Last year, the drop from September to October was less than one percent. It had a similar drop this year. I think the YOY inventory percent change will stay the same at 40%.
I have no idea about sales. Inventory is behaving the same. Are fewer people putting houses on the market or are sales staying the same? It is not a good time to sell. I imagine that fewer people are entering the market, but how many fewer?
We could look at a trend line:
July 06-07 : 3724-4026 = -302 (more sellers)
Aug 06-07 : 3927-3762 = +165 (fewer sellers)
Sept 06-07: 3780-3771 = +9 (fewer sellers)
Ugh. That doesn't tell me anything.
I just going to say that pending sales will follow the same trend as last month: down 32% YOY.
Median closed price: Down 2% YOY (although that doesn't really tell us much either -- I'm making the bold negative decline prediction based on the theory that fewer jumbo loans being made will skew the results downwards).
The last few months of residential sales are 2881, 2700, 2453, 2094, and 1541. Using linear interpolation (which I doubt is a valid model), October might have around 1200 pending sales. Last October there were 2440 sales. That is a 50% YOY drop in sales!
Last October saw a 7.4% MOM gain in sales over last September. Whatever the actual drop is, it will look even worse since sales increased a year ago.
I don't know - I have a CBBain.com property watch going for all of the homes in Snoqualmie Ridge. Seems like there were VERY few sales and a RIDICULOUS number of hoems simply taken off the market without selling. I wouldn't be suprised if MOS was flat from last month...think it's possible?
If the inventory does end up being around 10,780, sales would have to be totally flat from last month (1,541) for the MOS to stay above 7. It could happen, but for some reason I have a hunch that sales will increase slightly from last month, and come in between 1,700 and 1,800. I have no good reason for guessing that though.
As far as the median price goes, I've given up guessing where that might go. The mix of homes sold is just changing way too much.
There might be an explaination for rising sales in October.
People with children want to move before August for the start of school. The survey of purchases I did in my old neighborhood had 3/4 owner-occupied purchases occuring in August.
That might put pressure on people who would otherwise move in September to push their plans ahead to August. In effect, August borrows demand from September. Maybe October is too far away from September to have this effect. No demand is borrowed from October and so there is a slight rebound in sales.
Although not every year sees the rebound.
The inventory levels this year look very similar to last year. I find a MOM increase in sales to be very likely. If that happens, the RE press is going to have a field day.
I am not following how homes can just come off the market without selling. These people have carrying cost (mortgages), and assuming people believe housing prices will just stay flat, and not go down, they are decreasing their equity on a daily basis. Given what has happened with Washington Mutual in the last couple of weeks I can't believe money is flowing faster than it did in August.
If sales are in the 1,500-1,700 range for the month, there are a lot of RE professionals that will not be shoping at Nordstroms for Christmas.
Well, at least oil is still under $100 (at least last time I checked)
I am not following how homes can just come off the market without selling.
Human psychology.
I've read that it is much better to price your property slightly under market value instead of pricing it high and then dropping it. The high intitial price will cause the property to sit on the market for a long time. A long time on the market signals to buyers that it is undesirable and will encourage buyers to seek deeper price cuts. Those cuts can be deeper than if the house had been priced correctly initially.
A house that is taken off the market can be relisted as new a few months later. During the winter, there are supposedly fewer buyers so the opportunity cost of taking the house off the market is less than at other times of the year.
Take the gain from having a fresh listing and subtract the carrying costs. If the number is positive then you take it off the market and relist in the spring. If it is negative then you keep trying to sell now. 10% on a median house is close to $50k. What are the carrying costs for three months? Maybe $25k if you bought a few years ago?
Unfortunately, this requires predicting the future. People here generally think price will go down. A belief in prices dropping would make the number more likely to come out in favor of keeping the house on the market. Many RE professionals believe prices will be flat. That makes it more likely they will take the house off the market to relist.
The true cost depends on how much of your monthly payment is interest. In the first 7 years of ownership, most is interest. In the last 7 only a little is interest.
As an aside...
I've heard that if you are playing the tax game right, most of your income each month goes to paying off interest on a house. That way, 25% of that interest can be returned during tax season. Sure, the other 75% is 'thrown away' to the bank, but if you focus on the fact that you can use the 25% back to buy a plasma TV, you'll hardly care. I like to think of it as Christmas in April. Except Santa Claus is a skinny angry guy wearing a 3-piece suit, and instead of giving me a gift, he takes my money and then gives me a piece of the cut.
Me: 2% median price drop YOY
Actual 1% median price drop YOY
I'm very pleased with how close my prediction hit to this mark. Actually, I'm quite surprised the YOY median price actually did go negative.
Me: 40% inventory increase YOY
Actual: 44% increase YOY.
We've been around 40% for a while. This one was easy to ballpark.
Me: 32% sales drop YOY..
Actual: 28.5% sales drop YOY.
I overshot that a bit and that surprises me. Sales were up MOM last October and I kind of expected the sales drop to be exaggerated this month. Instead we had a smaller YOY drop than last month against a strongish month a year ago.
There were 14,240 single family homes and condominiums on the market last month in King County
Pending sales continued their decline in October, slipping 28.5 percent to 2,366 in King County
For those of you keeping track at home, that comes out to six months of inventory for residential and condo units (and that number is probably low due to the number of unlisted condo units held by developers).
I just going to say that pending sales will follow the same trend as last month: down 32% YOY.
