Anecdotally Speaking
Well, I headed on over to the Parcel Viewer to look for the official government record of a sale, only to find that the most recent sale listed was in May 2004, when the current owner bought it for $327,000. Hmm, so it hasn't sold yet... is it still on the market? Why yes, yes it is—and according to ZipRealty, it has been languishing on the market for 74 days now. The seller must not be very motivated (or they're counting on the spring selling season to rescue them), because they have only dropped the asking price by $25,000.
I can understand why a dumpy little place stuck between a busy road and a Safeway didn't sell last year. But if the market is "sizzling" as the Seattle Times and P-I make it out to be, why has this house still not sold? Seems to me that either 1) it's got mold, or 2) the market just might not be as hot as it was before.
Before anyone jumps all over me, I'm perfectly aware that this is only one example and doesn't "prove" anything. But it is a typical example of what is going on in the numbers we've been seeing posted in the comments here (thanks Dukes!). Price reductions galore and consistently more "new listings" than "solds" every day. Make of this example what you will.
43 comments:
No surprises here at all.
Not sure why you would qualify your statement with "it's only one house" when you know, based on the numbers, it's far more than one house. It's MOST houses.
Another anecdote:
There's a guy at work who purchased a little house in the north Seattle burbs about six months ago. At the time, we were all kind of surprised, because neither he nor his wife are making a great income. To top it all off, he became very bristly with me one day, when I was talking to another coworker about the insanity of the Seattle housing market. His words? "If you want to own, you can make it work" (the implication being, of course, that anyone who didn't "make it work" was just being negative).
Well, after being scolded by Mr. Make-it-Work for the Nth time the other day, curiosity got the better of me. I plugged his name into the Seattle and King County public records databases, and pulled up the information on his sale.
What did I find?
In short, Mr. Make-it-Work is aptly named. He overpaid for his dumpy little craftsman by nearly $60k (versus the current assessment -- according to the sale records, the house has appreciated in value by nearly 100k in three years' time), put down less than 10% of the value, and took out two mortgages on the place -- one of which was an 5-year ARM.
Now I know why Mr. Make-it-Work is bitter...if the market turns south, he's going to be underwater on that house for a long time. All because he felt it was safe to over-leverage himself to buy a hot property....
By "current assessment" did you mean what the city assessed the property for?
Usually the city's assessment lags way behind market value...often by as much 100K.
'm
Funny story Anon.
When too many people have had to "make it work" to "afford" (! yeah right) their home, there'll be a lot of anxiety around to keep the market going.
I mean really, have you ever in your life seen so much anxiety about the state of the housing market?
It's beyond ridiculous. It's nervous breakdown time.
The tide's turning. Homes will once again become a place to live, nothing more. Speculative premium gone. Amen to that.
Hi Price drop,
Do you think we'll see some big losses in next months MLS #s? Lower median prices across the board? Big increases in inventory, etc? Is May the turning point in the market?
thanks,
'm
Anon 9:48-
Overleveraging to buy a hot property has been all the rage for several years now.
What blows my mind the most is people taking out ARM's when interest rates are lower than they ever have been- they've got nowhere to go but up!
That stupidity and lack of common sense is going to bite a lot of people.
Notice to home buyers: You get an ARM loan when rates are at an historical high. That way when rates go down, you can ride them down.
Another notice: Rates are more than likely still heading up, so it's still a bad time to get an ARM.
Meshugy --
Yeah, I was referring to the city's assessment.
You're right that in this market, the assessments lag the "real" value, but in markets that aren't insane, that tends to be less true. After all, the city has a vested interest in getting the numbers right.
I'm following the below property keenly.
http://www.zillow.com/HomeDetails.htm?city=Sammamish&state=WA&zprop=60972966
The seller bought it for around 380K in 2003 and wants to sell it now for 575K, which is 200K more in just 2.5 years.
See below
http://sarascrossing.com/default.aspx
The ZESTIMATE of the house is 514K.
I know that this person wants to sell this house and relocate. So, it would be interesting to see for how much price it will be sold finally...!
Have fun watching the property.
at @5% a year appreciation (way more normal) it would sell for around 420K.
Course I'm sure they overpaid in '03 so if the bottom falls out by Fall, they could get less.
Do you guys have the links to the King County databases that let you pull up the sale history and assesed taxes?
