02.10.2007 - Weekend Open Thread
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Last night I noticed that Redfin will display sales histories, so I decided to gather a little historical data. I set the Redfin map so that it covered the Bellevue area north of I-90, south of Old Redmond Road, and including a little bit of land east of Lake Sammamish.
I then looked at sales histories for different prices ranges for SFH and condos. I am going to try to post the data below in a table (I spent a bunch of time formatting the data in an html table and now I discover that blogger will not let me post tables. I am posting the raw data below, but that is going to look like crap. I will send the table to Tim if he is interested in reposting it). Redfin does not seem to have sales data for the last three months so all of those values came out to zero. I also suspect that Redfin is not including all of the sales in this area.
I did not get any insights from this data, but maybe someone else here will.
SFH on market 0-3 mos 3-6 mos 6-12 mos 12-24 mos 24-36 mos
<300k 0 0 10 85 152 >500
300k-350k 1 0 7 34 191 >500
350k-400k 8 0 27 93 299 >500
400k-450k 7 0 48 123 >500 >500
450k-500k 26 0 45 142 >500 >500
500k-600k 40 0 72 292 >500 >500
600k-700k 51 0 65 200 >500 >500
700k-800k 44 0 46 141 214 >500
800k-900k 42 0 37 105 165 >500
900k-1000k 24 0 24 79 104 63
1000k-1250k 40 0 29 105 120 80
1250k-1500k 43 0 35 84 97 59
1500k-2000k 53 0 21 62 84 65
2000k-3000k 37 0 23 42 57 35
3000k-5000k 22 0 10 18 36 19
5000k-10000k 12 0 5 6 17 13
Total 504 1611 1536 334
Condo on market 0-3 mos 3-6 mos 6-12 mos 12-24 mos 24-36 mos
300k-350k 50 0 153 >500 >500 >500
350k-400k 18 0 24 91 152 103
400k-450k 19 0 35 89 85 47
450k-500k 12 0 18 47 47 25
500k-600k 11 0 8 22 24 20
600k-700k 10 0 10 21 29 27
700k-800k 5 0 3 14 38 23
800k-900k 5 0 0 9 13 10
900k-1000k 5 0 1 7 10 11
1000k-1250k 3 0 3 1 5 4
1250k-1500k 4 0 4 5 3 3
1500k-2000k 7 0 0 3 2 2
2000k-3000k 1 0 2 3 2 4
3000k-5000k 5 0 1 3 5 7
5000k-10000k 1 0 0 0 10 0
Total 262 315 425 286
Alan...
I love numbers...and would love to be able to crunch them from my perspective...so I thank you for gathering the data.
If you could clarify something for me...
I'm not sure if I am able to easily follow your table. It appears that you have broken down the houses and condos into their respective price ranges and have included some numbers after them.
I'm guessing that the numbers after the prices refer to the 0-3, 3-6 , 6-12, 12-24 and 24-36 months that a house has spent on the market.
Where I become confused is that you have broken it down into 5 categories but there are 6 numbers following each price level. I'm guessing that the latter 5 of the 6 numbers are the ones that correlate to your DOM breakdown.
So...I guess I'm asking what the first number is.
I have a gut feeling that if the data was available for the stuff that has been on the market for 0-3 months, we would see larger numbers than those that have been on the market for 3-6 months.
Statistics in themselves can be misconstrued/spun...whatever. As the old quote goes..."there are three kinds of lies....lies, damn lies, and statistics."
However...just by glancing at it...it looks like there is a bottleneck and the people who have had their houses on the market for over 12 months just don't quite "get it" yet.
The first number is the number that are currenly "on market". Had the table formatting made it, you would have seen that there are actually six data columns.
Also ">500" actually means "no observation". Redfin does not display results of more than 500. I subtracted "0-3" from "0-6" to get "3-6" and then subtracted "0-6" from "0-12" to get "6-12". There may be fewer than 500 in the ">500" results.
There is also a little bit of error in the numbers. A house that sold for 400k will be in the "350k-400k" results and then "400k-450k" results. I started out removing these double reported residences, but quit after the few few rows. I also saw a few houses that were listed multiple times so I expect there is some error there as well.
And "3-6 mos" means houses that were sold between three and six months ago. It has nothing to do with the amount of time the house sat on the market.
I really don't think much can be extrapolated from that data to be honest...but I still think that it will be interesting to see what happens with the inventory in the upcoming months and compare that with how long homes sit until the next bigger fool comes along.
