"Sizzling," "Strong," "Dynamic..." "Crazy"

Now that the local press has spoken, let's check in on yesterday's predictions.

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"enthusiastic stories ... cheering on the huge price gains" - check

Elizabeth Rhodes, Seattle Times

When million-dollar homes, traditionally the slowest to sell, start flying out the door, it's a strong signal that the market is sizzling.

Kathy Mulady, Seattle P-I

Kim Dales knew the Laurelhurst house with its waterfront view in a traditional neighborhood, recent remodeling work and a $3.7 million price tag was going to do well on the market.

But even Dales, an associate broker with Windermere Real Estate, was impressed with the flurry of offers — all cash — that followed the first showing of the house last week.

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"proclaiming that the idea of a bubble in Seattle has been once and for all dispelled" - check

Times:

"I don't think there's a question in Seattle anymore about a bubble market," [Chris Pauling, a Prudential Northwest Realty owner] said. "We'll continue to have good, strong demand."

P-I:

"Seattle isn't in a bubble, our inventory is awful," [Mike Skahen, owner of Lake & Co. Real Estate] said. "Tell people to put their houses on the market for goodness sakes."

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"completely ignore [increasing inventory and decreasing sales]" - ¾ check

Times:

The report showed that scant inventory is taking a bite out of sales and helping pump up prices.

P-I:

For the rest of us, home prices continued their double-digit climb, fueled in part by a small inventory and fewer houses on the market. While prices were up, total sales for the month were down compared with last year.

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Okay so the Times did say that sales had "a bite taken out" of them, whatever that means, and the P-I actually explicitly mentioned that sales decreased. But the P-I loses points for the demonstrably false claim of "fewer houses on the market." See for yourself that in King County there were 5,397 houses on the market in April '05, and 5,526 on the market in April '06 — a 2.39% increase. Now if they had said "fewer homes on the market," that would have been accurate, as the "res + condo" inventory was indeed down 1.05%.

I did get 2 out of 3 predictions right about the actual numbers (listings flat, pending sales down 10%, median closing price $408,000), but I am clearly much better at calling what the local reporters are going to spout off than I am at forseeing the numbers themselves. One thing I did not predict however was that both the Times and P-I articles would have such an inordinate focus on the high-end sales. (Seriously, is "Kathy Mulady" really just a pen name of Elizabeth Rhodes or something?)

Times:

"The upper end is crazy; it's wild," said Barbara Shikiar, a Windermere agent who handled one of the sales.

The million-dollar market heated up about a month ago, Shikiar says, and now "there are so many people waiting for the right thing."

P-I:

And apparently for some, price was no object. Bidding wars and all-cash deals invigorated the high-end and luxury home market. Sales of single-family homes costing more than $1 million increased 37 percent, compared with the same time last year.

High-end condominium sales more than doubled during the same period, according to the Northwest Multiple Listing Service.

Could this be an indicator that we are seeing the pre-fall spike that commenter Snoho_Renter theorized?

I think a brief sharp rise in median price will be a precursor to a slowdown, although there is no evidence that the current spike is that precursor. In particular, once affordability finally gets too high, the bottom end of the market will slow first, which will bias the mix of sales towards the higher end.

It certainly looks like that might be exactly what is happening. I do wish we could get some kind of statistics about the actual properties that are being sold, like acreage, square footage, etc. Without such information it's impossible to tell what is really going on here. Increasing inventory and decreasing sales can't continue to result in increasing prices. Basic economics just doesn't work that way.

(Elizabeth Rhodes, Seattle Times, 05.06.2006)
(Kathy Mulady, Seattle P-I, 05.06.2006)