this blog shows that last summer closed sales were almost as high as 2004-2005. I think it will be interesting to see whether this continues into next year. It seems that it is slowing down this fall.

  26. 26
    Erik says:

    RE: HappyRenter @ 25
    I purposely don’t get caught up in causation anymore. I know that I am not smart enough to untangle that complicated web of why something is happening to forecast what will happen.

    What I think I do understand is that inventory is low. Before a bubble bursts, supply has to exceed demand. That has not happened, therefore the bubble will not pop yet. Kary bought with mostly cash at the height of the last bubble. I wouldn’t listen to his advice on timing if I were you. I’m trying to ride the bubbles for extra cash. It’s a good idea. You should consider studying real estate bubbles and riding them. They are somewhat predictable.

  27. 27

    RE: HappyRenter @ 25

    Yes, I have said it many, many times. :) Not necessarily the “large number of closed sales” but the speed at which listings tend to sell due to advanced technology.

    10 years ago buyers didn’t get “instant alerts” to know about the property within 15 minutes of it being listed. Houses actually sell a little slower than they would if the seller did not fairly regularly insist on a showing time of at least 4 days or so before looking at offers.

    I have also seen sellers pull a property off market in less than 30 days if the market did not produce the frenzy they expected. I have not personally had that happen with one of my clients, but I do see it. So that quick removal from the market also skews the numbers.

    Taking a tally of “standing” inventory on one day each month is only giving you the number of homes that people are not readily interested in buying. Not all of them as some will have just been listed. But the majority of them are homes the market has rejected for one reason or another. Then the buyer has to figure out why the market reacted negatively and determine if that negative is fixable or not.

    I see no benefit to tracking inventory, mainly because it is not uncommon for me to have a buyer interested in a new listing every week and for that listing to be sold at the end of 4 to 7 days and before the end of the tally date, pretty regularly.

    None on market? How about the 6 that just sold during that month and before that day at the end of the month when you took the tally? If you don’t count the properties that came on market and went pending during the 30 day period, it’s pretty meaningless.

  28. 28

    RE: Erik @ 26

    Instead of inventory is low, change that to there are more buyers than sellers. In our area the issue is more the excessive demand than the decreased supply. The difference being that incoming can change more rapidly than the supply of houses and quickly swing the pendulum the other way. You can’t merely track current incoming as many buyers rented for a period after arriving and before buying.

    But if there would be a recession with layoffs and hiring freezes you would quickly see that the demand side is what is impacting the market more so than the supply side.

  29. 29
    ARDELL says:

    RE: HappyRenter @ 25

    I just saw a crazy bid out, a true bidding war, within the last few days. So no. The only slow down is houses coming on market, which is always the case until the new cycle starts 1/8 to 1/15. We still have too many buyers for the same houses.

  30. 30
    Jay says:

    RE: Deerhawke @ 11 – I absolutely agree with you! Your advice is great.

    I worked for a builder in college as a summer job, and I saw that agents actually got paid as much as the builder, which was kind of unfair due to the amount of work that a builder did compared to the agents.

  31. 31
    Deerhawke says:

    Ardell is right in pointing to the demand side factors, but there are both demand side factors and supply side factors in this supply/demand imbalance. Right now we have a lot of people moving to Seattle and many of them want to make a longer term investment in staying in the area (strong demand side). On top of that we have a fair number of people wanting to hold onto their real estate because they feel that selling now will yield less than selling later (weak supply side). Forced sales such as foreclosures are much less of a factor than during the downturn. So with relatively little new supply that can come into the equation in the near term (land use restrictions, difficulty in getting permits, etc) it is clear that the imbalance will get worked out through the price mechanism.

    In the neighborhoods that I track in Seattle, I notice that pending sales are greater than sales are greater than new listings (P>S>L). This kind of thing usually only happens in the spring when there is a bit of a market frenzy, usually in March and April.

    But here it is happening during what is traditionally the deadest part of the real estate calendar, a time when many agents traditionally took off for vacation in warmer places.