Median closed price: Down 2% YOY (although that doesn't really tell us much either -- I'm making the bold negative decline prediction based on the theory that fewer jumbo loans being made will skew the results downwards).
Well, not to pee in your Cheerios, but it looks like KC SFH median was up slightly by 0.9% Y2Y. hard to tell what happened to SFH inventory. Need to see the breakouts.
That should help high-end home sales and thereby bring the median price back up. According to http://www.altosresearch.com/research/WA/SEATTLE the price-per foot of Seattle listings has been steady for a couple months after being up a bit in the summer.
Comments
I have no idea about sales. Inventory is behaving the same. Are fewer people putting houses on the market or are sales staying the same? It is not a good time to sell. I imagine that fewer people are entering the market, but how many fewer?
We could look at a trend line:
July 06-07 : 3724-4026 = -302 (more sellers)
Aug 06-07 : 3927-3762 = +165 (fewer sellers)
Sept 06-07: 3780-3771 = +9 (fewer sellers)
Ugh. That doesn't tell me anything.
I just going to say that pending sales will follow the same trend as last month: down 32% YOY.
Median closed price: Down 2% YOY (although that doesn't really tell us much either -- I'm making the bold negative decline prediction based on the theory that fewer jumbo loans being made will skew the results downwards).
The last few months of residential sales are 2881, 2700, 2453, 2094, and 1541. Using linear interpolation (which I doubt is a valid model), October might have around 1200 pending sales. Last October there were 2440 sales. That is a 50% YOY drop in sales!
Last October saw a 7.4% MOM gain in sales over last September. Whatever the actual drop is, it will look even worse since sales increased a year ago.
I'd guess pending sales will be ~2,000. I think financing loosened up and there was probably some overhang from sept that will land in oct.
if that is true it will probably drive up the median as well.
As far as the median price goes, I've given up guessing where that might go. The mix of homes sold is just changing way too much.
People with children want to move before August for the start of school. The survey of purchases I did in my old neighborhood had 3/4 owner-occupied purchases occuring in August.
That might put pressure on people who would otherwise move in September to push their plans ahead to August. In effect, August borrows demand from September. Maybe October is too far away from September to have this effect. No demand is borrowed from October and so there is a slight rebound in sales.
Although not every year sees the rebound.
The inventory levels this year look very similar to last year. I find a MOM increase in sales to be very likely. If that happens, the RE press is going to have a field day.
If sales are in the 1,500-1,700 range for the month, there are a lot of RE professionals that will not be shoping at Nordstroms for Christmas.
Well, at least oil is still under $100 (at least last time I checked)
My bet is sales will be 1,650.
Human psychology.
I've read that it is much better to price your property slightly under market value instead of pricing it high and then dropping it. The high intitial price will cause the property to sit on the market for a long time. A long time on the market signals to buyers that it is undesirable and will encourage buyers to seek deeper price cuts. Those cuts can be deeper than if the house had been priced correctly initially.
A house that is taken off the market can be relisted as new a few months later. During the winter, there are supposedly fewer buyers so the opportunity cost of taking the house off the market is less than at other times of the year.
Take the gain from having a fresh listing and subtract the carrying costs. If the number is positive then you take it off the market and relist in the spring. If it is negative then you keep trying to sell now. 10% on a median house is close to $50k. What are the carrying costs for three months? Maybe $25k if you bought a few years ago?
Unfortunately, this requires predicting the future. People here generally think price will go down. A belief in prices dropping would make the number more likely to come out in favor of keeping the house on the market. Many RE professionals believe prices will be flat. That makes it more likely they will take the house off the market to relist.
As an aside...
I've heard that if you are playing the tax game right, most of your income each month goes to paying off interest on a house. That way, 25% of that interest can be returned during tax season. Sure, the other 75% is 'thrown away' to the bank, but if you focus on the fact that you can use the 25% back to buy a plasma TV, you'll hardly care. I like to think of it as Christmas in April. Except Santa Claus is a skinny angry guy wearing a 3-piece suit, and instead of giving me a gift, he takes my money and then gives me a piece of the cut.
Seattle Times
Actual 1% median price drop YOY
I'm very pleased with how close my prediction hit to this mark. Actually, I'm quite surprised the YOY median price actually did go negative.
Me: 40% inventory increase YOY
Actual: 44% increase YOY.
We've been around 40% for a while. This one was easy to ballpark.
Me: 32% sales drop YOY..
Actual: 28.5% sales drop YOY.
I overshot that a bit and that surprises me. Sales were up MOM last October and I kind of expected the sales drop to be exaggerated this month. Instead we had a smaller YOY drop than last month against a strongish month a year ago.
Seriously though, good job.
For those of you keeping track at home, that comes out to six months of inventory for residential and condo units (and that number is probably low due to the number of unlisted condo units held by developers).
Last month we were at 7 MOI for SFR.
Well, not to pee in your Cheerios, but it looks like KC SFH median was up slightly by 0.9% Y2Y. hard to tell what happened to SFH inventory. Need to see the breakouts.
I'm sure Tim will be on the case tomorrow
So much for my career as a TV economist making predictions about the past.
Graph rate trends over time: Jumbo vs. Conforming
That should help high-end home sales and thereby bring the median price back up. According to http://www.altosresearch.com/research/WA/SEATTLE the price-per foot of Seattle listings has been steady for a couple months after being up a bit in the summer.