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Monday, August 07, 2006

July: Inventory Up, Sales Down (Yet Again)

Well I waited all weekend for the NWMLS "recap" pdf to be posted, and it's still not up. In the mean time, here are the pertinent numbers for King County (residential only), pulled from the summary sheet, which has been posted.

Active Listings: 6,909 (+ 19.29% YOY)
Pending Sales: 2,665 (- 13.08% YOY)
Median Closed Price: $435,000 (+0.01% M2M, +16.00% YOY)
Nothing too surprising. The trends of the last few months are just continuing—increasing inventory and decreasing sales. The median price pretty much stalled, but it seems to do that pretty much every July. (Last year it was unchanged at $375,000 from June to July.) Generally speaking, inventory tends to start decreasing month to month during the last half of the year, but as you can see, active listings are still increasing at over 6% per month. If the trend continues, I think we will start to see a real slowdown in the median price next spring.

Meanwhile, in Olympia...
Thurston County home sales continue to show signs of slowing as the South Sound housing market crossed into uncharted price territory last month.

For the first time, the average price of a single-family home rose above $300,000 in July, according to Olympic Multiple Listing Service data released Friday.

The average price of a home was 21 percent higher than last year at $301,129, while the median price of a home also was higher at $262,000, up 12 percent compared to July 2005.
...
Regardless of the increase in average and median prices, South Sound real estate professionals say there has been a noticeable shift in the market.

"The ratio of buyers to sellers has drastically flipped from the past," said Chad Roraback, a real estate agent with Abbey Realty in Lacey.

"The buyers haven't left the market; there is just so much more to choose from," he said.

Roraback attributed the surge in median and average home prices to sales of higher-priced homes.

Sales of homes priced at more than $450,000 have doubled since 2005, climbing from 106 to 216 home sales in 2006, an increase of 104 percent.

Roraback also thinks inventory levels are much higher in Thurston County than the Olympic MLS data would indicate because large home builders don't always list every home available.

The number of homes on the market is more in the range of 2,200 to 2,500, he estimated.

"I just think we will be flattening out and take a while to absorb the inventory," he said. "The population growth isn't going to match the number of homes available right now. Builders may have to slow down production."
At 1,928, the total active listings (residential & condo), Thurston County is already over 80% higher than a year ago. If they're really looking at 2,500, that's an over 100% increase. I don't see how that kind of increased inventory can sustain continued price increases. I guess that's why I'm not an economist.

(Rolf Boone, Olympian, 08.05.2006)
(NWMLS, 08.2006)

Update: The recap pdf has been posted. Also, the big Seattle Bubble Spreadsheet has been updated to reflect the July numbers.
Please read the rules before posting a comment.

60 comments:

meshugy said...

One interesting # on the MLS report is that NEW KC Residential listings are DOWN both MOM and YOY.

New Res July 2005: 3,883
New Res July 2006: 3,724

New Res June 2006: 4,009

So LESS people are putting houses up for sale...we'd be in trouble if new listings were up and sales were down. But it seems that sales AND listings are going down which doesn't look like a crash scenario.

Tim, thanks for NOT giving me credit for providing the detailed King County report. It's pretty bad blogging practice not to acknowledge the contributions of your readers.

matt said...

Roraback attributed the surge in median and average home prices to sales of higher-priced homes.

This goes along with my SoCal thesis, higher median, diminished sales, more invetory....

a thesis that's been challenged on this blog a few posts back

synthetik said...

If he were to give you credit, then people may tend to question the numbers.

Again, King County/Seattle was simply late to the equity party. I doubt you will see a 2-year stagnation before the inevitable plunge that San Diego is experiencing now.

More likely it will happen at a much faster pace now that MSM has a clue.

The Tim said...

Tim, thanks for NOT giving me credit for providing the detailed King County report. It's pretty bad blogging practice not to acknowledge the contributions of your readers.

Incidentally, you will notice if you actually click the link that the pdf I linked to was not the one that you pointed out in the open thread. And in fact I had both those links in my list of links already.

Seriously dude, get the chip off your shoulder.

meshugy said...

If he were to give you credit, then people may tend to question the numbers.

