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Saturday, July 15, 2006

Pinpoint Stats: Snohomish Co.

Snohomish Co. Residential sales only (only houses, no condo's, no land)
Source: NWMLS
2005:
April 1283 (Median $283,250)

May 1165 (Median $287,000)

June 1473 (Median $295,000)

2006:
April 1134 (Median $331,254)

May 1133 (Median $339,950)

June 1347 (Median $350,000)

The rise in median prices are remarkable YOY & MOM and that's with less sales and rising inventory in 2006. That is one whale of an increase in median price any way you look at it.

To bears, is this a clear sign of irrational appreciation? To bulls, is this a sign of or result of continual economic health? Some experts are predicting a more modest single digit appreciation for the remainder of 2006 in our Puget Sound area market.
Please read the rules before posting a comment.

26 comments:

Anonymous said...

Why focus on California housing? Because it is a big deal – it represents some 25% of the dollar value of the US housing, or $7-8Tr.! Someone from North Carolina pointed out to me that the housing is doing great in NC, but it is no more than 1-2% of the dollar value of the US housing. A 20% drop in the price of California homes has the potential of taking the US and the world economy down with it because of the leverage, reckless lending practices, pioneered in Southern California, and the globalization of the financial system.

The most important development during the past two months is the increasing numbers of price reductions in the areas that I monitor on a regular basis. For example, during the past three months the median listing price of SFH (Single Family Homes) in Santa Clara County is down from $895K to $849k and in Santa Cruz County it is down from $820K to $799K. Most of this is due to the price reductions in the listings that existed. Another important development is very low levels of sales for the seasonally strong period. The current pending sales are at the same level, or lower, than what they were during the winter months. The most ominous sign for the future prices is the mushrooming of the inventory on the market. I will let the statistics and a case study do most of the talking.

Anonymous said...

You think California housing prices don't matter much to Seattle, THINK AGAIN~!!

We better just watch California.. because if California takes a Hit.. We get hit as well~~!! Guaranteed..

SeattleMoose said...

The median has shot up since April because the "high end" has been selling like hot cakes to CA equity locusts and move up buyers who have been enabled by CA equity locusts paying top dollar for their home.

I live in 98112 (Madison Park). Check out Zillow for 215 34th Ave. E. It shot up 300K in 3 months!!! Why? Because CA ELs have been gobbling up million dollar homes like crazy in this neighborhood. I know of 3 properties within 3 blocks where I live that have sold at or above asking prices (all over 1 million).

BTW...I rent a basement in one of the million dollar homes from a flipper who bought the home in 2002 and now want 3x the amount paid!!!

All homes within a half mile from Lake Washington (the CA EL bait area) from 520 south to Seward Park are listed and sold within 30 days.

The rest of Seattle...well that is a different story. Mid to low range housing continues to sit and sit while inventory creeps up every month.

Also, from my random investigations of listed homes (using Glover/Zillow) it is clear to me that Seattle also has a tremendous amount of speculators holding homes as investments. I think the smart flippers are already starting to list and that is what is causing inventory to rise 24% since beginning of May.

So in summary, the CA EL feeding frenzy in the high end has driven up the median for the city and hence, the county. I suspect the same pattern is repeating itself in all CA EL "target destinations" throughout the country.

It truly is "The Summer of The Locust" but the good news is:

1) Inventory is building steadily even during the "hot buying season"
2) The CA spigot is slowly being turned off as the endless supply of greater fools in this ponzi scheme runs out of gas
3) All the economic indicators (rising rates, tigher lending, wars, gas prices, coming recession, etc.)
4) The flippers are starting to list knowing full well that prices are peaking here and NOW is the time to sell. More precisely, NOW is the time to sell if you have the type of high end property that CA ELs will gobble up. However, if you have a mid to low end home...the peak is already past and you had better start cutting your price before you REALLY have to cut your price.

I have very little "hard evidence" to back any of the above up except for the trend of rising inventories which I have tracked weekly since May. But I examine listed properties weekly and drive around Madison Park, Leschi", and all other CA EL bait areas checking out open houses, talking to RE agents, and sellers, and have developed my "theory" based on putting the pieces together.

I have always said on Ben's blog that Seattle will be one of the last dominos in the chain to fall, because we are a "destination" for CA ELs. But we are not "special" even though it may appear that way since we are at the tail end of this thing...but Seattle will drop about 33% on the average with a range of about 20 to 50 percent depending on area, how wildly overpriced the property is, and what buyers can afford.