    Well, maybe this is a fluke. Or maybe what we are seeing is that the spring frenzy has gotten off to a really, really early start during the winter. If that is the case, then we know to expect much bigger price increases even than last year.

  32. 32
    ESS says:

    RE: Deerhawke @ 31

    Or maybe what we are seeing is that the spring frenzy has gotten off to a really, really early start during the winter. If that is the case, then we know to expect much bigger price increases even than last year.

    I think you are correct Deerhawke, which will make for an interesting spring. And if interest rates start to increase, that may induce some panic buying, which will make it a more interesting spring.

  33. 33
    ESS says:

    By ARDELL @ 29:

    RE: HappyRenter @ 25

    I just saw a crazy bid out, a true bidding war, within the last few days. So no. The only slow down is houses coming on market, which is always the case until the new cycle starts 1/8 to 1/15. We still have too many buyers for the same houses.

    Of course if one is a seller trying to get top dollar – there can never be too many buyers. Just depends on which side of the buy/sell equation one finds oneself.
    My plan if I leave this area. Sell my properties in an environment that has too many buyers for the same house or houses, and move to an area that has too many sellers for the same buyer.

  34. 34

    RE: Deerhawke @ 31

    I call that “an elongated season” and basically a season with no end. It only happens when the following year is expected to be more of the same in an upward pattern. 2012, while an up year, did not have the same pattern, but rather was a never ending January. The current push didn’t start until first quarter of 2013 even though 2012 was an up year. 2012 was an up year but of normal cycle, i.e. seasonal adjustments.

    The movement at present is more like first quarter 2007. A change in pricing will not likely be predictable by monitoring the seasonal variations, but instead will be as abrupt as the 8/3/2007 change and equally caused by national, external factors. Likely the mortgage industry again, and I am seeing some odd behavior in that arena recently that could play out to another credit crisis, though of smaller proportions.

    Banks are cutting their rate in favor of only the primo of clients and also houses. More loans are faltering because a bank doesn’t want to fund the house than that they don’t want to fund the person. Mortgage Brokers are scrambling to find an edge because they can’t meet or beat the rates being offered by the banks. There is where you will see the errors made to capture marketshare. So instead of the banks failing, look for the non-bank lenders to have problems this time around. They are losing business to the banks. For those buying homes, especially with a loan over conforming amount, compare the bank rate to the rate “your agent’s lender” is giving you. There has been great disparity for at least 18 months or more. Notably U.S. Bank in Seattle and Chase “Personal Banking” office next to Microsoft on the 156th side.

    The difference will be that the players that fail will not be large enough to warrant a government bail out. Much like the local banks that failed without bailout around her last time around.

    The primary oddity of this market is the newcomers make no distinction when buying new homes as to the relative quality and reputation of the builder. Previously almost shunned builders are now able to grab the same prices as the best of builders. Very odd and I don’t know how that will turn out on resale of those homes.

  35. 35

    RE: ESS @ 33

    Not a good plan normally unless you want to go the SWE route of moving to Kansas City or “The Kansas City of Seattle”. When you shift during an upswing by selling high and buying “where no man has gone before”, you usually lose your shirt. Any area that is not increasing at all during the last bubble or this one, is likely to remain “no man’s land”. Better to pull your money and wait for the primary or secondary markets to dip than to move your money to a 4th or 5th tier market where demand is low in robust times.

    Better to find the house no one wants because of a fixable issue in a primary or secondary market than to shift to 4th or 5th tier markets. Actually I think SWE shifted to 6th tier. :)

  36. 36
    ESS says:

    By Ardell DellaLoggia @ 35:

    RE: ESS @ 33

    Not a good plan normally unless you want to go the SWE route of moving to Kansas City or “The Kansas City of Seattle”. When you shift during an upswing by selling high and buying “where no man has gone before”, you usually lose your shirt. Any area that is not increasing at all during the last bubble or this one, is likely to remain “no man’s land”. Better to pull your money and wait for the primary or secondary markets to dip than to move your money to a 4th or 5th tier market where demand is low in robust times.

