July Stats Preview: The Inventory Bleeding Stops

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With July officially in the books, let’s have our first look at how the month’s real estate stats stack up. First up, here’s the snapshot of all the data as far back as my historical information goes, with the latest, high, and low values highlighted for each series:

King & Snohomish County Stats Preview

It seems like buyers in King County may have finally had enough. Sales dropped considerabily from June to July, and were down year-over-year, while inventory jumped double digits month-over-month for the second month in a row, coming within a few homes of break-even for the year. Snohomish County was a different story, with sales up year-over-year and inventory still way down.

Next, let’s look at total home sales as measured by the number of “Warranty Deeds” filed with King County:

King County Warranty Deeds

Sales in King County fell 10 percent between June and July (a year ago they fell 2 percent over the same period), and were down 6 percent year-over-year. The last time we had a double-digit drop in sales between June and July was 2011.

Here’s a look at Snohomish County Deeds, but keep in mind that Snohomish County files Warranty Deeds (regular sales) and Trustee Deeds (bank foreclosure repossessions) together under the category of “Deeds (except QCDS),” so this chart is not as good a measure of plain vanilla sales as the Warranty Deed only data we have in King County.

Snohomish County Deeds

Deeds in Snohomish fell 1 percent month-over-month (roughly the same as that period last year) and were up 3 percent from July 2015. The July sales level was only slightly below the all-time record set in June.

Next, here’s Notices of Trustee Sale, which are an indication of the number of homes currently in the foreclosure process:

King County Notices of Trustee Sale

Snohomish County Notices of Trustee Sale

Foreclosure notices in King County were down 25 percent from a year ago and Snohomish County foreclosure notices were up 6 percent from last year. Notices in both counties are still in the low end of the typical “normal” market range.

Here’s another measure of foreclosures for King County, looking at Trustee Deeds, which is the type of document filed with the county when the bank actually repossesses a house through the trustee auction process. Note that there are other ways for the bank to repossess a house that result in different documents being filed, such as when a borrower “turns in the keys” and files a “Deed in Lieu of Foreclosure.”

King County Trustee Deeds

Trustee Deeds were down 25 percent from a year ago.

Lastly, here’s an update of the inventory charts, updated with previous months’ inventory data from the NWMLS.

King County SFH Active Listings

Snohomish County SFH Active Listings

Active listing inventory was up 12 percent month-over-month, and down less than one percent from a year ago in King County. Snohomish County inventory was up 9 percent month-over-month and down 22 percent from a year ago.

Note that most of the charts above are based on broad county-wide data that is available through a simple search of King County and Snohomish County public records. If you have additional stats you’d like to see in the preview, drop a line in the comments and I’ll see what I can do.

Stay tuned later this month a for more detailed look at each of these metrics as the “official” data is released from various sources.

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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.

63 comments:

  1. 1
    Justme says:

    Interesting that the inventory build is starting in the “center”, the center being King County, whereas Snohomish County (to the North) still has lower inventory than last year same month.

  2. 2
    Tyson says:

    As an investor in Pierce county I would love to see the data from this county included as well. I feel like inventory is increasing in our area and sales are going down. I have a feeling the real estate market will change a lot over the next 6 month’s.

  3. 3
    The Tim says:

    RE: Tyson @ 2 – I do include Pierce County in the “Around the Sound” series, which I try to update at least every few months.

  4. 4
    Deerhawke says:

    Maybe we are seeing some faint slowing down in the King County market as things stabilize at a much higher price point than last year this time. Or maybe not. It is still too soon to tell. One month where the listings were almost the same as last year (although still a bit lower) does not constitute a trend. This may, for all we know, be a statistical glitch.

    I am guessing that King County Warranty Deeds contain stuff that does not denote real arms-length sales. Perhaps these include quit claims within families or something like that. But when you have 4493 King county Warranty Deeds and only 3543 active listings, something is out of whack. I would guess that a lot of this is off-market sales. Anybody who lives in Seattle gets 2 letters a week asking if they would like to sell their house without paying an agent’s commission. As a builder, I virtually never buy anything on the MLS because it will be bid-up to a price that means essentially working for free. I am sure that fully 20% of the new construction single family homes and townhomes in Seattle are pre-sold and therefore do not even show up in the normal MLS statistics.

    For those who are looking for good news and hope the market is tanking so they can buy, I cannot offer any hope. My recent experience has been that it remains a seller’s market. When I had new homes to sell in May and June, they sold fast (one a pre-sale that never went on the MLS) and at prices I would never have imagined when I first started construction last summer. Now that I am looking to buy one or two teardown lots, they are scarce and they are really expensive– fully $100-125K more than last summer.

    .