With flippers and suicide loans drying up and more main stream media focus on "the bubble", the pool of "real buyers" will continue to shrink until a major price correction takes place.

Next to Social Security , this is the biggest Ponzi Scheme of all time.

Anonymous said...

2003-2004... I Remember driving around many-many houses so many houses were were being put on the market for rent at the same time there was massive houses being sold.

Believe me these investors are waiting.. many many people in the seattle area purchased in 2003-04.. I predict they also will come out in groves all at the same time "I predict to sell..

they drove down the Rental Market price in 2004 there was so many so investors buying and then turning them into rentals.

meshugy said...

Hi Moose,

Mid to low range housing continues to sit and sit while inventory creeps up every month.

That's not true at all...at least in NW Seattle (Ballard, Greenlake area). If anything is even listed below 400K it's grabbed up immediately, as buyers are desperate for anything in that price range. Anything reasonably priced in the 400-600K range gets multiple offers and is gone in 1-2 weeks. Only the overpriced houses on busy streets sit for more then a 2 weeks. And even those sell eventually. It's still a very competitive market across the board, both high end and low end.

One thing I've noticed in Ballard is that a lot of the excess inventory is condos. Single Family homes are almost impossible to find...very, very few for sale and they go for top dollar. Even the ones that are total dumps...

meshugy said...

I think moving to outskirts of King County is now the only option for a lot of folks:

Only 9 areas in King County left for middle-income buyers

Professor Chris Mayer, director of the Milstein Center for Real Estate at New York's Columbia Business School, says Seattle outperforms other major cities because it's relatively unusual.

"Seattle is one of a handful of places I've written about and referred to as a 'superstar city,' " Mayer said. "It's not quite in the same league as San Francisco and New York, but if you look at census data, house prices in Seattle have grown faster than the national average for 50 years, from 1950 to 2000."

So major home appreciation "is a pattern that's been going on for a long time," Mayer said.

He defines superstar cities as people magnets because of their attractiveness and amenities.

"But being attractive isn't enough," he said. "It's also necessary to limit supply." That's happened here for two reasons.

Limited land supply

Restrictions push housing prices higher.

Newcomers abound

Job market lures out-of-staters, who drive prices up.

"In superstar markets, including Seattle, you can tie the price of housing to the incomes of the wealthiest Americans — not just the people who live in those cities right now," he said.

"This means house prices can grow faster than the incomes of existing residents if there are new residents from outside the metro area who can afford to move in and buy those houses."

That's happening here. Puget Sound's already strong economy is growing — a trend expected to continue at least through 2009 with the addition of 140,000 jobs, according to Conway Pedersen Economics.

Plenty of King County residents can afford houses. The percentage of households earning more than 150 percent of median income — that would be more than $90,000 today — grew faster than any other income category between 1990 and 2004. It now accounts for almost one-third of all households, a county study found. They number almost 250,000.

matt said...

The rest of Seattle...well that is a different story. Mid to low range housing continues to sit and sit while inventory creeps up every month.

This is so true moose, some friends of mine in Crownhill/Greenwood noticed 4 houses for sale within eye shot of their front windows, all are hellholes with 400K+ price stickers on 'em and they've been sitting forever. Most were purchased a few years ago for 250K back in the glory days of 2003, now they're trying to double their money. They've also been sitting empty, draining their pig-headed owners cash reserves like a bad weekend in Vegas.

Anonymous said...

It sure won't be unsual next year in Seattle when this market takes it hit.

Same story another city.. If you look you can get the same write ups stories for nearly any large City.

Folks Say Were SPECIAL.. It cant happen here.

There are exceptions of course.. Then again I personally thing Las Vegas & Reno are awful places to live.

many of the locales there absolutly love it there! Gets me...

Theres a guy that claims to be an investor on Bens Blog, that swears theres a shortage of real-estate in Las Vegas... He Claims there Special As Well.

KEEP TALKING ABOUT HOW SPECIAL WE ARE IN SEATTLE...

Were Special Alright we have been given a 1 year warning on whats coming our direction.

Anonymous said...

I think moving to outskirts of King County is now the only option for a lot of folks:

there's another option called
r-e-n-t-i-n-g

this article astonishes me--'Superstar' city my a@@

Anonymous said...