    Better to find the house no one wants because of a fixable issue in a primary or secondary market than to shift to 4th or 5th tier markets. Actually I think SWE shifted to 6th tier. :)

    I see your point Ardell – but my next move in a few years will be to an active 55 plus area – different kind of market. There are places in Arizona where one can buy houses for one quarter of the price for a similar house in a hot Seattle market area, not to mention taxes that are one quarter the amount of the crazy amounts they are around here. Very enticing to free up money from the properties and do some of the things I enjoy. The savings alone in taxes each year get us one time to Europe for a vacation.. Better to spend the property tax money on a worthy cause (me) than to waste it in property taxes that never seem to make anything better.

    And if my house doesn’t appreciate over time – I will let my heirs worry about that.

  37. 37
    ARDELL says:

    RE: ESS @ 36

    Agree. I’ll be 62 in June. :)

  38. 38
    SellYourHome says:

    I am going through this shise. I sold in a market which was buyer’s and have come to Bellevue which is seller’s. If we were to rate on a scale of 1 to 10, where 1 is seller’s market and 10 is buyer’s market, here is what I notice in Eastside for single family homes based on listing price:
    $400K – $650K: Score 3
    $650K – $1MM: Score 1
    $1MM – $2MM: Score 3
    > $2MM: Score 5

    You can count on your hands the number of active listings between $700 – $950K in Redmond, Bellevue, Kirkland, Sammamish (with good schools, etc.)

    We were outbid on a 1980 house that came for $850K…it got sold for $950K all cash. Sellers had 12 offers in 3 days. The same home was last sold in 2008 for $700K.

    What is going on in Seattle? Who are these buyers? Are these all imports from Bay Area?

  39. 39
    Cap''n says:

    The Redfin estimate is pretty solid. Didn’t pick the most representsive comps, but got pretty close on price for my not-for-sale home. My comp estimate was only 3 percent different. To make it marginally on topic, I wonder if easy access to a more reliable tool (I.e., not a zestimate) will have any effect on price trends. If Redfin says it’s worth x, it must be so.

  40. 40
    Michael Debejos says:

    This whole supply/demand dynamic hinges on Amazon and its stock value. A discussion about Seattle real estate next year, for better or worse, equates to a discussion about Amazon’s hiring and stock price next year. Yet for some reason no one talks about it that way. It’s as if all this high demand for Seattle housing is falling from the sky and guaranteed to continue unabated.

    Then again, it’s not as if anyone can predict AMZN stock any better than they can Seattle house prices, but at least we can acknowledge that AMZN is among the most risky stocks one can own in terms of valuation and beta right now. Ergo so is Seattle real estate.

  41. 41
    Cap''n says:

    RE: Michael Debejos @ 39

    Certain companies reach a scale and level of diversification such that short term market fluctuations are largely irrelevant to local economic impact. In my view, AMZN could drop 30 percent or gain 30 percent and local real estate market fundamentals would only reflect their long term business strategy, not day to day valuations. Some folks overlook just how diversified Amazon is as a company. Much more of an alaphabet as opposed to Boeing.

  42. 42
    StupidLifeDecisions says:

    By Cap”n @ 40:

    RE: Michael Debejos @ 39

    Certain companies reach a scale and level of diversification such that short term market fluctuations are largely irrelevant to local economic impact. In my view, AMZN could drop 30 percent or gain 30 percent and local real estate market fundamentals would only reflect their long term business strategy, not day to day valuations. Some folks overlook just how diversified Amazon is as a company. Much more of an alaphabet as opposed to Boeing.

    Right now most owners and analyst of amazon stock are overlooking how overvalued this stock is. What is going on with this stock is a historical outlier and if you delve deeply enough, it looks like their long term business strategy is rife with threats that this company does not have the intellectual compasity to overcome, not to mention they are too arrogant to plan for them. Meanwhile, every single segment of this company has competitors who have the compasity to outsmart them given enough time. But I agree with the people who think this stock has a good chance of going above where it is now, but only because people are dumb enough to buy it and desperate to hang on to something that ended years ago.

    What’s happening with this stock looks very dangerous to me. This kind of cheap money ends up being very costly.

    This stock reminds me of a clueless woman my age who thinks she’s still got it but doesn’t.