  5. 5

    By Deerhawke @ 4:

    I am guessing that King County Warranty Deeds contain stuff that does not denote real arms-length sales. Perhaps these include quit claims within families or something like that. But when you have 4493 King county Warranty Deeds and only 3543 active listings, something is out of whack. I would guess that a lot of this is off-market sales. .

    Yes it’s out of whack, but in addition to off-market the deeds are also condo, vacant land, commercial, etc. It’s sort of apples and oranges to compare warranty deeds to active SFR listings. (BTW, I don’t think quit claim deeds are included in the stats for King County).

    On the supply side though, it would probably be useful to track stale listings over time too, and by stale that might mean older than 30 days in this market! But a lot of those active listings might be either in bad condition, bad locations and/or well over-priced. I previewed 11 houses on Friday, most of which were new listings, and most of them were horrible listings that I wouldn’t even consider recommending that a client see. None of them were terribly exciting. So just the number of active listings doesn’t really mean much. Clearly we need more, but we need quality too, not just quantity.

  6. 6
    jordan says:

    Sales are down because there is nothing on the market. I’ve been watching homes from Bothell to Renton and there is nothing move in ready. Everything is old and needs reno. Most people like don’t have the time and money to do a big reno. Similarly, I have not toured any homes in the last two month because again, nothing good on the market.

  7. 7
    Deerhawke says:

    Kary you are right about the poor quality of the inventory.

    I am helping a friend looking for a place in Greenlake and Wallingford. At first I really thought there was more on the market than earlier in the year. But it was basically all junk. Teardowns masquerading as real listings. Or you find a house that looks like the right area, the right size,etc and then notice the price. Suddenly anything that you would consider living in is $1.2 million. I have lived here for 25 years and it was always a student and hippie neighborhood. It is hard to think of it as a millionaires neighborhood.

  8. 8

    RE: jordan @ 6
    Lots of White Paint

    Can make destroyed shacks with “outdated kitchens” and dilapidated cupboards look wonderful, just paint everything white….cover up rot with plastic goo, let dry then more white paint…the home inspectors won’t write it up then, they don’t use x-ray machines….

    This sound like a joke, its the actual way a realtor showed me foreclosed home sales….but had a guilt pinge when I mentioned 50% down and then taught me all his secrets for buying foreclosed homes….including the “white wash” before listing….too bad I was married then, almost all wives won’t stand for living in a “flipper”. Do this when you’re single. He showed me how he could make 30% profit selling 20% below listing prices of similar units using the “white wash” technique.

    Money for nothing….

  9. 9
    Eastsider says:

    When looking at the statistics, keep in mind that the housing market has not returned to normal conditions. Otherwise, given the recent population growth, we should see at least 3 times more activities. The current market is being driven by select few (e.g. significant number of cash buyers). Unfortunately I don’t expect it to return to normal in the foreseeable future given the FED’s extra accommodative policies (which can go on indefinitely as in Japan.)

  10. 10
    SFraz says:

    *Fifty-one percent of all non-U.S. buyers flocked to Florida, California, Texas, Arizona, and New York. Among Chinese, a third bought in California, with many also turning to New York, Texas, New Jersey, and Washington. But the NAR says Chinese are the most widespread of any non-U.S. group, with 39% buying outside of those five states.
    http://www.barrons.com/articles/chinese-buyers-plant-a-flag-in-the-u-s-suburbs-1469247016

  11. 11
    ess says:

    I am interested in a more detailed discussion on the operative definition of a “teardown” house. I assume it is more than just a house that is so dilapidated that it is not cost effective to fix it. I would also assume that the definition of a “teardown” house has a great deal to do with the underlying value of the land that the house is sitting on, and whether the house that is removed can be replaced by more than one residence. Thus I assume a house in the hottest areas of north Seattle would be considered a “teardown” house while a comparable house much further out in a less competitive area is not. Is this assumption correct? Do folks in the business use any standard formulas to determine if a potential property is a “teardown” or not? I look forward to responses!

    Thanks

  12. 12

    RE: SFraz @ 10 – Just the reminder that those stats are completely made up because no one tracks non-US buyers. The stats are based on NAR surveys of Realtors, and thus prone to incredible inaccuracy.

    As an aside, it’s rather incredible that so many of the business press sites picked up that NAR study without questioning it. Being a journalist really doesn’t mean much any more. They’ve become more interested in creating click bait than reporting facts.

  13. 13

    RE: ess @ 11 – It depends on the area. On Lake Washington waterfront property the house might be in perfect condition.

  14. 14
    jordan says:

    every open house I went to in Renton was full of Chinese. Not American Chinese, but Chinese Chinese. I know cuz I’m Chinese myself, but not rich like the ones that are immigrating here. American Chinese and other Asians don’t have money.