Hi Dukes,
I'm still a little confused by these #s you're posting. They'd be really useful if I knew how to interpret them.
You're showing about new 250 listings a day for King County...that would be 7750 new listings a month at that rate.
Last month there were only 4,741 new listings in King county (which was down -1.05% YOY). That's 158 listings per day. About 100 less then what you're showing. Also, I've been tracking the King County MLS and the inventory has been going down all week. According to your #s I should be seeing 250 more houses per day, but it's actually going down.
Can you explain in greater detail what these #s are and what they mean?
Thanks,
To check sales history go to:
http://www5.metrokc.gov/reports/property_report.asp
very east to use. all you need is street address and you're in.
Thanks for the breakdown Dukes. So it looks like that's about 30 sections they've divided the whole pie into, about 10 of which we'd consider Seattle proper.
We are very lucky to have somebody whose got access to these numbers! thankyou.
thanks Dukes....
I'm still not sure why your #s don't jive with the NWMLS monthly reports and the current NWMLS data available to the public.
So if the #s you're reporting are correct, the May NWMLS report should show::
1- A big dip in median price in most areas
2 - a substantial increase in inventory in most areas
3 - less sales in most areas
right?
thanks,
'm
Meshugy:
Not a realtor myself, but the 250 new homes represent what's added to the market, subtract from that the homes sold/pending/inspection and you have the net homes added to the inventory..
if you see it's not 250 net to the market, it's a lot less
Formula for NET homes added:
(New Homes + Back on market) - (sold/pending/expired/inactive)
that is your net...
I'm not a realtor either but if there's 30 sections there, it does seem totally plausible that 250 homes came on the market in one day, right?
I mean that's less than 10 homes/condos/apt. bldgs/lots per section.
Anyway, keep posting the #'s Dukes- even if we don't completely understand them!
Dukes,
The numbers are helpful, thanks. I wonder if you'd be interested to dump them into a running spreadsheet & share the aggregate data with us from time to time? Keeping track of them across multiple blog posts is a bit rough, I for one can't always hit these pages each day and lose track of whats posted where. Perhaps you could use a simple free blog page somewhere and dump the numbers each day as a standalone post, so we could track them ourselves that way.
Thanks
Lesser Seattle-
Please share the results with the rest of us!
Dukes-
Posting the #'s is terrific and time-consuming enough. The spreadsheet sounds like a lot of work!
I like the idea of tracking the inventory in this manner. Tim, perhaps you could compile the #'s from Duke's post and keep this as a running section on your blog. It would definitely kick it up a notch as it would add an additional dimension of fact and analysis. It's a great blog and is definitely gaining much momentum!
On another point, I notice that people tend to make a big deal about the increasing median price of homes. I think it's meaningless in the bigger picture and more long-term horizon (i.e. 6-12 months). The median prices will come crashing down once the down-draft begins in earnest. This same phenomena is happening in virtually every other community. You can read about it in Phoenix, LA, North East cities, SF, etc. In most of these communities one would be hard-pressed not to admit that there is a bubble. What is happening in each and every one of these towns is that sales have fallen off a cliff (typically down anywhere from 10-50% YOY), inventory has shot up (anywhere from 10-500%) and the median price has generally gone up a little (usually 3-15%) depending on the community.
This data indicates that the "stand-off" between sellers-and-buyers is at the peak (and I believe because we're in the middle of the Spring selling season where all the sellers hope to snag their last buyers). These buyers are usually well-off financially and committed to an area, therefore will buy at the high end without really being impacted by cost or market situation. At the lower (and very upper) ranges, buyers are terrified of getting snagged in the downdraft and realize that housing is too expensive. They don't want to get left holding the bag once the dust settles.
In my opinion, what is going to happen is we're going to get past this peak selling season, and a few things will take the last bit of wind out of the sails of the housing market. This will crush the remaining stand-off between buyers and sellers and will likely result in a wave of panic selling at very discounted prices as most investors, and other committed to downsizing or escaping with some equity from their home, will sell.