  43. 43

    By StupidLifeDecisions @ 41:

    But I agree with the people who think this stock has a good chance of going above where it is now, but only because people are dumb enough to buy it and desperate to hang on to something that ended years ago.

    The stock market is sort of like Family Feud. You don’t need the correct answer–you need the answer other people think of, correct or not.

  44. 44
    David B. says:

    By Kary L. Krismer @ 42:

    The stock market is sort of like Family Feud. You don’t need the correct answer–you need the answer other people think of, correct or not.

    I think I’m going to have to add that one to my list of quotable quotes.

  45. 45

    When Seattle Housing Inventory Collapses

    Rents go through the roof too. Even middle incomes don’t qualify for high Seattle rents.

    Its not just Millenials renting….its X-Gens and Boomers too….in their 40s and 50s….

    http://finance.yahoo.com/news/more-half-us-renters-older-050630574.html

  46. 46

    RE: David B. @ 43

    Most Current Stock Investors Cringe When I Bring This Up

    Why are today’s stock market profits on dividends tied to baseline $120/bbl oil prices when oil’s $37/bbl and going down? This includes food, building materials, plastics, shipping, etc., etc.,….

    The American middle incomes DRASTICALLY need a “depression deflation” break in prices in general. Fixed incomes especially…

  47. 47
    MD says:

    RE: Kary L. Krismer @ 42 – Brilliant quote about the stock market.

  48. 48
    Michael Debejos says:

    By Cap”n @ 40:

    RE: Michael Debejos @ 39

    Certain companies reach a scale and level of diversification such that short term market fluctuations are largely irrelevant to local economic impact. In my view, AMZN could drop 30 percent or gain 30 percent and local real estate market fundamentals would only reflect their long term business strategy, not day to day valuations. Some folks overlook just how diversified Amazon is as a company. Much more of an alaphabet as opposed to Boeing.

    I’m baffled by this comment on a couple levels…

    1) How is Amazon so diversified that market fluctuations don’t impact its fortunes? Amazon isn’t some huge complex conglomerate whose revenue is evenly drawn from a wide variety of uncorrelated industries and countries. Its income is derived from only two material sources: Consumer discretionary retail spending and more recently business IT spending through AWS. That’s it.

    Look at the consumer discretionary ETF XLY…it’s a mirror image of AMZN stock. AMZN has been riding high on a hot sector, and therefore could go the other way just as easily when the sector cools off in a recession. You might say Amazon’s AWS line of business is real diversification from retail, but AWS = IT spending and IT spending goes up and down with recessions just like consumer spending does. AWS does nothing to reduce AMZN’s exposure to macro risk.

    2) “In my view, AMZN could drop 30 percent or gain 30 percent and local real estate market fundamentals would only reflect their long term business strategy, not day to day valuations.”

    Would you be equally likely to buy a house if tomorrow, as an AMZN employee, you had 30% less RSU money, serious doubts about whether you’ll even stay in Seattle without an AMZN job, and the looming prospect of having to pay back AMZN your relocation costs + sign on bonus if you end up leaving?

  49. 49
    Cap''n says:

    RE: Michael Debejos @ 47

    Haha. Way to set up a straw dog and tell it to sit.

    (1) You argue Amazon is not diversified because one of its two main sources of income is consumer discretionary spending. That makes no sense. Consumer spending drives 70 percent of our economy. Amazon has about 1000 ways it gets at those dollars, and has its hands on everything from AI to massive capital investments in distribution, production, etc. I never said its fortunes couldn’t be affected. But I believe that it can weather a 30 percent drop in its stock price and still have enough upside potential in any one of its businesses that no one will be thinking it’s amazon’s end of days. Simply because you are a company that sells goods and services does not mean you can’t be diversified.

    (2) if I worked for a company that was as committed as Amazon is to market share, with a demonstrated willingness to take a loss in the short term for long term gain, no. And even if it spooked a few employees, I don’t think it would be enough to significantly affect local SFH sales. Amazon is big, but it ain’t the only game in town.

    More importantly did anyone else try Redfin estimates? How did it match up for your properties?