  15. 15

    RE: ess @ 11

    A house becomes a teardown, regardless of the condition of the home, when it is worth more to a builder who will tear it down than it is to someone who would buy it to live in it. The house on the property adds zero value if and when the builders will pay the same price or more than an owner occupant buyer to throw the house away.

    More often this is about the size of the house than the condition of the house and the price people are willing to pay in that location for new construction. So no, it is not about the house being so dilapidated that it is not cost effective to fix it. The math would be the cost to expand it to a larger home and what that would sell for vs tearing it down and building a new home from scratch and what that would sell for.

    In those periods of time when builders are not interested in building “on spec”, you will see the same houses sold to owner occupants at lower prices than when those buyers have to compete with builders. An increase in builders wanting lots to build on increases the number of teardowns and changes the parameters of what is and is not a teardown.

    It’s easier to go back and see what was on the lot where a new house is standing to understand “a teardown”. This is where the rule of “3 x lot” comes in as well. If what you can build new on that lot is equal to or more than 3X the price of the existing home, then the home becomes a “teardown” when applying “highest and best use” of the land under it.

    Take this house sold in June for $1,600,000 as example. It sold for slightly over asking in 2 days.

    https://www.redfin.com/WA/Seattle/2114-NW-67th-St-98117/home/163410

    It was previously an 840 sf single family home that was listed for $399,950 and not as “a teardown”. What made it a teardown was when the builders were willing to pay more for it than the people who wanted it to live in it, more due to size of structure than condition. It was a nice little house with hardwood floors and an updated kitchen. It bid up from $399,950 to $471,000, 17%+ over asking.

    This one was also a house listed at $399,000 before it became this. The original house a bit larger at 1002 sf and not in as good shape as an Estate Sale. The builders outbid the owner occupant buyers to 13% to 14% over asking at $454,000 and the end product sold for $1,680,000.

    https://www.redfin.com/WA/Seattle/2414-W-Newton-St-98199/home/124341

    I couldn’t find a good example on The Eastside, though they are not uncommon in parts of Kirkland near downtown and parts of Bellevue. When the existing home was large you have to be more careful when they call it “new construction” as often they use the same older foundation if they can match the footprint size, and then it doesn’t follow the 3 x lot rule.

    When a home is tiny and a rental it is not uncommon for the owner to know it is “a teardown” but not be ready to sell it vs rent it yet. I know a house like that in Kirkland and those do fall into disrepair with the owner not wanting to fix wood rot or put on a new roof because he knows all that will get thrown away when he sells it. Still he holds it and rents it because prices are still going up. Initially he was going to tear it down himself and build a house there for himself, so he was absolutely sure it was “a teardown” and hasn’t spent a dime on anything unless the tenant needed something fixed. That can go on for decades when the property is bought to maybe later build a house for themselves.

    I had two almost exactly the same scenarios but one was a 740 sf house of wood near Downtown Kirkland and the other was a 1,900 sf house of brick in Mt. Baker neighborhood of Seattle. The former being “a teardown” no matter what the condition and the latter not being a teardown almost regardless of what it needed…unless it burned down.

    The cost of fixing it up if it is a sizeable house is almost always worth it. The need to tear it down if it is a large structure is almost never the case, and when it is, often the end product is not “all new construction” as is often claimed but rather what we call “a 90% remodel” where most but not all of the old structure is gone.

  16. 16
    ess says:

    RE: ess @ 11

    Thanks for the responses Kary and Ardell – most interesting, and it provided an interesting discussion in this household!

  17. 17

    RE: ess @ 16

    Note that “main floor footprint” is more important than overall square footage that includes attic bedrooms but no bath up and finished basement space. If you have a 2,100 sf house but 700 on the main, 700 up and 700 as finished basement…it’s still a 700 sf main floor footprint, possible teardown.

  18. 18
    Weasel says:

    Funny how people will throw out a TV when the remote batteries need replacing, but they will replace 90% of a house renovating it, rather than get something new built which would be safer and (more) energy efficient – how often are the latter two things alone taken into consideration?

    Couple places on our street have had big renovations, but.. these houses were all built in 1980, have decent floor plans, and by then the sketchy stuff had been eliminated from the building and electrical codes.

