Inventory Up, Sales Down (Still)
Yes, the May MLS numbers are out. Here are direct links to the full NWMLS stats and the King County "breakouts" (PDFs). So far I've seen just one news report on the numbers, a blurb in the Puget Sound Business Journal:
Buyers looking for homes near the job centers of Seattle and Bellevue won't find as many houses for sale compared with the outlying areas, according to the latest report from the Northwest Multiple Listing Service (NWMLS)....and I continue to not buy that as an explanation for the decrease in sales. Just like last month, inventory is creeping up (KC homes +10% compared to May '05) while sales creep down (KC homes -6% compared to May '05). You do the math.
And the prices paid for homes in King County continue to rise, the report says.
The median price paid for a single-family home (not including condominiums) in King County last month was $427,950, up from $370,500 a year ago.
...
"We continue to see a lack of viable inventory in those areas close to the job centers in Bellevue and Seattle, while the outlining areas have leveled out and now have more than enough supply for the demand," said Lennox Scott, chairman and CEO of John L. Scott Real Estate, in a statement.
(Puget Sound Business Journal, 06.06.2006)
40 comments:
Inventory was only up 4.76% YOY for Seattle. I had expected more....so there's still not that many houses for sale in town. And pending sales kept pace with the small increase in inventory (pending sales YOY up 3.77%)
Seems like inventory is piling up more outside of the city...in town it's still a sellers market.
And what's up with the Eastside? It's actually had less inventory this year....inventory is down -3.25% YOY. And the MOM median price shot up from $478K to $484K. The Eastside YOY increase was huge, from $415K to $484...just shy of $70K appreciation in one year.
The only area in King County that saw a YOY price drop was area 700 (Queen Anne/Magnolia). They were down -2.24%.
Ballard (area 705) had the most new inventory of any part of Seattle (YOY inventory was up 20% in Ballard). But YOY pending sales rose 23% making Ballard the most active market in Seattle.
Laurelhurst (area 710) was also pretty hot. They actually had less YOY inventory (down -2.96%) but more pending sales (YOY sales up 4.39%). And a MOM price increase of 30K!
Your pal Liz reported it too: http://seattletimes.nwsource.com/html/businesstechnology/2003043643_webhomesales06.html
Yeah, I just saw that. I'll withhold comment until she posts the full, real story tomorrow.
I am honestly flabbergasted that prices are going up again.
I can't figure out what's keeping inventory this low--and believe me, it's craptastic in the downtown-commutable neighborhoods. I was sure that it would really take off by now--any ideas? This is turning into a screwed if you do, screwed if you don't situation.
Note that Total Listings/Pending Sales in King County actually dropped to 1.7 from 1.8 in April. Also note, King County Historical Active listings for May:
May 2006 - 7,348
May 2005 - 6,782
May 2004 - 9,792
May 2003 - 12,422
Anon@2:50,
Indeed. Hense why I used the word "creeping" to refer to the increase in inventory, and not "skyrocketing."
Something that bothers me about that Seattle Times article is how the writer provides YoY percentages only, versus actual numbers of homes on the market. I'm sure most readers can't recall home volume figures from last year, or how these compare to long-term trends.
And what's up with the Eastside? It's actually had less inventory this year....inventory is down -3.25% YOY. And the MOM median price shot up from $478K to $484K. The Eastside YOY increase was huge, from $415K to $484...just shy of $70K appreciation in one year.
This is accurate with what I've been seeing on my daily commute from Lake Hills to Microsoft lately. Last winter, the few houses on the market sat for several months before selling at reduced (but still high) prices. This spring however, there are many more houses up for sale, and they are selling very quickly, usually within a week or so. And I don't think it's speculators for the most part. People are living in the houses, and I never saw any For Rent signs. It's been rather disheartening actually, as I wait for the market to level off and/or tumble. For whatever reason, the Eastside is not seeing the same calming that the rest of the country or even the rest of the metro is seeing so far, from my experience.
Reskeptic...anon posted those #'s above you. they are also on the May mls report.
Last year there were 6,782 houses for sale in KC. This year 7,348
Meshugy-
Yes, thanks. And just checking for Seattle on ziprealty returns 1364 SFR homes for sale.