Hey guys - which link on the front page is for "Ben's blog"?

Anonymous said...

We are so SPECIAL Superstar City.
Right, Our Wages are so special. Tell that to the average Joe how special we are. Same Write-ups another City.

Myself I can swear I have seen the same kind of senarios given for countless locations around the country, of how special they are as well. Seems like almost every major city is special.

How can so many citys be so Special? gets me!

Anonymous said...

the top one--

thehousingbubbleblog

jcricket said...

To answer s-crow's original question (as someone who's not a bear or bull, really), I think this just means that the economics of the housing market are not so simple that an increase in inventory and decrease in sales is automatically a signal that prices are going to decrease across the board.

As others have posted, there are clearly signs pointing all over the map, depending on neighborhood, housing type (condo/single-family), house condition & price range. It's not enough to just look at inventory and sales as the sole price indicator. So across-the-board statistics are too broad to draw any specific conclusions about.

If I had to give an opinion on just this statistic I would say that this is sign that the "floor" on Seattle housing is not dramatically below where current prices are. However, there are clearly some bearish trend indicators and I wouldn't be surprised to see housing prices flatten or decline next year.

If you asked me outside this blog, I'd predict flattening of home prices next year (which is actually a price decrease because of inflation). You still might pay more for the house you want, though, because it's possible for median prices to decline, even a lot, but your price range to see increases.

Anonymous said...

We have two clearly competing hypotheses!

seattlemoose says:

"The median has shot up since April because the "high end" has been selling like hot cakes to CA equity locusts"

while meshugy says:

"That's not true at all...at least in NW Seattle (Ballard, Greenlake area). If anything is even listed below 400K it's grabbed up immediately, as buyers are desperate for anything in that price range."

I am currently working on an analysis that will put numbers to your hypotheses. I am assembling sales data using King County records for specific neighborhoods, and breaking them down by price and square-footage, year-over-year.

Moose, I've already completed this analysis for Madison Park/Capitol Hill (June 05 / June 06), and I find that the distribution of sales prices is very similar for the two months, and that only a handful of sales skew the median numbers upward by over $100,000. There are very few sales under $750,000 for either year, so small percentage changes to individual properties result in huge changes in median property value (in absolute terms).

Perhaps more interestingly, the median price per square foot in Madison Park/Cap Hill is up, from $369 in June 2005, to $447 in June 2006. Thus, there are still significant real price increases going on in this neighborhood.

I've sent the spreadsheet for this data to The Tim, but I haven't heard back from him yet. I suppose I'll bug S. Crow and Tim again once I have the numbers ready for a "starter" neighborhood (Ballard, perhaps....)

Anyway, just thought I'd let everyone know that the days of idle speculation regarding high-end versus low-end sales are coming to an end.... :-)

jcricket said...

Anyway, just thought I'd let everyone know that the days of idle speculation regarding high-end versus low-end sales are coming to an end.... :-)

Sign me up. I'd love to see that data. One question I had is when you say things like "very few sales below $750k" for Cap Hill/Madison. Does that mean few properties for sale at the price or many properties but no sales. Two different conclusions depending on which one it is.

Also, big swings in prices for individual homes shouldn't have as much impact on the median as they do the mean, unless there just aren't that many data points. Or rather, if the median goes up, that's a more accurate reflection of the price a homebuyer would pay for at least 50% of the homes in the area (bell curve distribution). I thought that was one of the whole purposes of using the median (same number of homes for sale above/below) vs. the mean (average price over all houses, which can easily be skewed by a few homes at the very, very high end.

Personally, I think the neighborhood by neighborhood analysis is great. Comparing home prices per square foot, number of homes sold/available in each price range, number of days on the market by price range and neighborhood. Each one tells you something different and interesting, vs. the KC-wide stats, which I don't think tell you enough to draw clear conclusions.

And I don't buy the whole "as CA goes so goes the entire world" argument. People have been peddling that line for years and despite the massively disproprotionate effect of the dot-com bust on CA (esp. Northern), the US and world economy didn't get screwed.

Anonymous said...

"when you say things like "very few sales below $750k" for Cap Hill/Madison. Does that mean few properties for sale at the price or many properties but no sales?"