    Anything built before about ’78 should be considered for demolishing vs a big renovation. They’ll possibly have lead paint, asbestos in the ceiling coatings, frame not bolted to the foundation, that dodgy as hell aluminium 120V wiring people like to wirenut to copper. Aluminium was used for the 220V stuff for much longer, people tend to mess with that less. I’ve encountered the incorrectly done aluminium to copper joint someone did for the stove in our place, the wirenuts were melted charred black messes, its lucky they left it hanging behind the stove rather than stuffing it into the wall as that would have burnt the house down, I replaced it with correct socket for aluminium, anti corrosion gel etc when I replaced the stove (an electrician took a look at my job later and said it was fine), the dishwasher hookup wasn’t much better, apparently twisting the wires together and some electrical tape is ok, and an appliance connected to the water supply dont need the ground connected either lol – and this is in a 35 year old two owner house, older houses have usually screwed around with a lot more by several owners that think they can DIY properly ;-)

  19. 19

    By Kary L. Krismer @ 12:

    Being a journalist really doesn’t mean much any more. They’ve become more interested in creating click bait than reporting facts.

    Maybe I need to take that back. Totally off topic, but I find it interesting someone actually took on the issue of flossing. Interesting read.

    http://www.chicagotribune.com/lifestyles/health/ct-medical-benefits-flossing-20160801-story.html

  20. 20

    RE: Weasel @ 18 – Ignoring the 220 volt stuff, aluminum wiring is relatively rare here in the Pacific NW. Three conduit wire though didn’t seem to catch on until the late 60s.

    A to the studs remodel will take care of most the issues you mention.

  21. 21
    Weasel says:

    By Kary L. Krismer @ 19:

    By Kary L. Krismer @ 12:

    Being a journalist really doesn’t mean much any more. They’ve become more interested in creating click bait than reporting facts.

    Maybe I need to take that back. Totally off topic, but I find it interesting someone actually took on the issue of flossing. Interesting read.

    http://www.chicagotribune.com/lifestyles/health/ct-medical-benefits-flossing-20160801-story.html

    Unproven means that no one has actually done research and published studies on it. Does not mean flossing is a waste of time. I use those little flossing pick things which make it easy to do – I have periodontal disease, and flossing every day for the last 6 years has basically stalled the bone loss.

  22. 22

    RE: Weasel @ 18

    May I ask what Country you are from? Do you make any allowance for historic significance?

    I used to manage this house built in 1756 or so.

    http://www.woodfordmansion.org/

    Throwing all the houses away is not exactly a popular idea in most of the Country. Disposable houses? I’m aghast! Throw every house away built before 1980? Holy Caboley! What a concept!

  23. 23
    ess says:

    By Kary L. Krismer @ 19:

    By Kary L. Krismer @ 12:

    Being a journalist really doesn’t mean much any more. They’ve become more interested in creating click bait than reporting facts.

    Maybe I need to take that back. Totally off topic, but I find it interesting someone actually took on the issue of flossing. Interesting read.

    http://www.chicagotribune.com/lifestyles/health/ct-medical-benefits-flossing-20160801-story.html

    Oh no -25 miles of dental floss down the tubes, not the mention the sore arms I have from all that flossing!!

  24. 24
    ess says:

    http://www.marketwatch.com/story/its-a-sellers-real-estate-market-but-whos-selling-2016-08-03

    Speaking of inventory – an article addressing the issues of a tight inventory market. The article sites SF and San Jose, while I believe that the Puget Sound inventory is even tighter.

    Is anyone here hunting for a “starter home”, or a “downsize” home, and are they finding the same issues here? If the article is to be believed, the bottom third of the market here should remain quite strong.

  25. 25

    RE: Weasel @ 21 – I think you missed my point, perhaps because I didn’t make it well.

    In this situation the reporter didn’t just accept what someone had been feeding him. He actually questioned what we were being told and did some digging. It’s a long standing criticism I’ve had of the press (and people in general). They read something and assume it’s true. This reporter is the exception, not the rule.

    http://blog.seattlepi.com/realestate/2009/08/06/have-we-become-a-nation-of-the-extremely-gullible-its-on-the-internet-it-must-be-true/

  26. 26

    On the topic of the press, check to see how many articles about this Zillow study pick up the fact that many of the properties they think will be underwater if the seas rise 6′ are not on salt water! ;-)

    http://cdn1.blog-media.zillowstatic.com/3/Seattle-c4cfec.png

    BTW, there might be high tide issues, but I suspect they are not that difficult to deal with.

    BTW, Tim previously covered this with a 10′ rise, and struck the part about Lake Union and Lake Washington.

    https://seattlebubble.com/blog/2014/05/16/thousands-seattle-homes-to-end-up-literally-underwater/

  27. 27
    js says:

    By Deerhawke @ 4:

    Maybe we are seeing some faint slowing down in the King County market as things stabilize at a much higher price point than last year this time. Or maybe not. It is still too soon to tell. One month where the listings were almost the same as last year (although still a bit lower) does not constitute a trend. This may, for all we know, be a statistical glitch..