These factors converging to break the standoff are (in no particular order of impact):
1. Increased interest rates
2. Restricted lending rules
3. Record foreclosures
4. Record inventory
5. Record declines in sales volume over the last 5 years.
6. An emerging general malaise over the state of our economy due to falling stock markets, slowing housing sales, declining housing prices, lower dollar, higher inflation, record commodities prices, record gas prices
7. Lowering prices on houses, which will start the vicious cycle down
Most communities, including Seattle and the PNW, will not walk away unscathed. This will be a serious situation for the economy and will be something that will hurt, but definitely something we will need to go through to eliminate the excesses of the past few years.
Anon 8:08:
I love the idea of posting Dukes numbers more prominently- in fact , I was going to ask him if he'd start a blog!
Either way- here or a new blog. It would be great to get some meat behind this instead of always just wondering about the newest local media spin or hype.
I mean, we know that's crap anyway, so why even pay so much attention to it?
check out the Sacramento blog for a good read.
Sac's going down fast and hard.
Tim's got the link provided. thanks Tim!
http://bubbletracking.blogspot.co
m/2006/05/tracking-seattl
eking-snohomish.html
The seller bought it for around 380K in 2003 and wants to sell it now for 575K, which is 200K more in just 2.5 years.
Taking a look, I think it's sad people are expecting $500k for a rather souless nabe, and a house of low/medium build that I'll guess is at most $125/sqft construction quality. If there's any doubt, take a look at the back of the house and the total lack of decent windows and balconies. I like parts of Sammamish, but I'd take an old house with personality over that cracker box that will self-destruct in 20 short years.
Hey People,
Please be aware that the folks on this blog who share data that they have collected are already doing a lot of work!!
If you want to see their data posted to a separate website or to an excel sheet, etc., consider offering to take on the project yourself. I'm sure the others on the blog would be grateful, as your suggestions are good ones.
Thanks all - its a great blog. Very informative!
http://seattletimes.nwsource.com/html/realestate/2002990371_affordable14.html
The seller bought it for around 380K in 2003 and wants to sell it now for 575K, which is 200K more in just 2.5 years.
Given the way that sammamish/issaquah
has been going i would not be
surprised if he gets atleast 550K.
Here is one reason why I think the RE
market in the eastside area is still
holding up - Chinese & Indians (East Indians that is).
I am not being racist/discriminative here (I belong to one of the above mentioned communities).
In the Asian culture, RE & gold occupy a high place and held (hoarded ?) for a long time.
If you drive thru any new eastside development (< 4 years old) i guarantee that you will find 60-70% of the homeowners are either chinese or indians.
Disclaimer - I am not a homeowner here. Have a house in the midwest market that i need to sell first :(
Re. foreigners buying. Can't people in those communities help spread the word throughout that now is a bad time to buy?
I understand the mentality myself, ie. "safety and security" of owning a home, stashing gold, etc.
But there are times when it's just plain stupid to invest in either of those. Gold's probably still safe, but American RE? I wouldn't bet on it.
Any East Indians or Asians out there who can spread the word?
Correction: Slash "either of those" from above statement. Makes it sound like I meant BOTH RE and gold.
I mean RE only. Gold may have a ways to go. It bears watching.
But seriously, American RE is a bad bet. Those communities need somebody to educate them on what's happened/is happening.
The Tim, what follows below is a computer generated comps report available to Realtors using the NWMLS website. It appears that the property you posted is probably asking way more than the comps (ie. recent comparable sales) justify.
An excess of optimism is depressingly familiar to realtors who must try to reason with excessively optimistic sellers who feel that it's our fault if their houses don't sell at the inflated prices that their optimism demands.
Excessively high asking prices don't come from realtors, they come from owners. When we suggest what we consider a reasonable price to an optimistic seller, we are met with suspicion by a seller who thinks we will short-change him in order to make a quick buck.