Neither. The King County eSales database has only sales prices, not listings, so it's impossible to draw those types of conclusions from the eSales data alone.

What I'm saying is that that there are very few closed sales for under $750,000 in these neighborhoods. The sales prices are high, and therefore, a small percentage increase in value equates to a large dollar increase in value. Furthermore, most of the difference between median sales prices in 6/2005 and 2/2006 can be attributed to 6-8 sales.

On a per-square-foot basis, properties in these neighborhoods are selling for more in June 2006 than they were in June 2005. I still need to work out the correlation between cost-per-square-foot and total property size, however. That will give a better picture of equivalent-property pricing trends.

Hope that was a clear answer...

cosmos said...

I haven't been tracking Snohomish County, but I just collected the numbers for Seattle (areas 2,6,3,7,22,4,8,& 9 off the Windermere area search), and the total as of today (7/16) has increased 8.53% since my last count on 6/20.

Median prices can be driven up by higher end sales, or because buyers don't do adequate research (or rely on real estate professionals (99% unethical IMHO)).

That inventories continue to rise -and that median wages don't come close to supporting the prices, says to me a decline in prices will come.

Family members in Palm Beach County (where one would think Boomers would be interested) have had their home on the market for 8+ months, and reduced the price at least twice already. I think this is similar to what we will be looking at here, particularly in Seattle areas that are less than prime. Seattle is clearly mediocre as a city (crappy transit, lack of downtown living viability, dirt & drugs, ridiculous "libraries," etc.) and only getting worse. Too bad the leaders have taken what could have been an extraordinary place and ruined it.

meshugy said...


That inventories continue to rise -and that median wages don't come close to supporting the prices, says to me a decline in prices will come.


Our current inventory is at a historical low (2005 was the lowest.) We have 1/3 less houses then 2003 and half the houses from the 90s. We need over double the inventory for the market to really tank. Right now it's very clearly a sellers market because there is so little to choose from and so many buyers.

Anonymous said...

"Furthermore, most of the difference between median sales prices in 6/2005 and 2/2006 can be attributed to 6-8 sales."

The median is the midpoint in a series. The mean is the average. The mean is very sensitive to extreme outliers. The median, not so much.

Anonymous said...

"The median is the midpoint in a series. The mean is the average. The mean is very sensitive to extreme outliers. The median, not so much."

OK, folks. Enough with the lectures on mean and median values. I am well aware of the definition of the median. Nevertheless, it is still possible for a handful of values to significantly shift the median of a series of numbers (and they don't have to be extreme values, either).

Here is a histogram of the Madison Park/Capitol Hill sales in 6/2005 and 6/2006:

Price.....2005.....2006
---------------------------
$250,000.....1......0
$500,000.....1......4
$750,000.....15....11
$1,000,000...15.....9
$1,250,000...5......7
$1,500,000...2......3
$1,750,000...4......7
$2,000,000...3......2
$2,250,000...0......0
$2,500,000...0......0
$2,750,000...1......0
$3,000,000...1......0
>$3,000,000..3......1
-------------------------
Totals:......51.....44

Thus, despite a reduction in overall sales, and an overall similar distribution (bi-modal -- NOT normal/poisson), the median 2006 sales price is about $100K more than the median 2005 price.

The fact that the distributions are not normally distributed (i.e. bell-shaped), implies that the median and the mean are both inadequate for describing trends in the data. In this case, the median overestimates the difference between the distributions, and the mean underestimates the difference.

If I just drop the extreme values, I get a median price increase of $99K, and a mean price increase of $84K. The truth is probably somewhere in between.

jcricket said...

anon - thanks for the data, it's really interesting. Your comment about both the median and the mean not accurately describing the picture was particularly enlightening.

The "not a bell curve" distribution of at least the one neighborhood you highlighted helps partly explain why you can have lower sales, higher inventory, and still see YOY price increases.

And I love this gem by eliz:

(or rely on real estate professionals (99% unethical IMHO)).

I have worked with and know quite a few people in real estate (e.g. agents, mortgage banking, and some web 2.0 real estate companies) and none of them are unethical. Sure, they all want to make money, but I'm betting you do as well. I'm sure we could trade anecdotes all day, but this saying "99% are unethical" is clearly an overly broad brush to paint with. IMHO, it basically discredits everything else you say.

Jackson Wallace said...