    Seems like a statistical glitch. Inventory is still at record lows for July.

    The big gorilla in the room is the central bank. They juiced the big banks with $1.7T from 2008-2014, and housing is a hedge against inflation. How long can they keep the crazy big bank party going and what’s next? Inflation? Hyperinflation? Global deflation (fueled by Euro collapse)?

  28. 28
    Screenname345 says:

    I keep watching the market since I want to potentially sell next spring. It’s difficult to find anything for sale that is a comp to my house that was listed for sale/sold this year. Last one was in March when there at least was a little flurry of activity. Since then almost nothing listed. I guess we will just have to list low like everyone else and hope for the bidding war.

  29. 29
    wreckingbull says:

    RE: Kary L. Krismer @ 26 – While I also laugh at that map, high tide issues are very difficult to deal with. Marine bulkheads are almost impossible to build or modify these days due to regulations. They are highly frowned upon. Trying to tame migration/movement of a beach is not a science nor an art, it is a Hail Mary. One high-tide winter storm and you have years of work literally washed away.

  30. 30

    RE: SFraz @ 10
    Vancouver [Canada] Wants an Extra Property Tax

    On all foreign real estate investors. China wants to catch them and throw these foreign Chinese investors in prison.

  31. 31
  32. 32
    js says:

    By softwarengineer @ 30:

    Vancouver [Canada] Wants an Extra Property Tax

    On all foreign real estate investors. China wants to catch them and throw these foreign Chinese investors in prison.

    That already happened (yesterday). And the repercussions have started.

  33. 33
    Doug says:

    RE: js @ 32 – so maybe that money will start flowing to Seattle?

  34. 34
  35. 35

    RE: Doug @ 34 – Wow, a Zerohedge report of a bunch of anecdotal evidence! Very compelling. /sarc

    It isn’t at all surprising that deals would try to be pushed through and that existing deals that didn’t close on time would fall apart because they’d effectively be paying a lot more than what they had agreed to. As to the future, we’ll have to wait and see for some real information and not just Zerohedge BS.

  36. 36
    Doug says:

    RE: Kary L. Krismer @ 35 – Oh, I know. I get just as bored of ZH’s broken record of bear propaganda, but I think we can all agree it is in fact a decent resource of real time financial stories. You just have to be able to see through the spin.

    Separately, I’ve never agreed with Gross, especially when he shorted bonds in 2013, but I think he’s now on the right track: http://www.bloomberg.com/news/articles/2016-08-03/gross-says-i-don-t-like-bonds-most-stocks-favors-real-assets

  37. 37
    js says:

    By Kary L. Krismer @ 35:

    It isn’t at all surprising that deals would try to be pushed through and that existing deals that didn’t close on time would fall apart because they’d effectively be paying a lot more than what they had agreed to. As to the future, we’ll have to wait and see for some real information and not just Zerohedge BS.

    As to the future of Vancouver BC housing, what is your prediction? Oh wait I forgot you don’t make predictions because you are too much of a wussy.

    I’m calling top.

  38. 38

    By js @ 37:

    As to the future of Vancouver BC housing, what is your prediction? Oh wait I forgot you don’t make predictions because you are too much of a wussy.

    No, I don’t make predictions because I know it’s impossible and don’t try to fool people with meaningless BS. Also, Vancouver is hardly my area of expertise.

    But you never know what the future holds. Back when they last amended the bankruptcy code (2007 or so) they predicted a steep decline in bankruptcy filings due to the new provisions (and the fact that misreporting by the press was causing people to file who didn’t need to file, depleting the future supply of filers). That decline did happen, until the financial events of late 2008 hit.

  39. 39
    Erik says:

    RE: js @ 37
    How do you think Kary got the name Kary “the snake” krismer? No spine.

    I don’t think we are at a top. Not with inventory at historical lows. I predict double digit housing price increases in King county next year.

  40. 40
    js says:

    By Erik @ 39 – I don’t think we are at a top. Not with inventory at historical lows. I predict double digit housing price increases in King county next yet.

    I called top in Vancouver BC, not Seattle. Pay attention or we will send you back to north Everett.