  50. 50

    By MD @ 46:

    RE: Kary L. Krismer @ 42 – Brilliant quote about the stock market.

    You can thank the second windstorm in a row at 2:30 in the morning for that one. And the fact that only the first one took out our power.

  51. 51
    ESS says:

    Worried about Amazon having a negative affect on the market? I remember when Seattle was a one horse town – Boeing. Those of us that have been around long enough recall the Boeing collapse of the early 1970s and what that did to the market. Boeing had over one hundred thousand employees in a state of 2.5 million people, and they reduced their workforce by about half. Even if Amazon has difficulties and they reduce their workforce, the impact won’t be as great as it was when Boeing was the only game in town.

    Of course some of us were silly enough to actually buy housing at the tail end of the 1970s Boeing bust, and did quite well. It is not only booms that don’t last forever.

  52. 52
    boater says:

    Seattle has certain traits that have been consistent long term draws. On the coast, check. Near a top tier university, check. Liberal mindset, check. Major port, check. International airport, check.
    If it wasnt so gloomy and dark all winter this area would have popped a decade or two ago.

  53. 53
    HappyRenter says:

    RE: boater @ 52
    Your comment was posted at 11:11 AM when it was still overcast. Now, at 2:16 PM it’s sunny and beautiful. I don’t think that “gloomy and dark” is a deterrent for people to move to Seattle. I hear from a lot of people who are from the Midwest that they love the mild climate of Seattle.

  54. 54
    HappyRenter says:

    RE: Michael Debejos @ 48
    On top of this, I read a while ago that how a company treats its employees is also important for its stocks. Amazon does not seem to treat its employees very well. In the long run, this might be bad for its stocks?

  55. 55
    redmondjp says:

    RE: boater @ 52 – To continue your list of Seattle features: internet service slower than available in Grant County in Eastern WA, check.

    100+ year old water and sewer pipes and no sidewalks in many neighborhoods, check.

    No storm sewer system so we dump stormwater right into the sewer system instead which it can’t handle during storms, dumping raw sewage right into Puget Sound, check.

    Traffic lights from the World’s Fair era (1962) that are still in place, without a single improvement such as vehicle sensors added in 53 years, check.

    Lack of affordable housing and rentals, check.

    Maddening transportation policies that punish anybody in a car, check.

    Major failures of transportation projects (Bertha; defective-design cracked pontoons for the new 520 bridge that were band-aided with baling wire and chewing gum that will be lucky to last 30 years instead of the intended 75; I-90 light rail over a floating bridge expansion joint design conundrum that no engineering firm wants to put their professional stamp on; the absolute clusterfark of the new HOT lanes on 405 where the more you pay, the slower you go), check, check, check and checkmate!

    I’m sure that I missed a few things, but I see the negatives outweighing the positives for being in Seattle unless you are a two-income dual techie household that telecommutes.

  56. 56
    boater says:

    RE: redmondjp @ 55 – there are only two on your list that actually impact people’s decision on where to live. Traffic and housing.
    Traffic sucks but I cant find anywhere in history that it’s caused a cities downfall from popularity. It’s as silly as Yogi Beras comment ‘No one goes to that restaurant, it’s too crowded.’
    Housing is expensive no doubt. Building a better mix of condos and apartments would help.
    What you pointed out where reasons why a person can’t afford to live here which is a very different thing than pointing out why they don’t want to.

  57. 57
    boater says:

    RE: HappyRenter @ 53 – the majority of people moving here come from Southern climates. The adjustment to day length and rain can be a real issue for some. Especially those who only visit in the summer.

  58. 58

    By boater @ 57:

    RE: HappyRenter @ 53 – the majority of people moving here come from Southern climates. The adjustment to day length and rain can be a real issue for some. Especially those who only visit in the summer.

    I’d have a similar problem if I moved to Phoenix. I remember the drought we had here in 76-77 drove me nuts.

  59. 59
    whatsmyname says:

    By boater @ 56:

    Traffic and housing.