What follows is the actual comp report:
Comparable Statistics:
Subject Property High Low Median Average
Assessed Value $295,000.00 $548,000.00 $243,000.00 $307,000.00 $317,700.00
Assessed Value Ratio 1.11 2.16 0.89 1.29 1.40
Sq Footage 2,130 2,400 1,860 2,120 2,100
Sale Price $327,000.00 $845,000.00 $248,000.00 $400,000.00 $439,543.20
Price/Sq Footage $153.52 $449.47 $133.33 $193.47 $210.34
--------------------------------------------------------------------------------
Summary
Address City State Zip Recording Date Sale Price Building Sq Ft Bedrooms Total Baths Dist (miles) Total Assessment Assessed Value Ratio
1. 19321 67th Ave NE Kenmore WA 98028 12/23/2005 $326,000 1,920 3 3 .088717 $260,000 1.25
2. 19520 66th Pl NE Kenmore WA 98028 12/28/2005 $248,000 1,860 3 3 .10994 $280,000 0.89
3. 6824 NE 191st St Kenmore WA 98028 04/04/2006 $480,000 2,230 4 3 .125762 $341,000 1.41
4. 19018 68th Ave NE Kenmore WA 98028 02/22/2006 $360,000 2,300 4 3 .17802 $312,000 1.15
5. 19605 66th Pl NE Kenmore WA 98028 04/11/2006 $379,000 1,980 4 3 .19395 $268,000 1.41
6. 19327 65th Pl NE Kenmore WA 98028 03/09/2006 $447,000 2,120 4 3 .200853 $346,000 1.29
7. 19221 65th Pl NE Kenmore WA 98028 08/17/2005 $400,000 1,900 4 2 .229303 $315,000 1.27
8. 6520 NE 196th St Kenmore WA 98028 11/04/2005 $395,000 2,050 4 2 .245754 $260,000 1.52
9. 19507 73rd Ave NE Kenmore WA 98028 05/01/2006 $845,000 1,880 4 2 .28364 $391,000 2.16
10. 8217 NE 198th St Kenmore WA 98028 09/16/2005 $455,698 2,340 4 3 .288468 $243,000 1.88
11. 7206 NE 190th St Kenmore WA 98028 08/24/2005 $385,000 1,990 3 2 .30079 $344,000 1.12
12. 7344 NE 192nd St Kenmore WA 98028 09/30/2005 $415,000 2,160 3 2 .348083 $307,000 1.35
13. 6730 NE 202nd St Kenmore WA 98028 04/28/2006 $600,000 2,210 3 2 .392885 $548,000 1.09
14. 18614 66th Ave NE Kenmore WA 98028 09/30/2005 $347,500 2,160 3 3 .419615 $294,000 1.18
15. 19710 75th Ave NE Bothell WA 98028 04/27/2006 $509,950 2,400 4 3 .425866 $256,500 1.99
From today's Seattle Times RE section:
According to reporter Jane Rhodes, Seattle is "not in a bubble".
However,according to her, houses in Seattle ARE priced beyond people's means.
So here are a couple of suuggestions from Ms. Rhodes on how to buy a home in "not-in-a-bubble but over-priced-Seattle":
These are direct quotes:
1) "Unconventional Financing: Buyers often use low-interest or no-interest loans, adjustable rate mortgages, or other creative financing methods to get into a home."
2) "Group Purchases: Some get together with friends or others to buy a home"
That last suggestion should go over big in Seattle neighborhoods that have been fighting tooth and nail for years to keep density in their neigborhoods down. Two families per SFH this year, 3 families next? Love that suggestion!
Check this out:
Buying on a budget
I think people looking to buy should consider some of the points in this article. Mainly, if inner city Seattle prices are too high for your budget, it's still possible to find affordable housing further north or South of Seattle. You don't have to get in over your head to get a house.
I've been watching the market for a few years now, and it's pretty clear that the smart $ has been on buying. For example,
If you bought a median priced Seattle house in April 2005 you paid $355K and got a 30 yr fixed at 5.8%
Your final amortization comes to $749,872.25
If you bought a median priced Seattle house in April 2006 you paid $419K and got a 30 yr fixed at 6.2%
Your final amortization comes to $923,844.83
So if you bought last year you saved yourself $173,972.58!!
For those of you who could have bought last year but waited , your current "burn" rate is $14,497.715 per month! The combination of rising prices AND interest rates is making waiting a very costly option.
Eventually it will slow down. But you definitely will save by getting in earlier rather then later.
Good one Anon!
Just what I want to do: pay 923K for a 419K house that should have sold for 200K in the first place!
You're joking, right?
Har.
Yeah, if I was a complete idiot, I'd buy that $355k house (that's probably only worth $300k) at $416k, and pay out the nose.
However, since I'm not stupid, I'll recognize that the $416k house is only worth $300k in a normal year, and I'll wait. Meanwhile, I'll rent a nicer place for less money than the average mortgage payment, put the rest into a reliable long-term investment, and maybe do something nice for myself, too, like a vacation somewhere warm.