  41. 41
    Erik says:

    RE: js @ 40
    I will not be put back in North Everett. Once in a while I drive through there to talk to my old meth addicted neighbors. Last time I was there my old friend was trying to sell me some goods that “weren’t stolen.” As his meth addicted friend approached the car, my passenger yelled at me to go. I hit the gas and haven’t seen them since. Pretty sure they aren’t child predators as a disproportional number of people from north E are. Meth addicts are still unpredictable…something I learned from my 6 years of encarciration in north e. Another commenter said its a similar situation in Renton.
    About 10 years ago there was talk about renaming Seattle. One of the name options for Seattle was “we’re not Everett.” Seattle wanted to distance themselves from Everett. I don’t blame them. At the time I had purchased my first remodel in north e. I realized I’d been had by people in Everett promoting it as up in coming. This I can tell you from the depths of my heart… DO NOT BUY IN NORTH EVERETT!!! Everett has nothing but heartache to offer its inmates. Mukilteo is beautiful and it’s not that far away. Buy a smaller house or a condo there. In fact if anyone is considering buying there, I will take you for a tour and introduce you to the town folk. You will change your mind quickly.

  42. 42

    RE: Erik @ 41
    Actually I Liked Everett as a Kid

    But lived south of Everett in the Alderwood Manor 2500 acre green belt….this was before this was destroyed by asphalt and almost COMPLETE tree removal….its not the same as the heydays.

  43. 43

    Apparently the Ballard Locks are 100 years old today, and they surprisingly weren’t the top story in the Seattle Times when they did open.

    http://www.seattletimes.com/seattle-news/from-the-archives-ballard-locks-begin-operation-in-1916/

  44. 44

    I saw this story of the sinking/leaning San Fran condo covered by CBS last night, but this is probably a better source.

    http://archpaper.com/2016/08/san-fransisco-millennium-tower-sinking/

    Special assessment anyone?

  45. 45
    Erik says:

    RE: softwarengineer @ 42
    That area still isn’t bad. The area I’m referring to is north Everett. Years ago I think it wasn’t a bad place. Somewhere along the line a bad element moved in and began multiplying.

  46. 46
    herrbrahms says:

    Hey Tim, it would be interesting to have a dedicated article on the 15% foreign buyers tax that British Columbia put into place. Apparently there’s a need for it, considering the hubbub about purchases under contract being scuttled when no relief was extended to buyers whose close dates were after 8/2.

  47. 47
    Mike says:

    By Erik @ 39:

    RE: js @ 37
    How do you think Kary got the name Kary “the snake” krismer? No spine.

    I don’t think we are at a top. Not with inventory at historical lows. I predict double digit housing price increases in King county next year.

    Just not out on Alki, that market is one of the cooler ones.

  48. 48

    RE: herrbrahms @ 46 – If only there were a way to search for news stories covering certain current events. /sarc

    https://www.google.com/search?hl=en&gl=us&tbm=nws&authuser=0&q=vancouver+foreign+buyers&oq=vancouver+foreign+buyers&gs_l=news-cc.3..43j43i53.2521.7237.0.7386.24.8.0.16.16.0.103.491.7j1.8.0…0.0…1ac.1.Z9vJMVrVcaA

    Seriously, I don’t know what insight you think Tim could bring to the topic, or even why it would be that interesting. Such a tax would be illegal in this country, so I don’t see why it would be of any interest at all.

  49. 49
    ess says:

    http://www.seattletimes.com/business/real-estate/as-home-prices-surge-new-seattle-condos-flip-for-big-profit-before-they-even-open/

    A sign of a strong market with not enough inventory, or a classic bubble in the making? Can be argued both ways.
    Recently took a walk in a hot section of Seattle – east of the “U” District. On almost every block – there was a new house under construction. A new house under construction infers that an older house – often in good shape was torn down. I am sure that activity skews the housing prices much higher than in an area where there are just housing sales without many teardowns.

    Thus I wonder if a more accurate view of the market is to separate the sale of newly constructed houses that replaced older houses from older houses that were sold. If this was done, I assume that neighborhoods that have more teardowns wouldn’t not show the massive increases in prices that they do.

  50. 50
    ess says:

    By herrbrahms @ 46:

    Hey Tim, it would be interesting to have a dedicated article on the 15% foreign buyers tax that British Columbia put into place. Apparently there’s a need for it, considering the hubbub about purchases under contract being scuttled when no relief was extended to buyers whose close dates were after 8/2.

    Wonder if the 15% tax on foreign buyers will be extended to other hot real estate markets such as Toronto. If so, it may fuel increased buying in the US market.
    The debate is hot and heavy up north about their market. Some residents are thrilled the BC government is doing something, and other are worried about a real estate crash, with the end of new construction. No one is quite sure what will happen in the future in general, and government intervention will make matters even more unpredictable. At least it will give me another interesting topic to discuss with my in laws the next time we go up there for a visit.

  51. 51
    herrbrahms says:

    RE: Kary L. Krismer @ 48

    “If only there were a way to search for news stories covering certain current events. /sarc”

    No need to be a jerk about it. Clearly, it’s making enough news to where I, a homeowner on the periphery, managed to read the article without the benefit of Seattlebubble.