Statistics can be tricky things...you can see how both sides use them to try to prove or disprove the "bubble".
The things I would love to know is who will be left to buy the houses after everyone forcloses? What are the financials of the demographic that doesn't own a home? I would assume that unless prices fall by a TON that most people who were able to afford homes in the past 5 years already have theirs and probably won't be in the market for "investment" property for quite some time now.
Thought I would pass on 2 tidbits from my own personal life in relation to this housing bubble.
First of all worth noting, my brother-in-law works at one of the top 20 sub-prime mortgage lenders...Business is scarce, and his sales commission has been cut by 15% already this year. Add to that he and my sister have 3 properties in South Florida: 1 condo bought pre-peak, 1 bought midway through and the last bought at the top (the one they live in). Even though my sister doesn't work they don't seem to be worried at all about the implications (the other 2 units are rented.)
Secondly a comment from dear friend in Madison Park whom I spar with quite frequently over the housing bubble - He is actually a long-term owner with extremely low mortgage, but for some reason seems to take it personally that house prices won't go up forever.
Here is his response to the article in Seattle PI about the median home price plummeting in Seattle:
"I just had a conversation about that article last night. I was going to send it to you but knew that a naive person like you wouldn't be able to look beyond the words. Bottom line, our neighborhood is outta control and there are no signs of any slow down. You need to come and visit to grasp the magnitude of the real estate market in my area. Too hot to handle!!
Sorry you missed the boat and you are so bitter...maybe you'll get lucky one of these days."
Travis, your friend is in for a very big and rude awakening. I too have those same conversations with my friends. they say
"I live in west Seattle, and it is hot over there, selling like hot cakes."
but I see 3 houses I've kept my eye on, two of them with incredible views, and they've been on the market for 7 months now. there are a few places the sold quickly over there, but I sure see a lot of price reduced signs as well.
But we are going to believe what we are going to believe and they stay pat with their thougths, neither convincing each other. But the big difference is that they are wrong and will soon find out.
this just in.....Only 9 percent of economists say the housing decline ended in 2006, according to a USA Today survey of 55 economists taken Jan. 18-24. Another 42 percent said the downturn will end in the first half of the year, and 45 percent said housing will bottom out in the second half.
That is what I call an overly optimistic economist, but as some one said in Fridays thread I think, economists will put out bad info little by little so as not to start a panic. Stay tuned for more bad news in the future
Travis...tell your friend to keep telling himself that.
I keep a close Eye on Madison Park also.
The drops on the waterfront condominiums have been substantial before they sold. The cheap ones sold in the big tall Madison Park Green Tower...but the two left at 2.5m +/-...good luck.
An end unit sold for over 600k after being reduced a couple times. Whoever the buyer was has recently rented it out (it sat vacant for a while) for a whopping 2000 bucks per month.
Oh...it was 2040 43rd ave E #309 in case you are wondering.
the new owner has to pay 800-1000 in taxes and HOD so now...he gets about 1000 of that 2000 rent as a return on his 600,000 investment.
That works out to a whopping TWO percent return on his money...yeah...*that's smart. And that doesn't even take into account any other expenses of being a condo owner and a landlord.
I get better returns on my checking account...and then even better than on CD's. It is a sad day that when you do the math...a simple checking account is bringing in a better return than being a landlord.
Tell that to your "dear friend" and see what he thinks then.
Why is it about Madison Park people that they have such an attitude? I don't get it...it's not THAT great.
Oh...wait...sorry...yeah it is...and so is Belltown...and I'm sure that they are also immune to the bubble popping.
Seattle Times: it's the Year of the Corporate Whore when it comes to local real-estate reporting.
Seriously -- I think they fired Lizze because she was being too critical. This article had everything: balance (quotes from realtors and real estate marketing consultants), critical reasoning ("You might cringe at condos that sell for $2,000 a square foot. But it would be twice that in New York..."), and truthiness ("Land and construction costs continue to rise, ratcheting up the pressure on developers to raise prices or lose money.")
I hereby nominate Amy Martinez for the 2007 Rhodes' Prize for Excellence in Real-Estate Reporting.
Ha...that article is a hoot.
I love how Seattle likes to compare itself to Manhattan.
If you go to the NYTimes real estate section you will see that the avg $ per sf on the UWS (upper west side) is $1144...The Upper East Side is $979
For them to claim that 1200/sf is reasonable in Seattle is a joke. Do a search in the NYTimes and see how much more you can get for $2 million in Manhattan vs. Seattle...and I'm comparing apples to apples...I am not including the dingy (IMO) pre-war cooperatives...but rather the new glass curtain condos that are similar to the ones going up in Seattle.