What are you talking about? The report and the #s were generated from the MLS. I did the hard work of finding out how to get the detailed report. Tim previously only had access to the public #s...I found the much more detailed report available only to realtors.

meshugy said...

And in fact I had both those links in my list of links already.

Sorry Tim...that's total BS. You had never posted anything but the public #s until I made the private ones available. And there's a lot more...if you have them all then show me the full 60 page summaries going all the way back to 2002, as well as the annual reports going back to 98. And so many more...you know what you're doing then you should be able to easily find all of those.

deeplennon said...

Generally speaking, inventory tends to start decreasing month to month during the last half of the year
Actually, four of the last six years inventory for the year peaked in September (00, 01, 02 & 05). The other two years had peaks in May (03) and June (04).

A telling number would be if inventory rose in October over September, in the data supplied by the MLS since 00, that's never happened.

dash_point said...

we'd be in trouble if new listings were up and sales were down

Hmmm...could that possibly be happening anywhere?
Thank goodness everyone's safe!

The Tim said...

...you know what you're doing then you should be able to easily find all of those.

You're right, I can easily find them. As I stated in the post, the only reason I posted a link to the NWMLS-wide summary sheet (not the 50+ King-county-only detailed report) was because I got tired of waiting for the "Recap" sheet to be posted.

I indeed have access to the 50+ page King County reports, going back not just to 2002, but to 2000. Incidentally, I know how to use Google.

This conversation is a ridiculous distraction from the subject, and this is the last I will say on the matter.

meshugy said...

Sorry Tim..google doesn't show all the hidden stuff.

jcricket said...

ooh, blogfight. pass the popcorn.

ks_kitsap said...

New Res July 2005: 3,883
New Res July 2006: 3,724


What does "new res" mean exactly--newly built homes, versus resale? Because as of this morning, Ziprealty has 6066 SFR listings for King c. Personally, I wouldn't be surprised if new home sales trail off, because builders are scaling back across the country.

Lake Hills Renter said...

Can someone close the red color tag between rounds? All of the normally black text on the main page is red now. =P

Lake Hills Renter said...

Anecdotal: Looks like they are finally starting construction on the new subdivision just north of the main Microsoft campus. The lot has sat empty for over a year, while the "From the 800's!" changed to "From the 1 Millions!". More future McMansions. My gut tells me they missed the boat.

ks_kitsap said...

--I should mention my figures are from Ziprealty. All mls sources differ to some degree.

meshugy said...

The "residential" #s refer to existing single family homes. New construction is a different #.

Not a blog fight really, I just find it disappointing that Tim takes credit for the work of others. I thought he was better then that. I wanted to share a lot of this data I found, but this incident has persuaded me otherwise.

matt said...

I just find it disappointing that Tim takes credit for the work of others. I thought he was better then that.

You can start your own blog, apparently its not hard... I'm sure Tim would link up with it...

The Tim said...

Can someone close the red color tag between rounds? All of the normally black text on the main page is red now. =P

Whoops. Sorry, it didn't show up that way in my browser (Firefox). Thanks for pointing it out. It should be fixed now.

meshugy said...

The summaries are up here:

Home Prices Still Rising in Western Washington, Defying National Trends

It shows the Median Red/Condo closed price for KC went up 2.5K MOM from June to July. It also shows Seattle's median closed res/condo price went up 5K MOM from 415K to 420K. That an amazing jump for one month.

dash_point said...

Seattle's median closed res/condo price went up 5K MOM from 415K to 420K. That an amazing jump for one month.

So what does that mean--our homes gained $5K in equity over one month?

meshugy said...

and condos went nuts..

The Median closed price for condos in June was $250K....jumped to $264K in one month! And they're 22% higher YOY...looks like condos are holding up really well for investors.

meshugy said...

So what does that mean--our homes gained $5K in equity over one month?

Sort of...these are just general trends. To get a real assessment of your house you need to take a number of other things into consideration:

1) Year house was built

2) Condition

3) Size

4) Location


etc....the best thing to do is to find similar houses to yours that have sold and see what they went for. I've found that the increases shown on the MLS correspond very closely to the appreciation I've seen on houses similar to mine. Ballard is about 50-70K more then last year....and that's about what the MLS shows.