    I was asking for the article because the issue very clearly affects the local RE market. Here are just a few ideas that could be bandied about by the commentariat:

    1) With the 15% tax, how much of the Chinese cash superhighway will divert to Seattle, rather than to Toronto or Calgary? How much of the cash will continue flocking to Vancouver despite the haircut?

    2) Is such a tax workable in King County? You claim that the tax would be illegal in the USA, but you provide no evidence supporting that view. I can see how it might be construed to contravene trade treaties, but NAFTA governs Canada as well as the USA, and BC was willing to test the waters.

    3) Will the tax actually cause the apocalypse as many appear to believe, or will it simply cause a minor correction in the market — perhaps be the start of the plateau?

    In short, it’s news for us down here on the shore of the same inland sea, but it has been underreported because it happened across the 49th parallel.

  52. 52

    RE: herrbrahms @ 51 – Which gets to my point, I’m not sure what particular insights you think Tim can bring to the topic. Also, it’s already been discussed here quite a bit.

    As to why it’s illegal, it violates Fair Housing laws, which cover national origin as a protected class. http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/FHLaws

    That’s also the reason why there are no reliable statistics on how many “foreigners” are buying properties in the US. http://www.millersamuel.com/stories-on-chinese-overtaking-russian-home-buyers-in-manhattan-is-purely-anecdotal/ No one in the industry would risk doing that for fear the government would ask why are you keeping track of protected classes? I’m actually surprised that NAR even does their after the fact surveys.

  53. 53
    Blurtman says:

    Targeting the 15% tax to homelessness will likely prompt its passage in Seattle.

  54. 54

    RE: Blurtman @ 53 – You had the Seattle voters at “15% tax.”

    (Jerry Maguire reference.)

  55. 55
    AJT says:

    I thought this was an interesting read. There certainly does not appear to be ANY slowdown on the Eastside. I mainly look at the Issaquah/Sammamish area and homes that are even half decent go pending in less than a week every time. Guess I’m going to delay home purchase another 18-24 months. Wouldn’t mind some feedback.

    http://www.metrostudy.com/seattle-housing-2q16-time-caution-amidst-growth-record-prices-signs-slowdown-appear/

  56. 56
    ess says:

    RE: herrbrahms @ 51

    There was one little mentioned news item that stated that tech and other companies will have a harder time recruiting non resident talent that will be affected by the tax. Furthermore, real salaries are lower in Vancouver BC than in Seattle, thus this move may make Seattle an even hotter area for tech companies looking to relocate on the west coast. As we in the Puget Sound area have mountains, water and the same mild winters that Vancouver BC has, perhaps Seattle will economically benefit from the tax changes BC implemented. It can’t hurt when a competitor city makes life more difficult for themselves as per recruiting world wide talent, which in turn will make international companies think twice about relocating or expanding their operations in the BC area.

    In addition, if the market goes sideways or south in Vancouver BC – it could reduce the construction of new housing, as well as deter investors – foreign and domestic from buying real estate, which could impact the economy. 90% or so of real estate purchased in the Vancouver area is by residents and citizens of Canada, and recent purchasers of housing must also be concerned about this sudden turn of events. In laws of mine just bought a new residence in the lower Mainland – I am sure they are not thrilled by the timing of these events.

    And if a local employee is laid off because of a slowing economy, not only will that local not be able to buy a house as before, but paying rent will become more difficult as well. And that laid off employee will affect others as the dominoes start to fall.

    As I previously stated – no one really knows what the outcome of a pretty drastic move on the part of the BC government. This new tax was passed so quickly I wonder if anyone in government actually worried about the negative ramifications of their actions.

    It will be interesting to not only follow events up in Vancouver, but to see if those moves affect the real estate and employment market in the Seattle area.

  57. 57
    herrbrahms says:

    “As to why it’s illegal, it violates Fair Housing laws, which cover national origin as a protected class. http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/FHLaws

    The Fair Housing Act is intended to apply to sellers, realtors, and landlords. Whether a tax on foreign buyers set by a local government would come under the auspices of that law is up for debate. Until it’s tested by a court, your bold pronouncement that such a law would be illegal in the United States is merely an opinion.

    “I’m not sure what particular insights you think Tim can bring to the topic.”

    I’m not sure either. That’s why I asked him instead of assuming he’s ignorant on the issue.

    There has been more discussion about the issue as a result of my post, which I’m glad to see.

    //
    More to the point, I deal with people respectfully and demand it in return, even over the internet. I try to conduct myself on blogs like these as though I know the person in the flesh and have to deal with them on an ongoing basis. A professional way to reply to my complaint about your tone would have been to acknowledge that you were rude, apologize, and all would have been forgotten. It’s disappointing that that was not how you chose to deal with it.