    You are right on this. Worse; the housing problem is a traffic problem. Moving outward, each concentric ring has more area and cheaper housing. But they also become more isolated on an almost monthly basis. The secretaries get a 90 minute commute, but our transportation infrastructure dollars all go to vanity and bicycle projects for people already in or near the city. As a consequence, there are many cheap single family residences in what was once a 30 minute trip from downtown. But they are no longer realistic “supply”, so the supply/demand balance is worsening even faster than people think. Is our goal Mini-Manhattan-without-Central-Park-or-a-decent-grid; or is it San Framsterdam? Oh well, life is never perfect.

  60. 60
    boater says:

    RE: whatsmyname @ 59 – yes i agree on all your points.
    Seattle is running an experiment. If you force traffic to an unbearable state will you get density and a local commitment to mass transit and will that make a more vibrant and mobile city in the end.
    They have succeeded on making traffic horrible. They are succeeding in getting the density and mass transit. The question is will the outcome be better than if they did nothing. That I don’t know. It sure sucks to go into seattle right now. I’m glad i own property there but I hate to go in and work on it.

  61. 61
  62. 62
    Deerhawke says:

    Traffic congestion is a huge factor in real estate pricing.

    I lived in New York City in the late 70’s and all during the 80’s. People had fled the city all during the 60’s and 70’s. Life there was like one of those dystopian movies set in post nuclear war zone. Skyrocketing crime, crack epidemic, gang wars, graffiti, filth, rats, deteriorating housing stock, awful subway system. Oh and on top of it all, big hair and disco. A friend who worked on Wall St. said it all when he said, “if this city were a stock, I would short it.”

    So why did it stage such a remarkable comeback? The transportation system reached capacity and then became more unreliable and irrational. When your commute goes from an hour to 2 hours, that is bad. But when you miss all your morning meetings and aren’t even sure if you will make lunch it is time to sell the house on Long Island and buy a condo in the city.

    The same kind of thing is happening here. The so-called fish truck incident was a big wake up call. So do you wonder why with it is that suddenly everyone wants to live downtown or in the close-in suburbs? And do you wonder why it is that nice houses in close neighborhoods like Ballard, Phinney, Wallingford and Greenlake have jumped so much in price?

  63. 63
    boater says:

    RE: Kary L. Krismer @ 61 – EIS makes you consider all kinds of things. My bet is they will add some sort of pedestrian over/underpass instead of getting rid of bus lanes.

  64. 64
    HappyRenter says:

    RE: boater @ 60
    That doesn’t work. You have to first provide the alternative and then make traffic awful. People are not going to switch to metro if they know that metro is much more unreliable. For commutes under 45 minutes, biking is often faster than taking the bus.

    A city which has succeeded in what you say is Zürich, Switzerland. They have spent decades expanding their public transportation system. It’s simply not worth it to drive into Zürich. It will take you 1/2 hour just to get downtown, another 15-30 minutes to find a parking spot and you will have to pay 5$ just for a couple of hours parking. The train will take you straight into the core of Zürich within 15 minutes (if you live in a 10-15 km radius) and, depending where you live, you will get a ride every 10-15 minutes or more often. Zürich main station is located right where all the shopping, restaurants and movie theaters are. The trams leave every 7 minutes and take you to any corner of the city. Every tram/bus stop has a high-tech system that displays how many minutes to the next ride (Seattle has only recently started with this), large maps with connections etc. Also, walking in Zürich feels much much safer than in Seattle. The streets and bus stops are well lit. The pedestrian cross walks are painted with yellow reflective paint. Actually, it’s not just paint, they make an inch-deep rectangular grooves that are then filled with a yellow reflective material. Side walks and pedestrian under- and overpasses are everywhere. Every transportation vehicle (bus, tram or train) has a display that shows you the next station, the connections there and how many minutes away. Walking in Zürich feels like walking inside a huge high-tech complex which comes with parks, two rivers and a lake.

  65. 65
    boater says:

    RE: HappyRenter @ 64
    Well as a long time resident here I can tell you the voter willingness to spend the money for mass transit infrastructure came long after the traffic congestion. Your suggested way is better but it only can happen if the people are willing to spend the money on it. They haven’t been until recently. Seattle is doing it the only way they have left.

