Sunday Night Stats – Patience is a Virtue

My focus tonight is on the expectation of sellers to have an offer quickly after listing their property for sale.  I must admit that I am still in a “30 days to offer” mindset as most sellers are.  Truth is, that is not a realistic stance, but I didn’t realize until tonight how unrealistic that is.

In the month of May, considered to be a fairly robust month compared to the previous 6 -9 months, only 16% of all condos sold in 98007 sold in 30 days or less.  Only 29% of all single family homes sold in Issaquah, sold in 30 days or less.  Outperformers such as Redmond had a 45% chance of selling in 30 days or less. 

King County has 7.8 months of inventory.  Not much distintion between condos and single family homes.  yet how many sellers have the patience to wait 7.8 months to sell their home?  At best a seller has less than a 50/50 chance of selling their home in less than 30 days.  Redmond only has 3.8 months of inventory on market as to single family homes. Issaquah is an outperformer as to condos with 61% selling in 30 days or less and only 3.3 months of inventory on market. 

Lots of variations around King County, but be ready to have your home on market for awhile.  No running off for the weekend and “looking at all offers on Monday” this year.  And those of you who did manage to do that, realize how very, very luck you are.

OK, let’s see if we can find a silver lining out there in the clouds.  Seriously, if the sun would come out…things might get a little better in the housing market.  It’s been one gray year…and NO ONE believes it is JUNE!  (Today is my 54/54 birthday BTW…Born in 54 and turning 54.)

May – King County Stats

516 condos sold compared to 959 last may – Down 46% as to volume

$298 median price per square foot – Down from $303 last May

1/1/08 to 5/31/08 – 2,220 condos sold compared to 3,906 for the same period in 2007

That’s down 43% as to volume, so May is not outpacing the year as a whole unless there are a lot of really late postings.  Median price per square foot for the same period is down from $298 to $291. 

Single Family Homes – King County

1,499 sold vs. 2,502 last May – Down 40% as to volume

Median price per square foot $220 – Down from $228 last May

1/1/08 to 5/31/08 – 6,634 sold vs. 10,001 in 07 – Down 33% as to volume

Surprises me that May would be underperforming the five month average here.  Not a good sign.  Lets hope that when we see some better weather around here, we will see some better stats as well.  Real Estate can be very weather driven and this year has really been bad. 

Median Price per Square foot of single family homes since January is the same as May stats at $220 – down from $226 for 1/1/07 to 05/01/07.

There are 11,753 homes for sale right now selling at a rate of 1,499 a month.  There are 3,942 condos for sale selling at a rate of 516 a month.  Basically it would take 7.5 months to sell off what is on market IF the rate of selling stayed the same and nothing new came on market.

So where’s that silver lining I promised you?  There are 2,907 single family homes in escrow today and 938 condos.  Those of you who are off to sign your papers to close escrow, realize how very lucky you are.  And those of you getting ready to put your homes on market, have a great big party if you are one of the lucky ones who gets an offer in less than 30 days.

Stats not compiled or published by NWMLS. (Required disclosure) 

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ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: cell: 206-910-1000

64 thoughts on “Sunday Night Stats – Patience is a Virtue

  1. Happy Birthday ARDELL! 🙂

    I wish today would be a sunny one for you….but June Gloom is the one having a party today with a rainy day on tap. I am sure all the bright smiles 🙂 today at your home and elsewhere, wishing you a Happy Birthday will banish any gloom near you away for the day!

  2. Ardell, I’m not sure you can blame the weather for the slow May. It sure seems like we’ve had rotten weather, but this May was actually slightly better (if better = warmer and drier) than usual.

    According the National Weather Service, May 2008 precipitation at 0.89 inches was 50 percent below average of 1.78 inches. Temperatures for the month averaged 0.3 degrees above normal — the mean temperature was 56.1 degrees compared to the normal 55.8 degrees. And you’ll recall that May 17 reached a high of 90 degrees breaking the previous record of 85 degrees set in 1956.