  58. 58
    Erik says:

    RE: Mike @ 47
    Yeah, I know. Sucks… Everyone wants to move downtown. I work south, so it works nicely for me. Alki point is just not a hot area right now. My thinking was that it’s relatively cheap, it’s a beautiful area, and I could commute well from there. Too bad all the high paying jobs are north. I was hoping it’s just lagging.

  59. 59
    herrbrahms says:

    RE: ess @ 50 – “Wonder if the 15% tax on foreign buyers will be extended to other hot real estate markets such as Toronto. If so, it may fuel increased buying in the US market.”

    The government in Ontario is watching closely. They’re happy to let BC be their guinea pig for now, from what I read.

    As far as the ramifications to global corporations and their expat employees, you make some very compelling points. However, BC was already a more expensive place to do business than Washington, not only because of RE prices but also owing to progressive Canadian taxation.

    Down here, the Bezos & Hanauer set get away with something like a 1% yearly state tax burden. The combination of a strong economy, educated workforce, and tax haven status for the wealthy definitely make Seattle attractive for foreign investors. The question is, will the people who already live here eventually have enough of the newcomers bidding up the houses they wanted to buy and destroying their commutes?

  60. 60

    RE: herrbrahms @ 57 – You apparently have not heard of the Supremacy Clause.

    But you’re right. Seattle government generally doesn’t give a crap about complying with either state or federal law, so they could enact an illegal tax.

    BTW, the reason for my attitude on this is I consider the existence of the problem to be questionable at best and the topic to be based more on racism than anything else.

  61. 61
    ess says:

    By herrbrahms @ 59:

    RE: ess @ 50 – “Wonder if the 15% tax on foreign buyers will be extended to other hot real estate markets such as Toronto. If so, it may fuel increased buying in the US market.”

    The government in Ontario is watching closely. They’re happy to let BC be their guinea pig for now, from what I read.

    As far as the ramifications to global corporations and their expat employees, you make some very compelling points. However, BC was already a more expensive place to do business than Washington, not only because of RE prices but also owing to progressive Canadian taxation.

    Down here, the Bezos & Hanauer set get away with something like a 1% yearly state tax burden. The combination of a strong economy, educated workforce, and tax haven status for the wealthy definitely make Seattle attractive for foreign investors. The question is, will the people who already live here eventually have enough of the newcomers bidding up the houses they wanted to buy and destroying their commutes?

    Yes – Toronto also has a “vibrant” real estate market for the same reasons Vancouver BC does. You can bet they are watching very closely – and I am sure they are pleased that another jurisdiction is willing to take the risks associated with extreme taxing measures. If it works for Vancouver BC – Toronto will jump on the taxing bandwagon. If not – back to the drawing board.

    I have some knowledge about the Vancouver area having obtained a job years ago up there and marrying into a Canadian family. I ended up living in Vancouver BC for three years. There taxes are very much higher up north than in Washington State, as my in laws keep informing me.

    Unless there is a substantial groundswell of opposition, I don’t see roadblocks to continued economic development and increase employment and population growth in the Puget Sound area. The United States is increasing its population throughout the nation, and the Puget Sound is a desirable area to reside. And after the election, we may see an increase of immigration to all areas of the US.

    Regardless of how “progressive” Seattle and area is, business interests are powerful ones, and they will encourage the economic development of the area. Furthermore, the Growth Management Act dictates that new development be concentrated in developed areas, so the growth of this area is actually in line with state policies and law.

    As an aside, Canada was a much better “tax haven” for foreign investors. I am not an expert on tax law, but my in laws insist that one of the reasons so much foreign money poured into Canada was that out of country investments were not taxed, unlike the US. They seemed pretty adamant about it = but I just don’t know. Washington State is a “tax haven” insofar as we have no state income tax (yet). Of course our sales tax is pretty hefty – which is a regressive tax – but I don’t see any movement to implementing a state income tax. For a newcomer that has a good income, that is a pretty good deal.

  62. 62
    Doug says:

    Is today’s better than expected jobs print a positive or negative for our real estate market? Discuss.

  63. 63
    js says:

    By ess @ 56:

    There was one little mentioned news item that stated that tech and other companies will have a harder time recruiting non resident talent that will be affected by the tax.

    It will be interesting to not only follow events up in Vancouver, but to see if those moves affect the real estate and employment market in the Seattle area.

    As we learned in 2008, the Seattle RE market is controlled mainly by national and global level economics. A few jobs and people moving here from Vancouver won’t do diddly-squat except give greedy landlords like you a woody.

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