  66. 66
    boater says:

    RE: Deerhawke @ 62
    This is why I own in Seattle but live elsewhere. Do you hold many of your properties or strictly flip?

  67. 67
    Jay says:

    RE: Deerhawke @ 62 – That’s why I bought my place close to work, so I can walk to work.

  68. 68
    HappyRenter says:

    RE: boater @ 65
    Taxation in Switzerland is different. Federal income taxes are very small. Residents pay income taxes mainly to the city/town where they live in and to the Canton (the equivalent of the states in the US). In this way, money gets spent locally. There is a 6.5% national sales tax. The US spends a lot for the military. That makes a difference, too.

  69. 69
    Deerhawke says:

    I have a rental house I just finished rehabbing in Greenlake. The people calling about the ad all asked how long it took to get downtown (relocating for a corporate job), to get to Fremont (relocating for Google) or to get to South Lake Union (relocating for Amazon). Interestingly, they asked about school systems after asking about the commute.

    Eventually Seattle will have a real working public transportation system. But it will take billions of dollars and decades to roll out. So in the meantime, count on close, convenient centrally located housing to appreciate much faster than housing that requires a long commute.

  70. 70

    By Deerhawke @ 69:

    Eventually Seattle will have a real working public transportation system.

    Apparently you’re new around here. ;-)

  71. 71
    redmondjp says:

    By Deerhawke @ 69:

    Eventually Seattle will have a real working public transportation system. But it will take billions of dollars and decades to roll out. So in the meantime, count on close, convenient centrally located housing to appreciate much faster than housing that requires a long commute.

    I wish I could be as optimistic as you. Maybe certain parts of Seattle will, but as for the greater Seattle area, I don’t ever see it happening. If it would, they would be right now talking about elevated twin-track light rail down all of the major freeways in our area, with stations at the overpasses situated next to massive transit hubs each having a few thousand parking spots in several garages (with EV charging stations, bike lockers, showers, Starbucks, free wi-fi, etc).

    They could also be putting elevated rail on all of the Eastside rail corridors, but that will never happen either (we could be using on-grade light rail RIGHT NOW for commuting on those same corridors, but you notice how quickly the transit gods ripped out those tracks to keep their pet projects safe from competition, keeping the gridlock at a perpetual crisis level so as to justify perpetual massive tax increases).

    As it is today, the light-rail developers PURPOSELY deny parking along the routes, as they irrationally don’t want people parking and then taking the train to their destination, which is exactly how the system should be set up to serve all of the outlying areas that will NEVER have the availability of mass transit like Seattle city proper.

    This entire area is full of so much mass-transit fail that it makes my head spin (add a migrane to that if you calculate how much money they are already collecting from us). And I didn’t even mention the well-used Metro bus routes that they removed in order to punish Eastside users because they failed to pass Prop. 1 recently. Note: many less-used bus routes were kept. Logic?

  72. 72

    RE: Deerhawke @ 69

    Curious what your reply was when asked about school systems.

    Agree that my Seattle clients tend to ask about schools second, while my Eastside clients ask it first.

    My Google clients usually can work either at 38th and Evanston or Kirkland. Other than the odd question now and then about why BF Day Elementary is so low in ranking (anyone know? It’s actually double the ranking right now that it was when I was asked) those concerned about schools tend to opt for Kirkland. In fact I believe part of the original recruiting strategy was to have Fremont for the young, single hipster crowd and Kirkland for the family oriented crowd to have a broader recruiting base.

  73. 73
    boater says:

    Fremont appeals to the fresh out of college crowd more than Kirkland.
    Kirkland was the initial office for two reasons. First that was where the initial hires wanted the office. Second having an office in Seattle proper would have put pressure on Google corporate to open a San Francisco proper office which they were trying to avoid.

  74. 74
    Jay says:

    RE: Ardell DellaLoggia @ 72 – Google in Kirkland really can’t make much of an impact given that it is such a small office in Kirkland.

  75. 75
    boater says:

    RE: Jay @ 74 – How many people are in Seattle vs Kirkland?