The greed isn't on the buyer's side, it's the asking prices. I'm running into lots of carbon copies of myself at open houses--young people starting a family. In my completely unscientific observations, I'm not seeing many, if any, "investment" buyers. I think the era of the flipper is over--it's just too expensive to get in now.
Have you ever noticed how many real estate geniuses there are in Seattle? Lots of folks feel like Donald Trump for having done nothing more than fill out a mortgage application 5 years ago. They all say, "it ain't getting any cheaper." It's annoying. Anyway, as soon as inventory goes up I'm sure we're going to see prices head south. I just can't figure out why there are no houses for sale by now.
reskeptic...FYI - as of 3:29, NWMLS shows 1159 SFH in Seattle (140, 380, 385, 390, 700-710)
t.s. said:
"I'm running into lots of carbon copies of myself at open houses--young people starting a family. In my completely unscientific observations, I'm not seeing many, if any, "investment" buyers. I think the era of the flipper is over--it's just too expensive to get in now."
Now it's the era of the naive, overleveraged, first-time buyer. Yippee.
meshugy said:
"Ballard (area 705) had the most new inventory of any part of Seattle (YOY inventory was up 20% in Ballard). But YOY pending sales rose 23% making Ballard the most active market in Seattle."
And yet, unspoken sentiment hangs in the air like a dying fart:
yeah, but closed sales are off by almost 6% in area 705....
I'd like to see more specific data, particularly the inventory price levels for the different areas.
The only thing I found were NWMLS-wide info (17 county totals). 50% of all active listings in May were over $350,000; 25% were between $250,000 to $349,00.If I apply the NWMLS-wide ratio to Seattle, then the largest group of buyers (under $350K) are looking at only 25% of the available properties. Which I'm reasoning will keep prices up and why the sales volume is not that strong in Seattle. We're still seeing multiple offers on first-time buyer properties.
I've excluded the other 25% below $249,000 just because there's hardly anything less than $250K in the city so I'm presuming those actives are in the other 16 NWMLS counties.
To t.s. - I'm contemplating being one of those greedy sellers, getting out while the prices are strong and cashing out a windfall (no CGT), then repurchase in a year or two. I'm betting on some bargains by that time. Not sure my CPA would agree with me though.
emcityjill - is this what you're referring to - usatoday
Here's the USA today article:
Close to home: Seattle housing market is cooling more slowly than elsewhere
Seattle's strict growth-management policies and an economic rebound are
buffering the region's real estate market from cooling trends. The
number of new jobs has outpaced building permits for single-family
homes and condos by 30% the past 15 months. Though single-family home
sales fell about 7% in April, compared with April 2005, there's only a
three-month supply of homes in the Seattle market — half the national
average. That's largely why prices rose nearly 18% that month,
according to the latest data available. "The restrictions on supply by
growth management (are) forcing prices artificially up," says Bill
Riss, CEO of Coldwell Banker Bain. One answer to building restrictions
and rising home prices may be higher-density buildings. "We're in the
beginning of a building boom in mid- to high-rise condominiums," Riss
says.
"yeah, but closed sales are off by almost 6% in area 705...."
I suspect we'll see a bump in 705 closed sales once the Canal Station, Noma, Metropole and Hjarta are complete and those sales closes.
Sorry for the multiple posts...but we'll probably see a spike in Seattle closed sales towards the end of the year. The 2200 alone will account for 260 closed sales later this year. (Heck, if those closed in May, we would have seen a 12.8% increase in closed sales rather than -10.5%).
Also, I'm betting the other Vulcan projects (583 units) will provide a small bump to pendings once presale starts.
"I suspect we'll see a bump in 705 closed sales once the Canal Station, Noma, Metropole and Hjarta are complete and those sales closes."
Ya' think? Tell me...did you divine that from tea leaves, or was the 23% increase in pending sales a clue?
Yes, there will probably be a bump in sales when the massive supply of new condominiums hits the market, but that's meaningless -- when you add new condos to a market, you expect at least a *few* of them to sell.
