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Friday, May 05, 2006

Sales, Prices Up Slightly In Olympia

The Olympian wins the contest again for having the first story in my inbox about April's numbers. Their story only covers the Olympia area, but it should be enough to whet your appetite for the full NWMLS numbers that are supposed to be released later today.

In April, home sales rose 10 percent over last year, according to preliminary data released Thursday by Olympic Multiple Listing Service.

The sudden increase in April home sales is partly because of seasonal factors, such as better weather. But it also reflects Thurston County's strong economy with 4.3 percent unemployment, said Olympic MLS Manager Jerry Wilkins.
...
From March to April this year, the median price of a home rose from $244,000 to $252,200. The median price of $252,200 in April was 22 percent higher than the median price of a home for the same period last year.

The 10 percent increase in the year-to-year April figures reverses an earlier trend in which March home sales declined by 1 percent.
...
April had 1,113 active home listings compared with 832 for the same period last year, according to the Olympic MLS data.
To hear Rolf Boone tell it, everything is rosy in Olympia. However, note that inventory is up 34% from a year ago, while demand is only up 10%. While not as extreme as last month, when inventory was up 77% and demand up 19%, it's still a slowing trend.

(Rolf Boone, Olympian, 05.05.2006)

18 comments:

Anonymous said...

Does anyone know where to find data that show historical house prices in King and Thurston counties? I am very interested in learning how the prices behaved in the past market downturns, how much the prices dropped and how long the drop/stagnation lasted. Thank you so much for posting links if anybody found any. Do you think these numbers are reliable?
http://www.economagic.com/cenc25.htm

Dukes said...

Well, if anyone is interested in reading a long exchange between me and a local realtor, here it is. It should be noted that this realtor Tonya was nice and fair and I respect what she had to say, in other words, this was a CIVIL exchange as opposed to others I have had.

Me:

MLS Listing: 26066549
Hello Tonya,

I was emailed this listing from Zip Realty and I am curious about it. What I am curious about is the asking price of $320,000. This home is NOT in the best part of town, it was built in 1942, has only 2 bedrooms and 1 bath and is smaller than my apartment at 1,340 sq. ft.

Was this the seller’s idea to price it this high, or is that the # that you, the professional, came up with? I would like to buy in Seattle, I am qualified, have excellent credit and a high amount of savings earning interest. Why would someone spend 320K on such a small house in a less than desirable area? I would like to find an honest realtor to work with to help me understand this.

I know for a fact that real estate all over the country is in a declining phase, prices are off and listings are exploding in CA, VA, DC, FL, NJ, NY, CO, AZ…the list goes on. Wouldn’t I be the greater fool to spend 320K for this little house?
Thanks in advance for your reply.

Tonya's (Realtor) Reply:
Hello—

Thanks for your curiousity. As a realtor who also works on affordable housing concerns, I can understand where you are coming from when you see that price. It’s crazy what housing prices have done in Seattle, and still continue to be doing. Currently, the combination of relatively lower interest rates and low inventory of homes on the market in this price range have kept prices high and kept the process competitive for buyers. As crazy as it may seem, there may in fact be multiple offers presented to buy this home. We received one offer already yesterday before it had been on the market for 24 hours.

This house is actually in a very desirable neighborhood, referred to in West Seattle as Sunrise Heights, but more popularly known as Westwood. It’s gotten a lot of press the last year or so as a neighborhood undergoing great improvement. I moved to the neighborhood myself 6.5 years ago (these sellers are neighbors and friends) and it was on the sketchier side then, but really took off. It’s close to downtown, offers great access to south sound suburbs and I-90 (but I tell people West Seattle is not the place if you have a 520 commute). Locally, the shopping area known as Westwood Village has vasty improved with a bunch of new stores (mostly chain stuff, but the new places to eat are local). Also, something that definitely “dinged” the neighborhood was proximity to the High Point public housing area. This area is in the process of getting completely torn down and redeveloped as a mix of for-sale and affordable rental housing and is making a big difference too. Here’s a couple of links about this place:
http://www.thehighpoint.com/
http://www.wesbildshopping.com/Westwood.htm

I can’t find it online, but Seattle Metropolitan magazine was the most recent to do an article featuring Westwood as a up and coming place.

As for this house in particular, when I work with clients, I provide them information about what recent similar houses have sold for, make a recommendation within a range of what these comparables tell me and they make the final decision on how to price their home. As a practice, I don’t choose to work with people who have largely unreasonable expectations of what they think they will get for their home; pricing too high and sitting on the market for a long time is rarely in anyone’s best interest (time wasted, price gets dropped anyway, etc). It’s a sweet house with extra finished office space already and a highly finishable basement. So it’s tiny with potential.