Yes...you actually can find 2-4k/sf condos in Manhattan...but they are VERY few and far between and are usually penthouse properties in prized buildings such as the Time Warner Building for new construction...and the Dakota for prewar.
Seattle may have minted quite a few millionaires...but I would have to say that Manhattan has FAR MORE!
All the touting that Seattle is immune...and anything that is done to attempt to hold so tightly to their "dear" prices will only exacerbate conditions in the end.
Anyone notice how one somewhat negative article comes out from the local media regarding RE prices and all of a sudden they are "just making negative news to sell papers".
What about the last 3-4 years of pro real estate swill we have been forced to swallow. The whole RE community is up in arms about how the one article.
We have been forced to endure years of pro RE b.s.
Matthew, I think you're just confused about newspaper industry terminology:
Pro-real-estate shilling: "balanced reporting"
Factual, negative statements: "sensationalism"
Just do a mental substitution on every article you read, and the world will make more sense.
there was a good news feature this morning about Boeing's future...
bottom line Boeing execs look at a leaner more profitable boeing in the coming years as it sells off most of it's idle properties...
It also points out that a big part of the dream liner is manufactured (the wing) in Japan...
and here's the clincher... it will only take about 800 people to assemble the entire plane in Everett... vs the thousands before for the other planes...
So yes boeing will bring in jobs and keep the economy going, but it's not that much...
I read the same article in the Sunday Times and I could find only one sentence that was semi-lucid. Here's what real estate agent Brett Frosaker says about downtown condos "A lot of research shows there's a market for them ," he said. "But it hasn't been proven yet." Wow Brett, ya think?
I'd sure like to know what kind of research he's referring to. Let's do a show of hands. How many of you real estate developers out there think flooding downtown Seattle with overpriced condos is a smart idea?
Don't forget that those Boeing Execs are now in Chicago so most of the jobs that Boeing creates in the Puget Sound region probably won't be ones that are needed to soak up the excess of condos.
That's assuming that they would even want to live in a condo in the first place.
Anybody moving into the puget sound for a job with boeing up in everett will have enough sense to live north of seattle... unless they just love commuting...
doubt any seattle condos will benefit from them...
20% down seems like ancient history
rentfornow...great article.
I love how the author failed to mention the aspect of the amount of adjustible rate loans. It is interesting that he really kind of beats up on the people for the fact that they are putting nothing...or next to nothing down...yet it appears as if he is giving them the benefit of the doubt as if they were all in 30 year fixed mortgages. I feel he failed to mention how the rising interest rates and neg am mortgages will add an additional strain.
He also seems to target the people who bought houses in 2005-2006 when he refers to them having to endure flat appreciation...yet he makes no mention of the people that purchased in all the other years prior that used their houses as ATM's and basically in essence cashed out their 2000 purchase to the point where their loan out is really based on a 2005 value of their home.
oh...and not to mention...the person that originally purchased his home in 2000 on a 30 year fixed may have cashed out on an arm making full use of the "easier" money with an ARM.
rentfornow/econe,
This article is EXHIBIT A on why this is going to be such a bloodbath.
The only hint at any possible downside, is that recent buyers may have to endure a few years of paltry appreciation. So what happens if we get a few years of double-digit depreciation?
The entire industry is based on a very flimsy, longshot bet. If anything goes wrong - ANYTHING - it is going to be a real disembowelment of the US finance industry.
How does a shareholder or director allow policies to continue that do not put the borrower in a position to really want to keep making his payments.
What genius decided that the business model of a lending institution was collecting fees, rather than the return of capital?
Just another stupid, short-sighted American business priority.
Does anyone know what it is like to live in a leveraged economy that has a complete, and widespread banking system failure?
How much are homes worth in that environment?
eleua...I like that you take a look at the bigger picture as the numbers that are used to draw up data charts and any other sort of statistics can be fudged...just like the CPI and the substitutions and adjustments that can be made for the basket of goods.
I have a feeling that we may very well be heading into Depression...part deux.
Only...this time...the sequel will end up being better (worse) than the original.
How much will a house cost in that economy? I'm scared to say that may fall pretty low on peoples list of priorities as it gets worse and worse.
Don't forget about the "Bear Trap" term either...that will be the beginning of Phase 2 of the decline. We are just at the preview for Phase 1.
hmmm....this isn't good news.
http://financial.seekingalpha.com/article/26608
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