The real question is whether or not this new supply will exceed the demand. If so, we'll see a bunch of new condo listings hit the market as each of these cheapo properties are finished. They won't show up as listings before they're completed.
In fact, here's a question for someone in the know: will condominum pre-sales show up in the stats? If so, that might explain the big increase in "pending" sales....
"In fact, here's a question for someone in the know: will condominum pre-sales show up in the stats?"
Umm, yeah...did you read above - "...will provide a small bump to pendings once presale starts." Presales are pending sales.
"They won't show up as listings before they're completed."
Umm, no. Listings are listing (presale, resale) regardless if the project is complete.
"Umm, no. Listings are listing (presale, resale) regardless if the project is complete."
You missed my point. Walk through Ballard. Look at all the incomplete condos. Now, do a MLS search. See the discrepancy?
Thus, first question: how many of these incomplete condos are/will be sold without listing on the MLS?
Follow-up question: if a property is never listed in the MLS, and it is sold, does it get counted toward the sales statistics?
I don't simply assume that the NWMLS stats are unmanipulated. Hence, I'm trying to get a sense of the places where manipulation can take place.
So now it is a sin to want a house?
Forgive me Father!
Sure, I can rent until the apocalypse finally comes. Or until my landlord, who will be screwed when his ARM resets, kicks me out to sell his house.
I look forward to being called a moron momentarily. But here's a theory to try on: crashing housing market = tanking economy = hyperinflation = hey my $450K mortgage is less than a new car.
It's just a theory. I'll probably keep renting and thinking sinful thoughts.
"I don't simply assume that the NWMLS stats are unmanipulated. Hence, I'm trying to get a sense of the places where manipulation can take place."
Case in point: there's a massive condo project going up at 5440 Leary in Ballard. Currently, it's just a pile of half-assembled timber and concrete. Search the zip code for condominiums, though, and how many listings from this project do you pull up? One.
Yet, they're pre-selling these units in an office in the center of Ballard. How many of these pre-sales make it into the MLS stats? How many condos are *really* available? Just one? Really? Who knows!
(I'll tell you who: the real estate people. They just have a vested interest in keeping *you* from knowing how many units are sold.)
I've noticed that too, a whole bldg of units being listed as "one".
Thanks for the info, realistic realtor, about pre-sales being listed as pending. I've been wondering what category, if any, those fell into.
Buy an expensive home, get an expensive tax bill.
I have never understood why people would overbid for a house- it's the "gift" that keeps on giving, er.. taking and taking.
Yet, they're pre-selling these units in an office in the center of Ballard. How many of these pre-sales make it into the MLS stats? How many condos are *really* available? Just one? Really? Who knows!
There's one Active listing for Canal Station (5440 Leary). Doesn't mean there's only 1 listing. Only STI, Contingent & Actives are displayed in public MLS searches.
The MLS is showing 118 listings for Canal Station:
Active - 1
Pending - 63
Cancelled - 54
I can't comment on the cancelleds cause I don't know the reason behind it. But they were active back in January and cancelled in April.
If you want to know how many units in a project were sold...just ask. There's no conspiracy to keep info from you.
One other comment, new projects are often sold in phases, a # of units allotted to pre-constuction presale, a # allotted to pre-completion presale, and a # allotted to post-completion. They're not all available at once.
Also, I believe the non-listed presales do get entered into the MLS, but they are immediately changed to pending status...thus the public would never see the actual listing.
One more word on manipulation...MLS allows listings to be posted in more than one area (for a fee) and this can skew the stats. For example, Harbor Square on Bainbridge Island posted listings in 701, artificially bumping 701's listings and skewing sales figures and prices. 701 agents complained to the MLS and they eventually removed them.
"Also, I believe the non-listed presales do get entered into the MLS, but they are immediately changed to pending status...thus the public would never see the actual listing."
That's cute. It keeps the active listings number low, while bumping the pending sales number when the pre-sales are completed.
"If you want to know how many units in a project were sold...just ask. There's no conspiracy to keep info from you."
Mmmhm. And I have a bridge to sell you, if you're interested. I'm sure you can get financing...