I just checked the MOM #s for Ballard...it went up just short of 20K in one month! The closed res/condo median ballard now stands at $439K.

meshugy said...

The MLS report also mentions that

The latest report from Northwest Multiple Listing service, which tracks activity in 17 counties, shows prices rose 15.5 percent for July's sales compared to the same month a year ago. That figure – the sharpest gain for any month so far this year -- includes single family homes and condominiums.

matt said...

Ballard is about 50-70K more then last year....and that's about what the MLS shows.

Time to sell it 'Shug, take your investment, roll into some venture capital and start a day-trading/condo-flip firm , ...start making the big bucks

marin_explorer said...

So what does that mean--our homes gained $5K in equity over one month?
Sort of...these are just general trends.


I wouldn't trust “median price” as an indicator of equity gains on individual homes--especially if the market shows signs of softening. While the discussion below regards San Diego’s market, the same principle applies everywhere.

”Why is the median rising, when each individual home is selling for less? Actually, most San Diego homes are back at 2004 prices. The respondent is Bob Casagrand, a local SD realtor.

Bob told me that the under $400K buyer is squeezed out due to rising prices and higher interest rates. The high end is holding up a little better, because the ripple effect has not yet made it to the high end, and the low end has weakened MORE than the high end.

Last year, the +$1million home was 8.5% of sales. This year it is 10%. This is skewing UP the distribution of homes sold, raising the median, although each home, including the high end homes, are selling for 10-15% less today than last year.

We are selling proportionally MORE of the expensive homes, and the median tells us only about the MIX of homes sold.

It does not tell us about the value of each home. The $1.1 mil house was worth $1.5 mil in 2004, so it has also gone down in value.”

matt said...

No worries Marin Explorer, I'll answer for the 'Shug, he says the bulk of houses are in the 200K-400K market and that the high-end isn't keeping the median up... my point is that since we're NOT San Diego with regard to median (their's is something silly like 530K or whatever) that the 400K should be in fact adjusted lower for that quote to make it appropriate for Sea-town.

Bob told me that the under $400K buyer is squeezed out due to rising prices and higher interest rates.

I'd sub the 400K number to 300K-350K for Seattle and I think the comment will eventual hold true for us once inventory really takes off...

meshugy said...

Here's the report from the MLS...as you can see, the vast majority of sales are in the 200-500K range.

This report covers all 17 counties...

Closed Sales Report by Price Range
0 - 69,999 73
70,000 – 79,999 37
80,000 – 89,999 37
90,000 – 99,999 33
100,000 – 119,999 83
120,000 – 159,999 390
160,000 – 199,999 726
200,000 – 249,999 1,396
250,000 – 349,999 2,613
350,000 – 499,999 2,178
500,000 – 749,999 1,060
750,000 – 999,999 322
1,000,000 – over 220
Total 9,168

Peter Taylor said...

Meshugy, do those numbers include condos?

meshugy said...

yes...res and condo

matt said...

Here's the report from the MLS...as you can see, the vast majority of sales are in the 200-500K range

17 counties is a huge swath, to make the analogy apt you'd have to look at just Seattle, considering the Bob quote only refers to San Diego, not all of SoCal. I'm sure there's a few screamin' cheap deals to be had in the Imperial Valley but who in their right mind's lined up out there for a 500K rambler... And if you were hurting for a histogram, I'm sure you could snag a few more backward parts of the NW to skew the stats to sure up your conclusions

meshugy said...

unfortunately this report is only generated for all counties. Still, you'd have to see a lot more activity in the higher end to justify your theory. Also, general observation of N.Seattle sales show that anything decent in the 300-500K range is gone in a week. Driving around, for sale signs for single family homes are hard to find in N.Seattle. If what you're saying is true, there'd be 400K crafstmans for sale all over the place. Sorry, that's not happening...

dash_point said...

Medians: my question meant to pick at the various realities behind those figures. The Marin guy did touch on that.

Depending on your point of view, I think we can all inflate the importance of one dataset and be lost in terms of a bigger picture. It sure bit people unaware during the dot-bomb. So prices may paint a rosy picture--or suggest instability. The better the info we take in, the better conclusions we'll make.

matt said...