  76. 76

    RE: Jay @ 74

    That is clearly not the case, Jay. Google has had a substantial impact on pricing in the immediate vicinity of the Google offices in Kirkland. When you take the number of employees against the number of homes for sale nearby, the bid outs have been pretty staggering. Same was true in Seattle in close proximity to their offices there. I don’t work there as often, but it was very common to run into Google co-workers, many and often, when viewing homes in Ballard-Fremont with Google clients.

    Wanting to live within walking or bicycle riding distance to work, which is often true for both offices, puts a lot of pressure on many people wanting the same houses.

  77. 77
    Jay says:

    RE: Ardell DellaLoggia @ 76 – Given the current lack of inventory, almost every buyer is competing for the same houses anyway!

    Does anyone have any insights on what interest rates are going to be next year?

  78. 78
    Jay says:

    Most realtors keep track of their clients’ personal and professional information. I hated it when they asked me where I worked, etc. That was why I chose Redfin, their tour agents never asked me for my employment and personal information. They respected my privacy and allowed me plenty of time to look at the houses.

  79. 79

    By Jay @ 78:

    Most realtors keep track of their clients’ personal and professional information. I hated it when they asked me where I worked, etc. That was why I chose Redfin, their tour agents never asked me for my employment and personal information. They respected my privacy and allowed me plenty of time to look at the houses.

    You really need to realize you don’t have the experience to know what most Realtors do or don’t do. You know what a handful of Realtors do.

    Most likely the Realtors who offended you were just making chit-chat, trying to figure out your daily commute from different locations, or getting basic information necessary for agent security. And it’s possible that Redfin even has a system letting future agents know that a client is sensitive about giving out personal information, and/or recorded the information obtained in their system, so that’s why you noticed a difference with subsequent Redfin agents. But rest assured Redfin undoubtedly has some system in place to make sure they are at least dealing with a qualified buyer. They have your information. You possibly even typed some of it into their webpages.

    In any case, it’s not like there’s some program that allows agents to sell personal information to Google. Not sure what causes your paranoia.

  80. 80
    Walter says:

    By Ardell DellaLoggia @ 35:

    RE: ESS @ 33

    Not a good plan normally unless you want to go the SWE route of moving to Kansas City or “The Kansas City of Seattle”.

    As a recent transplant from Kansas City, I am curious where “The Kansas City of Seattle” is? I need to find my people.

    Also, I’ve long been curious where exactly in the Kansas City area SWE bought his house. Kansas City real estate is a bargain compared to other major cities, but no one is giving real estate away. Let’s not give people the wrong impression about KC :)

  81. 81

    RE: Walter @ 80

    Some time back and referenced many times here over the years, SWE bought a place in Kansas for $40,000 or less and parked his “millennial daughter” there. I’m not sure if it is a house on a piece of land or a condo as I think sometimes he refers to it as “a unit”. Originally I thought it was a house in Kansas. Someone else may remember more if SWE doesn’t respond.

    Back in 2011 this modest little place sold for $44,000 in Seattle on an 8,300 plus sf lot. Might be comparable. :) SWE? It has since resold in 2012 for more. But back then in 2011 it might have been a comparable purchase to SWE’s in Kansas.

    https://www.redfin.com/WA/Seattle/11017-19th-Ave-SW-98146/home/179601

  82. 82
    Paul says:

    RE: Ardell DellaLoggia @ 35

    Excellent advice Ardell. Investors would do well to pay heed.

  83. 83

    Well, 32 hours into the new year and there’s no surge of fresh listings in King County. Hopefully people/agents are waiting for a non-holiday weekday to list, otherwise things may stay bad for a while.

  84. 84

    RE: Kary L. Krismer @ 82

    It’s actually down significantly to 1,664 single family homes in King County (excluding manufactured-mobile homes and townhomes). Though I normally expect new inventory to kick in by the 15th and not the 1st or 2nd, that’s still a crazy low number.

    Not sure if the required disclosure is necessary for one number in the comment, but just in case that number is not compiled, verified or published by The Northwest Multiple Listing Service. :)

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