Seriously...perhaps you're honest, but there are any number of agents who aren't. What's more, because the data isn't public, it's impossible to tell if any particular is telling you the truth. And let's be honest -- it's in an agent's interest to make you believe that the condo you're interested in buying is hot Hot HOT!
Realistic realtor-
thanks for your contributions- you're a jewel!
God let this silliness continue for another year or two...
Folks, the more stupifying this Seattle Bubble gets, the more Scheudenfreude to revel in later...
Seattle's love to commit domesticide, the weather's too crappy most of the time and most folks don't ever leave the city to partake of all the beauty the tout when they move here... so what else to do? breed and nest... probably why there's not a great deal of 'observational speculators' at the these open houses.
I hope prices surge that much more, and all these people on their suicidal mortgages annihilate themselves financially when the eventual recession hits...
Good luck folks!
Here's the latest form of extreme flipping....
Apartment price jumps $6M in three years
This article explains the trial and tribulations of buyers in the current market.
Prices high but homes still hot property
It's pretty much the exact same experience I had last year when bidding on houses in Ballard:
-Multiple offers on every house
-Waive inspection
-Paying for pre inspections on every attempted bid (we paid $150 per inspection).
-Bidding 40-70K over asking
Third time was the charm for us....seems like not much has changed since last year. Excpet for the prices which are over 50K more.
"-Multiple offers on every house
-Waive inspection
-Paying for pre inspections on every attempted bid (we paid $150 per inspection).
-Bidding 40-70K over asking"
you're nuts Meshuga!
"$2000 - $3000/month mortgage payments"
hmm as a 25% of net income, the Matthewses must be pretty loaded.
I suppose when the scans of the deed of trust and the warranty deed are posted on the Records and Election Website we'll see what the mortgage length was and how much they paid, and have some more laughs.
The reason I think the home market has been generally resilient is not (as people here continually assert) stupidity on the part of buyers, or even greed. It's that nearly everyone I know who has bought a home in the past year did so because they had good reasons to move (i.e. not financial ones). They wanted to move to another school district for their kids. They got married and moved out of a condo and into a house for more space. Some moved across the country for a different job. They plan to stay in those homes a while (around 10 years). Despite what we read/hear in the media, most people move for reasons like that, and they'll be generally unaffected by a decrease in prices. In fact, even if prices do drop, many homeowners will simply choose to hang on rather than move and lose money. Time is on their side, in many cases. Also, I think a ton of the people who've bought homes have not gotten ARMs. The media over-reports trends (because those data points stand out) on every subject, and real estate is no different (see the book "The Media Paradox").
In general, I think the author of this blog raises some good points about how all is not rosy in the housing market, and how some reporting is basically a press release for the NAR. However, the commenters impute ridiculous motives onto the entire home-buying public (that they're all flippers, basically), have unrealistic negative expectations of what will happen if home prices drop (50%!!! Instant return of fiscal sanity!!!) and seem to think they've got unassailable logic about how renting is a better value for everyone. It also seems most are the results of a real estate crash to look like what happened the stock market crashed and the dot-com bubble burst. Tens of thousands of people (locally) are out of a job, unemployment up a couple of percent, and a lot of stories of the average person being forced out of their homes and losing their life savings. The general real estate market loses 50-60% of its value, and some homes lose 100% of their value (i.e. like a dot com). There's just no evidence to suggest, except in the worst economies/real estate markets (e.g. Texas, 1978-1982), that that happens, especially nation-wide. And if we do have an economy that turns that sour, you're in trouble too, because your vaunted investments (that have been growing better than your house value) will be in the toilet.
Look, I totally buy that prices are not going to keep rising 15% YOY as reported today in the Seattle Times. That's ridiculous, and I believed that appreciation rate was ridiculous last year and the year before. No one I know is earning 15% more a year. I totally buy that prices will (or have) topped out and will fall, especially on any yet-to-be-opened condo and the big housing developments built at the tail end of this boom. The net effect of this is that I believe we'll see is that some number of real estate "investment" and mortgage companies go belly up (i.e Merit Financial), the big home builders (Pulte, KB Homes) take a big hit and have low or zero profit quarters. This has happened before, and most investment and home builders know how to deal with it (i.e. it's built into their operating plans). The average home buying consumer will barely notice, except that they won't have to bid over asking or waive inspections (which is a good thing). I'm sure there will be some people who have to move out because they can't refinance their ARMs and get a reasonable payment. But there won't be mass defections of people getting out of their houses and massive price drops (30, 40 50%). To me a price drop is not, imho, where the price is lowered from asking, but where the average price returns to a number you could buy the home for in previous years.