So, let's see: option A, I take on unmanageable amounts of debt, build little to no equity, spend most of my take-home pay on interest, and in the worst case, spend the rest of my life paying off negative equity.
Option B, I save some money, live somewhere that makes me happy, and take a vaction.
Hmm. Tough decision.
To the anon who urges buy now before interest rates move up:
You are obviously too young to know this:
The price of homes falls as rates go up.
Hello?!? One of the main reasons prices got so high is because interest rates were at historical lows.
As rates move back to where they should be, and banks tighten lending standards, prices will go down.
It's just a matter of time. Patience folks. Don't buy in to a doomed market.
And PS: A 20K reduction on a house that's overpriced 200% is NOTHING.
To the "buy now" anon;
So, you've been watching houses for a few years and the smart money's on buying, eh?
Well 3 years ago, I'd say you were right. No doubt about it.
But, as you know, there are "tops" in all markets. The fact that Seattle's been sailing to new heights for several years now, year over year, says something.
Do not be at all surprised, when '04 and '05 appreciation are lopped off the top.
The whole US is in for a doozy of an RE correction.
The smart money got out last year. '06 is when the dumb money buys in.
'07 is when nobody buys at all.
no... 07 is when we all (in this blog) consider buying again because all the foreclosures bring the comps down to pre 2002 levels...
08 is when those who haven't bought start wondering if it's going to go even lower...
this blog will then become a reverse bubble blog... predicting when the market will start to recover again....
History does repeat itself... look at the 90's data if you have any doubts...
a bit off topic, but can somebody explain to me how a 200K home 3 years ago is now worth 400K?
Nothing was different the last 3 years than the previous 3 years before then xpt for low interest rates...
Unfortunately I was in no position to buy a home then... but now that I can, I just can't understand why prices are crazy high?
So when interest rates go back up... wouldn't it make sense that the market goes back down?
Yes. Prices will come down as rates go up.
As to why houses would inflate so quickly, it is ultimately attributable to one thing and one thing only:
Stupid, Scared Buyers.
There are some who think that the only reason the spring market doesn't look WORSE than it does right now is because some foolish buyers have bought the "buy now! interest rates rising!" hype.
There is a way to stop the madness:
REFUSE to buy.
Boycott houses. They're already doing it in San Francisco. Enough is enough.
TIM DUNN-
Have to respectfully disagree somewhat that it's the sellers that set prices. I think overwhelmingly people listen to the agents advice and go off of their suggestions.
My own experience tells me that informed homeowners can be just as effective at pricing.
Sold my home fall of '04. Had four very active agents in our community in North Seattle/Shoreline bring in comps. There was only one agent that came close to what I thought the home might get with an offer, but she was still $15K higher than my gut feeling. I priced it lower than she suggested, to her dismay! The other three agent CMA's were a joke. One even suggested a price that was $45,000 less than where it eventually sold, and she came through the brokers open and mentioned that it was way overpriced to her office agents. She used the home she sold a few blocks away as her primary comp which was on a main drag and in excellent condition. And this was one of the so-called top producers at the local real estate office across the street from Fred Meyer. Agents are all over the map in pricing.
Mr. Dunn,
Let me take a look at those 15 comps you listed at the end of your post. Let's see, what's the median? $400,000. What's the mean? $439,500. Fully 1/3 of the comps you listed sold for more than the current asking price on this property. And how many of those houses back a park?
While (apparently) attempting to show me that this house is priced too high compared to recent sales, you have in fact shown me that it is priced perfectly reasonably in comparison. If this were May 2005, I guarantee this house would have been sold in 2 weeks or less and probably would have received multiple offers.
I pointed this house out as just one example that the market in the Seattle area is finally slowing. Thank you for assisting me in proving that point.
Go Tim!
Beyond time to start pointing out the ludicrousness of the lies.
The lie: "that house is overpriced, that's why it hasn't sold" has been a favorite among Seattle realtors ever since the market started turning.
They've been using it since Fall '05 at least. Hogwash.
I suspect it's a catch phrase that they're taught to use at NAR meetings!
(Along with "Buy now, before interest rates go up!")
"Notice to home buyers: You get an ARM loan when rates are at an historical high. That way when rates go down, you can ride them down."
I think that it's also rational to get an ARM if the yield curve is extremely steep.
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