I think the market drove off a cliff the last two weeks
I posted earlier on this, but I didn't get a lot of comments so I thought I'd post in a new thread. I watch the free charts over at Altos Research pretty often - partially because my buddy runs the company - but mostly because I think they have good data on where the market is going.
Their big proprietary measurement is something called the "Market Action Index" (MAI). They describe MAI as follows:
Its pretty much Sales/Inventory, as far as I can tell. I know from my own statistical modeling that the % of inventory sold is a big driver of price - so when I see this dropping - I think it is a big deal.
Last week - the MAI for almost every major market in the Seattle area appears to have fallen off a cliff. All have dropped under 30 - most under twenty! While I think it is possible this could be a result of bad data (like back in ~July when they all appeared to drop to zero) I don't think so this time - for the very reason that last time they got bad data, all the readings went to zero - not into the middle of the "buyers" range. Plus we know financing has tightened, school has started so we're out of the buying season, etc so I think what it really means that nothing is selling right now.
We can probably confirm this with the NWMLS numbers, but I thought others might be interested in an early indicator of what is going on across major local markets.
Seattle
Bellevue
Kirkland
Redmond
Issaquah
Their big proprietary measurement is something called the "Market Action Index" (MAI). They describe MAI as follows:
The Index is a barometer of real estate supply and demand. A value above 30 indicates demand is relatively robust, we call that a Seller's Market. Below 30 is a Buyer's Market. Also use the long-term trends as a leading indicator for prices
Its pretty much Sales/Inventory, as far as I can tell. I know from my own statistical modeling that the % of inventory sold is a big driver of price - so when I see this dropping - I think it is a big deal.
Last week - the MAI for almost every major market in the Seattle area appears to have fallen off a cliff. All have dropped under 30 - most under twenty! While I think it is possible this could be a result of bad data (like back in ~July when they all appeared to drop to zero) I don't think so this time - for the very reason that last time they got bad data, all the readings went to zero - not into the middle of the "buyers" range. Plus we know financing has tightened, school has started so we're out of the buying season, etc so I think what it really means that nothing is selling right now.
We can probably confirm this with the NWMLS numbers, but I thought others might be interested in an early indicator of what is going on across major local markets.
Seattle
Bellevue
Kirkland
Redmond
Issaquah
Comments
In response: Boeing! Microsoft!
I eagerly await your response to my killer arguments.
Do you have data from a similar time period from the last year? Is it possible that the index falls below 30s every September?
If I had the time I'd start a parody real estate agent blog, filled with the kind of stuff that would make it difficult to tell at first glance whether it was someone being serious, or parody. Similar to the Sony Defense Force site, only about Seattle real estate.
I don't have any more data - but the chart shows a year's worth of data. So last september, just eyeballing -I'd say the values were in the range of 40-70. I don't see any real seasonal pattern, just a steady downward trend.
go over to the altos site and click around. Every city looks like this. (except those they've recently added where they only have 6 months of history)
And if I had the time, I'd start a "Fake David Lereah" blog in the syle of fake Steve Jobs, which is awesome BTW. "Dude, I invented the friggin' iPod. Have you heard of it?" Fake Steve
Fake Lereah Tagline: "Dude, buy a friggin' house, OK? Seriously."
Articles:
-Scientists discover that renters use more soap than French people
-Falling home prices is good for Australia, where everything is upside down anyway.
-GETDATE() is a good time to buy
-Shiller, you're so right you're wrong, and you know it.
-What's so irrational about exuberance anyway?
Why doesn't Altos show sales prices?
I prefer DateTime.Now
Probably because median sales price is influenced only by houses that sell.
Well, I think this question is answered. They've posted data for another week and while the MAI is tracking flat to slightly up, it is still under 20. Looks like we've crossed into a "buyer's market"
man, I can't believe I laughed at *both* jokes