I do a lot of looking down in south seattle, and the market is still going quickly. There is alot of garbage in the south, and it sits if its overpriced, but something good and attractive goes within 1-2 weeks. We're talking about an area that was fairly ignored only 2 years ago. I have watched so many neighborhoods in seattle go from cheap to expensive over the last ten years.
Ten years ago,k even sections of Mad park and Montlake on major streets were 'affordable'. Now its all forgetitland.

I do think the USA is headed for economic armageddon, but I also wonder if the PAC NW area isnt the last good place in the USA, and with global warming and immigration issues, a lot of people are gonna keep moving to the NW to get away from the problems of other parts of the country.
Lets face it, FL nad AZ have some real crappy sides. Of course, ours is our winter weather. But our summer is doing pretty nicely, than you.
I hate to see the NW continue to grow popular but there's a lot to seel up here....now there's news even EWA is getting giant server plants from
MSFT and Google. Prices skyowcketing in places like Sunnyside and the Dalles. and why not, they're kind of cool places, if you like yokels that is. Anyway, we're talking places you could get a house for 100k two years ago.

Still, with the ME falling apart, and uS debt skyrocketing, and boomers retiring, when the excrement hits the fan, were all done.

Jackson Wallace said...

Yeah, Palm Beach is such a great place, lots of scarfaces running around, poor carjackers and muggers filtering in from inland, fakeass people, headed underwater, no hiking, no mountains, no access to canada, no skiing.

The winter is a major plus, and waiting to get into a club so you wag
your tongue at some loser like P Dummy, or 15 Cent, or a spoiled athlete, while listening to crappy club music spun by talentless people who couldnt play an instrument to save their lives, sipping on ten dollar drinks. Woohoo. Walk ten blocks in from the coast and you need
a gun, quick.

I guess boating, which you can also do in Seattle, is a major attraction, as well as diving on bleached coral reefs with extinct wildlife that the Republican jackoffs in that state have destroyed. Talk about ruining paradise, I think Florida wrote the manual.

cosmos said...

meshugy - You state inventories hit their low in 2005. That supports the notion they are rising. This statement, "We need over double the inventory for the market to really tank." seems like sheer opinion. In the end, it doesn't matter - the point is that RE has crested.

jcricket - I've worked with many RE professionals too. And I stick by my assertion most of them are unethical, and don't have any notion of what it means to serve in a fiduciary capacity. Do YOU know what the word fiduciary means? I seriously doubt it.

jackson wallace - If you had read my statement accurately, you would have seen I wrote Palm Beach COUNTY. Having spent a considerable amount of time there, I don't see it as worse than Seattle, just different (and maybe even better) - tons of suns, lots of golf & tennis, good restaurants, warm clean beaches. Yes, lots of older folks, but the U.S. population is aging.

meshugy said...

meshugy - You state inventories hit their low in 2005. That supports the notion they are rising. This statement, "We need over double the inventory for the market to really tank." seems like sheer opinion. In the end, it doesn't matter - the point is that RE has crested.

Of course they are rising...but pretty slowly. I didn't base my prediction on sheer opinion. We had 30% more houses for sale in 2003. Over 100% more back in the 90s. If you look back at the historical #s you'll see this. We are still at rock bottom inventory.

jcricket said...

eliz - I'm quite clear on what the word fiduciary means, but thanks for assuming otherwise. I have personally worked with RE professionals who've acted quite approproiately WRT their fiduciary duty (when they were required to act in that capacity). Including mortgage brokers who steer people to other companies when there were better deals elsewhere, agents who recommend walking away from deals rather than escalating the price (and who never represent both sides of RE transactions) as well as people that work at the companies that charge far less commission than traditional agents and also are glad to expose any shenanigans of others involved in RE.

I will stick by my statement that your accusation that "99% of RE professionals are unethical" is an overly broad generalization. Coupling that with your ad-hominem attacks directed at people that question your assertion convinces me you're not correct.

I'm also not sure where you draw the conclusion "the point is that RE has crested", at least WRT Seattle. The original post for this thread points out that RE is still appreciating in Snohomish county. And the Sunday article in the Seattle Times points out rapid appreciation across KC. I suppose from these statistics you can say the appreciation rate has crested, but to me the Seattle "RE market" cresting would be actual price drops YOY. If you're predicting that in the future, that's fine, but I don't think you can say it's already here.