You have to make your own call as to whether it’s the right time to get into the market. We are not showing the signs of the Seattle market slowing right now; traditionally the market here has leveled off but not dropped like a brick. I personally own a home so I guess I’m in the system and work in real estate so come from a bias there. No body has a crystal ball, history here has been good but you need to do the research you need to do to feel good about your decision and I can offer the above as help in understanding this small part of the market.
Good luck,
Tonya Hennen
(206) 228-4638 cell

My response:

Tonya, thank you for the well thought out reply, I absolutely appreciate your honesty on market conditions. You are a rarity to be so candid. I do however disagree with you in part. I have lived all across this nation and I still have contacts in most of the areas I mentioned in my first email. There is no way that Seattle can be immune to what is unfolding around the country, in my opinion it is just a matter of time.

Locally, many media outlets such as the one you mentioned are perpetuating what is an inevitable downfall in the coming market. I will keep your contact information as someone I would like to work with when this storm blows over. I believe by the fall of this year it will be evident that we are in real trouble.

Thanks

Anonymous said...

Some more price history:
http://www.ofheo.gov/HPIMSA.asp

emcityjill said...

Here is some WA employment data reported by the FDIC that strikes me as interesting. I stumbled across it when I Googled "Washington state employment growth". In a nutshell, job growth is "brisk" but one in five new jobs is in construction. There's also a blurb on building permits issued in 2005, how many loans were ARMS, colorful charts, graphs, the whole nine yards for those of you who like that kind of stuff. Here's an excerpt regarding housing that appears after an optimistic blurb about house price gains:

"Nevertheless, deteriorating house price affordability, particularly in Bellingham and Seattle, and rising interest rates may weigh on the state’s housing market going forward."

An understatement, eh? But it still warrants a hmmm.

The Tim said...

Keep in mind also that the "one in five new jobs" bit is only considering construction, and doesn't even take into account all the other jobs that have been created during this housing boom in mortgage, real estate, and other related fields. Jobs which we are already beginning to see disappear...

meshugy said...

The April MLS data is up here:

April MLS

Looks like another record month in Seattle:

Median Price up 16.56% to 410K
Inventory down 4.18%
Pending sales down 14.85%

Price Drop and Dukes had been reporting all month that most houses were being severely underbid. But the MLS #s tell us the prices are going up.

Do you think NWMLS is actually manipulating the #s to fool us? What a scandal that would be...

meshugy said...

Hi Price drop...you're tracking Laurelhust, right?

That is area 710 on the MLS data. The data shows a 7.37% median price increase and a 1.17% increase in pending sales. You had mentioned your research was indicating a lot of underbidding.

DO you think this is some sort fluke...a dead cat bounce or something?

Dukes said...

I am not sure Meshugy, here is today's 24Hr Market #'s from the NWMLS:

New Listings 838
Back on Market 51
Price Increases 110
Price Reductions 351
Contingents 26
Pendings 459
Solds 408
Expireds 42
Inactives 102

Another day of over 800 listings and half of that # in solds. I don't know how inventory could be shrinking based on the very #'s we see coming out of NWMLS's own data.

Also remember with price increases, if people are approved for a certain amount of a mortgage, they will usually spend every single god damned dime of it.

What this means is that they can and do buy a more house than they would have bought before, this keeps median prices rising, or at least not falling. But remember, we see that at least every day there are over 300 PRICE REDUCTIONS. What this means to me is that people aren't spending less, but they are getting a more desirable house for their money as the less desirables are left to sit and be reduced.

Anonymous said...

One problem with using the median is that it's very dependent on the kind of homes being put on the market...

it doesn't explain square feet or age of home... just price..

One factor to look at is that as the market cools and corrects the highest hit are usually the luxury homes and more expensive units... so they're likely to hit the market first...

It may simply be that the people selling are the ones with pricier homes, thus driving the median up..

It's very deceiving without knowing all the data...

say for example 100 homes are on the market and the median is valued at 500K... that means there are 50 homes that are sold for less than 500k...

Say for example 10 of the homes under 500K decide not to put their homes on the market... and 10 homes above 500K go on the market...

The median goes up by a factor.. since the previous 60th most expensive home suddenly becomes the median (due to the previous median dropping down to the 40th most expensive home in the list)...

So even with price cuts the median could still go up... simply as a result of the quality of homes on the market

What would be intersting is to peg the data on a fixed entity say a 2000sf home on a 10000sf lot built after 2000... I would expect more fluctuations from that data... and it would reflect real market conditions...

seattle price drop said...

Dukes-

I have a question in reference to the "price reduction" category on the NWMLS:

If a home is taken off the market for a bit and then re-introduced with a new MLS# and a reduced price, does it go into the "New Listings" category in the NWMLS or does it go into the "price reduced" category?

See if your realtor relative can tell you the answer to that, would you? Thanks.

Dukes said...

spd: my realtor relative would have no idea of the answer to that...seriously. He is all about the sales, it kind of is sickening, but it is the truth.