Still, you'd have to see a lot more activity in the higher end to justify your theory.

Hmm... Well, I'm gonna hasten a bet that the glut of 200K-400K houses are being bought outside the Seattle Metro Area. Last time I checked Shelton wasn't seeing any McMansion developments to speak of, and from this article Oly's cooling quite a bit. So if you pull those numbers out of your 17 county amalgam, it sure looks like a lot of activitie's goin' on on the high end of the market. Call me crazy but if 400K+ is the high end in San Diego, it sure as heck would be considered the high end in Sea-town, considering their median's a good 100K above ours.

Driving around, for sale signs for single family homes are hard to find in N.Seattle.

Whatever, you keep pulling this dead rabbit out of the hat over and over. I live off of 3rd St. near Market, 4-sale signs are everywhere dude.

The Tim said...

Ballard is a veritable listings desert. Practically nothing for sale.

matt said...

Haha! That reminds me of the following Seinfeld...

KRAMER: Oh Tuscany huh? Hear that Jerry? That's in Italy.

JERRY: I hear it's ah beautiful there.

MAESTRO: Well if you're thinking of getting a place there don't bother. There's really nothing available.

JERRY: (Surprised) Huh?

ks_kitsap said...

You can start your own blog, apparently it's not hard

Perhaps that's not a bad idea--if your posts account for 1/3 of the bandwidth of this thread.

meshugy said...

Ballard is a veritable listings desert. Practically nothing for sale.

83 properties is nothing for Ballard...remeber that Ballard is the biggest area in N. Seattle. 83 is very, very little.

In July there were 251 closed Res/Condo sales in Ballard.

Mikhail said...

I see that inventory is slowly creeping up in my area on the Eastside. I've been watching the listings on ZipRealty.com for 98008 all year, and I see we are up to 70 actives today. It was only back in May that we were in the 40 range. Not that this is a sign of a crash or anything.

Also, I do a bike ride around lake Sammamish every week-end, and I notice a lot of for sale signs. There are quite a few for-sale-by-owner signs too. I've also noticed how construction around the lake has been on a tear for the a number of years now. Just this week-end I saw dozens of home in various degrees of construction.

Who says there is a shortage of home building in the Puget Sound?

The Tim said...

83 was just the number of sfh properties that were within the little window of Ballard that I zoomed in on in that screenshot. As I am sure you are aware (since it is in the link you posted in the weekend open thread), area 705 had 347 total active "res. only" listings at the end of July, a 26.6% increase from last year.

So it would appear that inventory in Ballard is actually increasing slightly faster than King County as a whole.

emcityjill said...

Is it typical, in a speculative RE bubble, for prices to remain high, while sales start to choke and inventory builds up? I would assume so, but I'm just guessin'. Anybody know for sure?

anon said...

http://seattletimes.nwsource.com/html/localnews/2003181723_webhomes07.html

meshugy said...

So it would appear that inventory in Ballard is actually increasing slightly faster than King County as a whole.

But the closed res/condo median price shot up 20K MOM! That's good for YOY...but it happened in one month. So even if there's more for sale, it's not enough to cause appreciation to slow.

There's no doubt inventory is increasing in every part of Seattle. But is it enough to cause a decline in prices? Apparently not...despite higher #s then 2005, we still have very low inventory.

July 2004, there were 350 res homes for sale in Ballard. July 2003 had 369, July 2002 had 414....

so 347 is still pretty low...hence the big price gains.

Mikhail said...

The Bellevue MLS data seems very odd. The number of active listings in all categories is down YoY. However, the number of sales is down, and the number of pending sales is WAY down. Days on market is also up somewhat from last year (although not by a huge amount).

This seems to be quite anomalous from what is happening in other regions. Normally inventory seems to increase at the same time that pending sales are down. But here we are seeing listing go down, just as pending sales are going down.

Strange...

marin_explorer said...

Is it typical, in a speculative RE bubble, for prices to remain high, while sales start to choke and inventory builds up?