  3. Is weather really an indicator or a factor? It makes buying a house sound like buying a kite. I can’t deny if it *is* a factor, but it sure sounds odd.

  4. Maybe we can blame higher gas price? Maybe agents are cutting back on driving to show homes to clients? Well, that’s just a theory. Let’s see if the theory is true WHEN the price hits $5/gallon.

    With the cost of everything going up because of the gas price increase, I am not sure people aren’t putting off buying a new home till later. Inflation up, unemployment up, housing market down, stock market down, home foreclosures up big time, home mortgage firms going belly up and lending standard becoming increasingly difficult. Somehow, the economists still insist we are not in a recession. I am sorry folks, I just don’t see the silver lining in this market. Weather is easy to blame, but when we have a great July and August as usual in Seattle, and things don’t improve, what can we blame then?

  5. Thanks Lax. May closings are April contracts. Weather issues have an affect on people deciding to buy a house, not on closing escrow 30 days or so after that. I’ve always wanted to see if a stretch of good weather produced more STI’s…kinda like a lot of baby’s being born 9 months after a prolonged blackout 🙂

    The Tim – thanks for the link. I’ll see if I can draw any correlations between weather and closings.

  6. I just checked my colored pie charts and bar graphs over on my blog on how sales have spread out month to month in years past. June will clearly be the telling month, as June and August are typically the highest selling months of the year, particularly for condos.

    In 2006 10.7% of all condos sold, closed in June and that was the highest percentage for any month in the year.

    In 2005 10.3% of all condos sold closed in June and that was also the highest percentage for any month in that year. Same in that year for single family homes.

    For things to be on track as to my prediction post, we should see 1,660 homes sold in June vs. 1,499 sold in May and 575 condos. If volume doesn’t increase as to June closings vs. May closings, that will be a telling sign.

    Weather has always been a factor for agents, particularly in areas that get heavy snow and that get extremely hot. Here in Seattle people often judge a place by how bright and sunny it is. Going to see property on a sunny day often makes the difference between looking at property and then going home and waiting, vs. deciding to buy one of them.

  7. Brian,

    I think you will see a correlation between gas prices and WHERE sales are doing better than others. As to total volume, I have seen some people selling further out and buying closer to work, so that would actually help volume vs. hurt it. It’s one of the reasons Redmond is continuing to do well and better than most areas.

    Some are selling far from work and renting closer to work.

  8. I wonder if the pending, or escrow, statistics mean the same today as they did in years past? I’ve heard that a higher portion of accepted offers actually fail to close than in the past.

    Even for deals that actually do close, I also wonder if the length of time from offer acceptance to closure hasn’t increased as well. If this is the case, then that could lead to artificially high pending numbers (i.e. if closing times have trippled, on average, we would see the number of pending sales mushroom).

    Has anyone noticed that more deals are falling apart in the Puget Sound areas than in the past, or is this just a phenomena impacting other regions of the country?

  9. Regarding the increasing days on market, I wonder why some homes are taking longer to sell? Is it just that the home-owners didn’t price their homes properly at the start and have to go through some price reductions to find the true market value?

    Watching the for-sale signs on my weekly ride around lake Sammamish I notice that some places sell pretty quickly, and others languish on the market for many many months. Inevitably a “price reduced” sticker will show up on any homes that haven’t sold in a while. It’s almost as if some home owners are actually running Dutch auctions, starting with an initially high price and then slowly reduce it over time until it sells.

    Maybe it’s not the expectation of how quickly a home should sell that needs to change, but the belief in getting 2007 prices that needs to be altered.

  10. I don’t think the people who sold their homes are necessarily lucky. They just priced it correctly.

    What is the price per square foot difference between houses that closed and asking prices of houses that didn’t sell?

  11. Happy Birthday, Ardell!

    I too am a 54/54, although I’d never thought of it before now.

    Even if sales don’t pick up, July/August has got to be better than this constant grey drizzle….. A little sun goes a long ways around here to perk people up!

  12. Happy BD Ardell!

    Sniglet, I don’t see closing timelines getting longer in my transactions, in fact, I think they seem shorter — with buyers trying to get a seller to go to a lower price, they often offer a very fast closing to get the sellers attention.

