Highest appreciation years

mike2

this is from the west redmond realestate buzz blog:

Top five years with the highest appreciation:

1998 - 21%
1997 – 18%
2005 – 17%
1999 – 14%
2006 – 13%

According to these figures, our bubble started in 1997, then took a few year breather before taking off again in 2005.

http://www.westredmondrealestatebuzz.co ... ed-in.html

biliruben

Yup. Absolutely. 1997 is about right for when prices started to deviate from fundamentals. House prices have nearly tripled since then. When you think about it that way, Eleua's 20 cents on the dollar prediction doesn't sound that far off. Maybe 35 cents, if it were a transparent, elastic market.

rose-colored-coolaid

That chart makes perfect sense. Let me explain.

Housing Fact: ALL housing sales derive from a solid job market.
Employment Fact: ALL people living in King County work for Microsoft or Boeing.
Economic Fact: Every B&M employee earns a salary in excess of $130,000
Historical Fact: Both companies were founded in autumn 1996.

As you can see, the facts prove that the run-up over the last 10 years are fundamental, sustainable, and irrefutably not a bubble.

anforowicz

She didn't say where the inventory numbers come from and what area they cover... I find it hard to believe that 9k houses were on market for Redmond alone.

Lukasz

finance

One of the main reasons the RE Mkt took off in 1997 was due to the new favorable tax treatments for Real Estate (tax interest deductions and the like). This caused the market to instantly adjust and allow any normal market price gain to be magnified going forward (both upwards and now in many areas downwards)...but of course this could never happen in seattle (sarcam).

anforowicz

She writes that there were 9546 houses on the market in Redmond in August 1991.

I checked data on Redmond zipcodes (98052, 98053, 98074) available via RedFin. In total there are 31307 households in those 3 zipcodes (I don't have any data for 1990-s, but I assume the number of households would be the same or slightly less). 9546/31307 = 30.4% - every third house was on sale - it indeed looks much worse than what we have right now.

Lukasz

PS. I am sure that 98052 and 98053 belong to Redmond. I am not sure why this link shows 98074 as belonging to Redmond when this link shows that 98073 is part of Redmond.


98052:
link to data
there are currently 18195 households in 98052 zipcode (55% owned, the rest either rented or vacant)

98053:
link to data
there are currently 7438 households in 98053 zipcode (81% owned, the rest either rented or vacant)

98074:
link to data
there are currently 5674 households in 98074 zipcode (79% owner, the rest either rented or vacant)

anforowicz

I emailed Debra and she was kind enough to share with me a scan of a NWMLS Eastside Summary Report for years 1990-2006. It shows that in August of 1991 we had more than 9k listings which translated into 15 months of supply. In August of 2006 we had a bit less than 3k listings which translated into 3 months of supply.

So - it seems to me that our current inventory levels aren't as bad as they seem. Perhaps the inventory will rise even further, but anyway I am a bit more skeptical about significant price declines in a near future (I still think that we will get near 0% YOY appreciation next year, but I think that declines aren't that likely)

Lukasz

PS. In one of my earlier posts I incorrectly assummed that Debra was speaking of listing numbers only for Redmond, when she was talking about the whole Eastside ("The chart extends from areas in South Bellevue out to North Bend and on up to Woodinville, Bothell, and out Duvall")

biliruben

I don't recall the details, but from my research a couple years ago, I found it impossible to compare the older MLS inventory numbers because of the change in area monitored as well as the way in which inventory was logged.

I would be extremely skeptical of the older numbers. My guess is that we aren't talking about the same size region, they weren't recording active listings and they didn't purge the old listings consistently.

Do have the data in electronic form? Maybe you could post for our perusal.

The_Tim

anforowicz wrote:

I emailed Debra and she was kind enough to share with me a scan of a NWMLS Eastside Summary Report for years 1990-2006. It shows that in August of 1991 we had more than 9k listings which translated into 15 months of supply. In August of 2006 we had a bit less than 3k listings which translated into 3 months of supply.

I have spent a good amount of time in the UW Special Collections recently pouring over old Seattle Real Estate Research Reports. Starting in the late '80s, these reports include NWMLS summaries.

It is explicitly stated in the report that the numbers given are for the entirety of King and Snohomish counties. Also, until 1993, they did not provide a breakdown of SFH vs. condo vs. vacant land, etc., so the total includes all types of listings, including commercial and multi-family.

Keeping those caveats in mind, the highest number homes on the market was 26,646 in August 1991. Using the same criteria today, you come up with approximately 22,500 listings.

However, using the breakdowns they provided from '93 through '96, I determined that in the early '90s, roughly 59% of the total listings reported by the NWMLS were SFH, which translates to 15,639 single-family homes on the market at peak inventory in August 1991. Today: 15,916.

I'm 99% certain that Debra is reading the report wrong.

anforowicz

Tim,

Have you received the report from Debra that I forwarded to you? I can resend if for some reasons my 2 emails didn't reach you.

The Tim wrote:

I'm 99% certain that Debra is reading the report wrong.

This is a pretty strong statement. Now that (I think) you had a chance to see the report... Could you please point out how Debra is reading the report wrong?

Thanks,

Lukasz

The_Tim

Um, I don't think I got any emails from you... could you try sending it again? The address is TimothyEllis -at- gmail -dot- com

The_Tim

Okay, I've had a chance to look at the report finally. Here's what I observe.

In August 1991, there were 26,646 listings reported by the PSMLS (Puget Sound MLS, the predecessor to today's NWMLS) in the Seattle-Everett Real Estate Research Report. This is described as being "all types of listings in the Puget Sound Multiple Listings Service within King and Snohomish Counties" (emphasis mine).

Using breakdowns provided in '93-'94, we can determine that roughly 70% of the total listings were SFH and condo in those years. Applying that percentage to the total King + Sno. in August 1991 gives you a total SFH + Condo of approximately 18,652. If we take the report at face value, there were 9,158 SFH+Condo on the Eastside that month. That's essentially half of the total listings in the entire two-county area.

It's certainly possible, and the alleged Months of Supply for the Eastside (15.5) matches up with the greater two-county area, which had a paltry 1,482 sales that month, for a MOS of 18.0. However, I suspect that the report is actually showing total listings of all types, which would put the Eastside's share of the total at 34%--much more believable. For reference, last month, SFH+Condo listings on the Eastside made up just 21.6% of the total listings in King and Sno.

All that being said, when I made my original comment, I was under the impression that she was claiming that many listings for the Redmond-area only. Also, until looking at the reports, I was under the impression that she was talking about SFH only, not SFH + Condo.

I still think that the report is showing more than just SFH + Condo for the older years though. Note the suspicious and sudden drop in total listings reported between 1996 and 1997. Something fishy going on there.

It's possible that the Eastside accounted for half of the total listings in all of King and Snohomish in August 1991, but it doesn't seem very likely to me.