Increased inventory and flattening appreciation are some of the first indicators of a downturn. Whether it's in Vancouver, Texas, or LA, the boom/bust cycle plays out predictably (just my take):
1. Period of frenzied bidding and speculation. Optimism runs high for those rushing into "equity wealth".
2. Reduced affordability, and more riskier loan products are taken on to keep sales volume going. Remember that graph on where WA falls in risky loans?
3. Demand finally taps out; inventory increases while prices remain high. Confidence is still high that prices will continue up, although at a slower pace.
4. Inventory continues building, small price reductions prevalent, and confidence starts to wane. Investors get worried and defensive.
5. Market instability is all too obvious. Price pressure is downward, but sticky downward, taking years to find equalization.

My town is in #4; #3 last Fall. Seattle is behind that, but will it play out any differently?

matt said...

My town is in #4; #3 last Fall. Seattle is behind that, but will it play out any differently?

Absoltuely not! Again, this Seattle's different nonesense is tiring, why? Because there's nothing definitive that sets us apart from all the other disparate housing bubbles in the country, personally I see more differences culture/economy-wise in cities like Boston v. Pheonix, or San Diego v. D.C. than say Marin/Bay-Area and Seattle... all are 2006 Housing Bubbles, some have different shades than others.

The ONLY thing keeping the Seattle party going longer is the California equity-echo... refugees with similar skill-sets (Defense/Software/etc...) cashing out down south and moving north. That's it! once the party ends down south, it'll be a year here or so and uh-oh Chongo!

marin_explorer said...

Absoltuely not! Again, this Seattle's different nonesense is tiring, why?

Right, while my points were incomplete, I think it's important to see this as a process, vs. a "fixed reality." Marin considers itself so special, but it's happening here.

emcityjill said...

So all that really needs to happen for the house of cards to come crashing down is: a couple of sellers with comparable properties in the same n-hood desperately need to move their properties off the MLS...and so reduce their prices. Then it's a downhill slide because the comps got out of whack. Wheeeee!

But isn't the real important variable how many speculators are actually part of the Seattle market? Is that public information? Who has it? Lenders? The county? I want THAT data point.

Dukes said...

Well Meshugy your attempts to spin what is happening are just getting more and more hopeless.

When Tim points out the rising Ballard inventory you jump on him that prices are rising, too funny.

Do you really think that we will escape what is happening all over the US? Do you really? If you answer in the affirmative, you are quite the fool.

matt said...

But isn't the real important variable how many speculators are actually part of the Seattle market?

A year ago or so, it was estimated to be around 25%, don't have the source of that stat, including second homes and trustafarian kids and their boomer parents...

Anonymous said...

I just checked the MOM #s for Ballard...it went up just short of 20K in one month! The closed res/condo median ballard now stands at $439K.


Just wait until Ballard becomes its own city. Then we could really see its value.

Anonymous said...

Meshugy, used to love you, but come on man, show some grace. Post your links if you think have inside info. Admit when Tim makes a good point (re: listings up in Ballard). Pursue objectivity!

Anonymous said...

Seattle real estate is becoming a game of musical chairs. The music is going to to stop soon and instead of 1 empty chair there will be thousands of screwed homebuyers.

Another analogy is a game of chicken. Who will blink first, sellers or buyers. I think the buyers are going to hold off for fear of holding the bag at the end of the bubble.

bob said...

Anon 5:09 left a link up there that i'm pretty sure is the article where REALTORS are talking about the cooling Seattle market.

So can we finally stop arguing about whether seattle is different or not?

It's official. the experts have spoken.

Honestly, everybody's talking about the benengenbreth site when median's going up every month. now that it's stalled for the past 3 or 4 months, not a word.

WA is # 6 in the country with funky loans. but maybe we won't have many foreclosures here!

Price Reductions around 30%, but it's a hot market.

None of that mattered.

But now local realtors are admitting the truth.

Is that enough for you or do we still need to beat a dead horse about how "different" seattle is?



Again,

Mooses said...

Looking for house to rent. Observations:

1) More and more houses coming on the rental market
2) 20 of the 25 rentals we have walked thru were bought within the last 3 years (flippers....probably)
3) The "owners" tend to be either 30ish couples who drive luxury cars (another flipper giveaway) or foreigners (Several russians, a few chinese, and 2 mid-eastern types)

As it becomes harder and harder for flippers to sell you are going to see a lot more expensive rentals coming on the market. Of course a bigger supply will result in a glut and concessions will have to be made...which means lower prices. I am already seeing the same overpriced rentals popup on Craigslist week to week. These guys just don't get it. If you list for $2400/mo (1 year lease) and nobody bites for a month, you just ate $2400 by being greedy. Predictably the higher rentals are now relisted with "new price".