I have questioned him in the past about the #'s and their exact meaning and he was totally clueless. He works in what he says is a "busy Kirkland office" - he says they got some new agents who moved up here from CA and they are "pumping up moral" in the office. Whatever the hell that means.

Sorry I couldn't help.

seattle price drop said...

Meshugy-

I do not understand your difficulty in comprehending how sales prices can be lower than asking price at the same time that median goes up.


HERE: let's explain:

I bought a house in "04 for 400K.

I put it on the market in "06 for 1 million.

I sold it for 800k.

This means:

200K reduction in asking price AND median going UP.

Do you get it now???

seattle price drop said...

Dukes-

Pretty surprising that the people who have access to the numbers do not know what they mean. That is just nuts.

Anyway, I hope you will keep posting them as often as possible. It's cool that you have access on a daily basis.

Thanks

meshugy said...

Hi Price drop..I perfectly understand houses sold below asking.

However, you seem to be implying that houses selling below asking are a signal of weakening market. That's only true if the underbidding is actually driving the median price down. That's not happening in Laurelhurst, the median is going up...which means that regardless of the asking price, the real value of houses in that area are going up, not down.

That's all I'm saying...

'm

Anonymous said...

Meshugy- We have discussed this before so forgive me if I sound abrupt.

My reasoning: Houses in Seattle were selling like hot cakes and ALWAYS being bidded up for the past several years.

That has STOPPED. Now many* HALF* according to the daily NWMLS#'s are selling at reduced price.

DOM's are mounting to a place we have not experienced in years.

To me, this indicates the TOP and I conclude that the median WILL go down from here.

YOU, on the other hand, need to see the house next door selling for 50K less than what it sold for last year before you can see a change.

When houses appreciate as much as they did in Seattle, it is going to take a while for the median of the whole city to go down.

Meshugy, I hate to say this, but I'm starting to think you are either a troll or, dense.

These concepts are WAY SIMPLE to understand and we've gone over it before. We are just going to have to agree to disagree on how to call the top on an RE market.

I have no problem accepting and understanding your criteria.

It is baffling to me that you are continually confused by mine. Seems pretty freaking staightforward.

In a market where everything was bidded up, it IS a sign of weakenng when things sell below asking-
do you call it a sign of STRENGTH??!!

BTW, in the 98107 (Ballard) zip, there are 32 SFH for sale, 9 of which have been price-reduced. That's almost 30%. Does that really indicate a red hot market to you? Almost 30% reduced?

Don't answer. Just think about it- or don't. Believe what you want.

meshugy said...

Hi anon...or are you dukes?

Anyway, for the most part I'm not making any predictions here. It's very hard to say what the market will do. Even the most experienced economists are consistently wrong in their predictions....no one ever thought the housing bubble would get this big.

All I've been saying is that the monthly reports from the MLS are clearly showing that prices are going up (median price was up 17% for King County in April). A normal market would have 3%-6% appreciation.

Dukes himself said that neither he nor is brother (who is a Realtor) knows what the daily mls reports actually mean. Until you figure out how to interpret that data, I'd say it's safer to just analyze the monthly reports which have all shown median price going up.

Are you actually saying that the MLS reports are wrong and that prices are going down? That would mean NWMLS is fixing the #s...maybe they are. Show me some proof.

And I'm in no way saying that prices might not go down next month...I think it's likely they won't. The market is just too strong right now. If you say you're seeing signs of a dramatically slowing market, that's fine. We'll know when we see the inventory pile up and the prices drop. That simply hasn't happened yet.

'm

seattle price drop said...

M- the Anon was me, computer problem poked me in as "anon".

Anyway, I thought it would have been obvious to you that it was me as it was a very direct answer to your question.

I can see from this last post of yours that you are infact 1) an idiot and 2) a friggin' troll.

You are becoming more and more unwilling to take facts that people lay before you at face value.

You are determined to twist what people say ( ie. insisting that I claimed 700 was Laurelhurst, saying D. has admitted that the realtors "don't know what the MLS#"s mean",etc).

You pick and choose and twist info to fit your little agenda.

You're a total jerk buddy, I'm ignoring you from here on out.

Here's hoping everyone else does the same.

seattle long term buyer said...

I'm still amazed at how people think the median always represents home value...

it just means that the homes being sold are the more expensive ones...

somebody with a 1.5 mil investment has a huge carrying cost and is sweating bullets wondering if he's going to miss the market...

Since he's been flipping properties to get to the high end, he decides he's made enough and cashes out... he also joined the market early, so he knows there's not much left to be had...

People in the upper market are a different breed... nobody is buying homes to invest anymore... anybody who is investing lives in a bubble of their own... (and they can stay there)

The actual buyers who plan to live on the property are taking the deals as they come, knowing that even with a loss, they will come out ahead in 10 years... those are the ones pulling the median up...

Somebody mentioned that a surge in the median usually precedes the bust..

only time will tell