My point is that if you take somewhat of a average/mid view-point between "the sky is falling, hahaha" and "home prices will rise forever" what you get is that the market will return to balance. Prices may drop big in some areas, and go up in some others (depending on external market factors), as there is not one housing market (like NASDAQ or NYSE for homes). The housing market is 1000s of different markets (e.g. condos downtown seattle, old homes on the east side, thurston county, spokane, aberdeen). It's possible you might get a new downtown condo for the same price in 2008 that you could buy it for in 2004. It's also possible that your Ballard will be 5% more expensive in 2008 than it was in 2004. Or that your investments in the stock market will be down after 4 years but your home holds its value. Or they both tank. Anyone who believes that people on this board have magic crystal balls, and that the statistics presented here mean "only one inevitable conclusion" is fooling themselves.
We may even find that 1/2 of you are right and 1/2 of you are wrong (depending on where you want to buy a house and when). But I doubt you've got an accurate read on the market you're following (depends on what you think you'd buy) as you think.
anon,
I agree with what you're saying here...I think there are some unrealistic expectations among some of the bubble watchers. It's incredibly difficult to "play" the housing market....you never know where the top is, nor the bottom. I see a lot of folks conflating housing with stocks...and despite some similarities in the "irrational exuberance" of these assets, housing doesn't behave like stocks. As many economists have said, housing prices are "sticky downward." Like anon mentioned, owners have time on their side. They'll just wait out a downturn.
We all know that 15-30% appreciation can't be sustained indefinitely. But I still maintain that a flat market is the most likely outcome of all this craziness. Unless of course there is massive job loss. As UCLA's Christopher Thronberg said, housing prices don't come down without dramatic job loss."
housing prices don't come down without dramatic job loss.
Such as there will be when the appreciation machine grinds to a halt. Think it through.
anon 8:26 - nice points but prices are set on the margins, hence the inflated but real significance of ARMs and speculators. And even your friends who moved for 'good reasons' did so with expectations of easy appreciation, or they wouldn't have moved so readily.
The market will return to balance, but only after serious pain to a lot of people. You offer the voice of reason, but euphorias don't end reasonably, and housing markets do and have crashed. Read some history.
Anon- "I think a ton of the people who've bought homes have not gotten ARMs."
---------------------------
True, a ton do not have ARM's.
It just that 10 tons of people do--short term, many w/pre-payment penalties (we are closing them.)
Our escrow company stats: All 2005 purchase deals closed--71% were 100% financed with ARM's. Nothing down.
The mood in overall transaction participants (agents,loan officers, buyers/sellers) has generally been quite pleasant during months past, but it seems like people are on edge a little bit more--in some cases,people need anger management.
OT:
Anyone know what happened to overvalued.blogspot.com? It's now a blog about commercial real estate? Wha-huh?
I was playing poker last night, and ended up sitting next to a realtor at Ballard Windemere.
He admitted that business wasn't so great recently, but thought it would turn around.
He must a lousy Realtor...Ballard had the biggest increase in pending sales for all of Seattle. Actually for all of King County. A huge YOY increase of over 23% in pending sales. Never mind the 14% YOY increase in median price.
I hope you won a lot of $ of him!
Yeah snythetik, just sit back and watch while the Nasdaq falls 50% in a year or two (see 2000 to 2001). Your investments can just as easily tank in the stock market as real estate. That doesn't mean you're wrong about real estate, but it does mean that renting and investing the "difference" in the stock market isn't a sure-fire path to growth either (at least not over any short-term period of time like the amount you mention waiting to buy a house).
BTW - I'm not professionally involved in RE in any way, so feel free to dismiss the merits of my argument, but stop with the "you're a shill so I can ignore you" BS.
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