Seller's Expectations
I just noticed that Redfin has trends you can look at. So I was glancing what they had, and there's a $/sq ft chart that details a price for listed homes and another for sold homes. Anyone else seeing a major disconnect in these charts? It appears sellers are still generally in denial...which means it's far too early to buy into this market.
Here's Bellevue
Redmond
And Kirkland
Here's Bellevue
Redmond
And Kirkland
Comments
Sellers in Bellevue and Kirkland are probably waiting for all those new office buildings to open up.
I'm not sure what the effect will be if light rail passes on Tuesday. It will be great for businesses in Bellevue, so that would be a nice place be close to work. On the other hand it will be easier for people to commute in from other locations, which would dampen demand for close-in houses.
I would think just the opposite - that it was a shift to bigger houses. AFIAK the bigger the house, the lower the $/sqft. At the extreme, condos are $500/ft while few houses ever approach this
I think people "moved up" and bought bigger places for the same $ - which meant small, high priced homes stayed on the market and the median was not impacted as badly as it could have been.
Just supposition, no facts - but logically it doesn't make sense to me that it is a shift to smaller houses driving the change. That would seem to sustain high $/sqft. Smaller denominator and all...
What really caught my eye was that $/sqft sold switched to being
higher than asking in all three cities starting in July 07. I don't think that was a case of people offering more than asking, although that did happen. I think that the mix of houses offered was different from the mix that sold, and I agree that larger houses have smaller $/sqft. So it seems that the mix of houses being sold had higher $/sqft and were thus smaller than the mix of houses being offered.
So the houses at the upper end have been building up since last year, and so I am theorizing why they might be waiting it out. But with the $/sqft falling so fast in Bellevue and Redmond, maybe larger houses are starting to move, relatively speaking? I don't have that data.
That sounds like a closer guess to me. If you look at list price, it's gone down only slightly, suggesting that the mix of homes listed has not changed, but sellers have perhaps accepted prices are down slightly.
Let's assume this discrepancy is due to a change in mix; that suggests bigger homes are selling better. The problem is, if you combine the fact that median price is declining you get a contradiction. Let's consider two possible houses in Bellevue.
#1 1000 sq ft selling for $350,000. ($350/sq ft)
#2 3000 sq ft selling for $600,000. ($200/sq ft)
If house #1 sells, it lowers the median sales price but raises the average price per sq ft. If house #2 sells it raises the median price, but lowers price per sq ft.
It seems to me that a change in mix (due to size) cannot sufficiently explain both trends, so I rule it out. I have to hypotheses right now. 1) Only the cheaper (or shoddier) houses are selling. Some (many) sellers are delusional, they put their house on the market for too much $$$ which raises the list average but not the sales average since these overpriced houses are simply not selling. 2) Closing prices are much lower than list prices. If the average home is 2000 sq ft and lists for $600k, that's $300/sq ft. If buyers are demanding (and getting) 10% off, then that explains the discrepancy.
I believe it's a combination of both.
How can you really average it out unless you pin the areas. For example Bellevue is going to have Medina, Enatai, Yarrow Bay, Clyde Hill, Somerset, and the likes included which have been $400-$500 a foot?
I don't understand your question. Bellevue will have included those areas all along. So unless there is evidence that the number of Medina homes listed or sold has changed considerably in relation to total Bellevue area homes, it still won't change the mix. Could you elaborate on your point?
(1) one just goes against what everyone is saying, only top quality is selling now. Flippers who would normally seek out junk are out of the market because supply is already high.
(2) Is probably part of the picture, but Kirkland and Bellevue buyers were certainly not getting 10% discounts in early 2007, so these graphs by themselves themselves are not good evidence of discounts.
The prices that those sellers are asking may or may not be delusional, if they are in no hurry and expect the Eastside housing market to recover in a reasonable timeframe.
FYI, Medina, Yarrow Bay and Clyde Hill are separate cities with their own name. Enatai and Somerset are neighborhoods within Bellevue, which make no sense not to include them.
I sort of did, but maybe it was unclear.
Here's a link if you want to see which cities they have information available for.
Each city I listed is just for inside the city limits. Medina is it's own city by the way. Here's the Medina chart if anyone is interested. I don't think that would be terribly valuable though, since the market is so small.
I went to the Bellevue city page on Redfin (the one you hyperlinked to) and found at the bottom of the page this data from Redfin regarding Bellevue houses in the past 90 dyas:
Median List Price $800K
Median Sold Price* $600K
I was shocked by the huge split! Can this data be accurate?
If this is accurate, then might this indicate that Sellers be starting to realize that they must accept lower offers than their absurdingly high listings?
Combine this with the fact that inventory just keeps piling up and the current economic mess, and I don't see any reason for a buyer to pay any more than that for the forseeable future.
For sellers, they will either have to wake up to this fact, or not sell the home. I predict that more and more sellers will gradually start facing reality over the coming months, but it's not going to be a quick or easy process.
I think you're right about the miniscule number of sold homes recently. So I am thinking that the Median Sold Price in Bellevue over the last 90 days is statistically/historically a very small a sample number that can easily be affected by a few extreme sales.
But the small numbers of sales, regardless of the Price, should be sending a loud and clear signal to sellers that demand is way down, and prices should reflect that by coming way down as well.
The split just means to me that sellers have not adjusted to changing downward market trends as quickly as buyers have. I hope the sellers wake up and accept reality.
They won't until they're out on their keisters with foreclosure. 99% of the people are totally delusional, bordering on mental illness.