Greed is good.....Ivan Boesky (who ended up in jail...well ok....Club Fed)

Anonymous said...

I'm sick and tired of seeing you confuse median closing prices with median closing prices per square foot, Meshugy.

A rising median closing price can be caused by one of two phenomena:

1) Prices for every property are rising.

or

2) More expensive homes are selling, while the low-end market slows.

The only way to get at the difference is to get the median closing price per square foot. You can't get that from the MLS...no matter how good you are with google.

jcricket said...

The only way to get at the difference is to get the median closing price per square foot. You can't get that from the MLS...no matter how good you are with google

Meshugy, isn't confusing the two statistics you speak of, since you're one of the first people to mention it. He's just posting a certain set of statistics, usually to counter what he believes are incorrectly "sourced" arguments (like when he posts statistics that show even during the slow RE market back in 1989-1991 in KC, median prices still rose). I'm not convinced that posting statistics is as interesting as discussing them, but whatever.

OTOH, you're the first person I can remember in the last month who has brought up this important distinction about sq.ft. prices, so thanks. And guess what, you can get this from the MLS. MLS has square foot data. That's how Redfin, I believe, lists the average price/sq.ft. per neighborhood on their site (you can also get it from combining KC excise tax records + property info from their web site).

I think, that median price increases/decreases are interesting barometers of the market as a whole, you're right not to solely rely on them. It's like relying on "price reductions" alone, which only tell you that there's a limit to how high you can price your house. You might still have appreciation in the face of price reductions, or few reductions but depreciation because people are starting at a lower price point.

The combination of rising inventory, decreasing sales, a decrease in the growth of median prices all point to a slowing market.

Some here believe those statistics are the beginning of a massive price drop trend. Others believe (meshugy) the market will flatten for a while and then rise again. I'm not making any bets, but I'm certainly not convinced we're all headed towards certain economic doom.

And really, I'm surprised that people are so shocked that the NAR and other realtors generally stay bullish on real estate. It's like expecting Microsoft or Amazon to "give up" and admit defeat during the annual shareholder meeting if they have a bad year - or lose some marketshare.

meshugy said...

The only way to get at the difference is to get the median closing price per square foot. You can't get that from the MLS...no matter how good you are with google.

Yes, you're are right, you can't get closed price per sq. ft from the MLS. But you can get it here:

Seattle Area Home Sale Activity

It's only updated once per quarter though...

However, the MLS does provide a Closed Sales Report by Price Range and Bedroom report which I posted above. That clearly shows most activity is below the 500K range. Doesn't look like the upper end market is over represented at all.

Anonymous said...

jcricket:

"Meshugy isn't confusing the two statistics you speak of, since you're one of the first people to mention it. He's just posting a certain set of statistics, usually to counter what he believes are incorrectly "sourced" arguments..."

You're right....I should have said that Meshugy is making arguments that can only be made with price/sq.ft. information.

Now for meshugy:

"However, the MLS does provide a Closed Sales Report by Price Range and Bedroom....that clearly shows most activity is below the 500K range. Doesn't look like the upper end market is over represented at all."

Unless the "low-end" market starts below $500k. How do you know that it doesnt? You don't.

Don't you get it, man? You can't take a single point of data and extrapolate from it! Now, if you took a series of these histograms (that's what you posted -- a histogram), and looked at how they changed over time, you'd have something. Showing data from a single time-point is interesting, but ultimately useless.

Scott said...

Tim,

Thanks for the cool spreadsheet.
Can you please consider adding closed sales nos in addition to prices.

Thanks
Scott

Anonymous said...

This pattern will likely continute well past the end of this year. I've justed posted some historical charts (by county) and the turning of the market started:

King/Snoh Country: Jun 05
Skagit/Mason: Oct 04
Pierce: Feb 04
The trend (with minor monthly hiccups) look like it's going to keep getting worst.