    Luck sometimes is why a well-price house sells fast — take a gorgeous, sunny day on a new listing — that home just looks shiny and pretty. Of course we sell on gloomy days, but I sure see a difference in attitude when the sun is out vs. these grey days we’ve been having. And, I see more cancelled appointments when the weather gets in the way.

  13. Sniglet,

    I’m doing a check of a status called “Sale Fail Release” as I’m typing this comment. Most sales that fall apart go straight from STI or Pending back to Active. But if the problem is too difficult to resolve, the property goes to “Fail Sale Release”. This might be a short sale that goes to foreclosure, a property that just can’t appraise at what the seller is willing to sell it for, Home Inspection issues that the seller won’t repair and decides not to sell the property but rent it instead, a condo complex with lawsuits that prevent anyone from being able to finance there. A myriad of reasons for “sale fail release”, but all were in escrow and failed to close and did not come back on market immediately and sometimes didn’t come back on market at all.

    In the last six months there were 234 properties in this status with average days on market of 111. The median price of failed sales in this category is $372,450 and the MPPSF is $259. I’m peeking in to see what the properties look like or where they were…one sec.

    82 were condos, 1 was a multi and 151 were single family homes. That’s disproportionately weighted to condo failings. 55% failed sales were condos. Typically 25% of all sales are condos. So looks like first time buyer woes outweigh other issues, so that’s likely financing issues.

    The first residential property is a house in Auburn that went on market at $334,000 on September 12th and went STI on October 8th (no price reduction) and passed inspection and went to pending on November 8th. Sale Released on January 18th of 08. Looks like someone didn’t get their financing or it didn’t appraise or both. It’s back on market now withouth showing cumulative days on market at $315,000. Says it’s on market for 35 days and doesn’t show the history of the previous 127 day listing unless you look harder.

    The next one, also in Auburn, listed at $565,000 on 4/4/07 and went STI with no price change on 4/25/07. Stayed STI until 9/7/07 WOW that is a long inspection negotiation 🙂 Fell out in January of 08. Almost a whole year in escrow…that’s an odd one. Not back on market since or yet.

    I spot checked several others and all of the ones I checked made it out of STI and to Pending and then failed. So looks like financing or appraisal issues for the most part. Now I’ll check to see if 234 is a higher number of properties than in previous six month periods.

    Previous June through December there were 290. That would have been when financing criteria was changing a lot, so I’m not surprised that things are better now than in the previous six months. Mortgage criteria was changing then while people where in escrow, so pre-approvals became meaningless for some people who could no longer get funded. Going back another six months…

    257 December 06 through June 07. Median prices still down in the $340,000 range. Back behind that six months – 279. So looks like fewer sellers are accepting contracts with shakey financing now then in recent past history. Agents and sellers apparently have gotten more wary of accepting contracts without stronger lending credentials.

    Diving into current history again and looking at residential. The first 75 or so are down south in Auburn, Federal Way, Des Moines, Enumclaw, Kent, Burien, Covington, Maple Valley and Renton. Those areas account for half of them…now headed into South Seattle, Skyway, Rainier, Beacon Hill, the CD.That accounts for more than half but not a full 2/3rds. The remaining 1/3 are spread out one here and there until you get to Snoqualmie – 1 in Capitol Hill, 1 in Leschi, 1 in Newcastle, 1 in Lakemont, 2 in 98006, 1 in Mercer Island, 1 in Yarrow Point, 1 in 98007, 1 in 98008, 20 or so in Snoqualmie & North Bend.

    Odd, there were 9 in Redmond almost all new construction, unlike the other areas that were all resale. 4 in Kirland, 1 in 98005, 4 in Woodinville, 1 in Duvall, 1 in Bothell, only 10 in all of North Seattle and 1 in Shoreline. Looks like 2/3rds are South and another 15% are far out as in Snoqualmie/Northbend/Issaquah.

    Condos cannot be blamed on “far out” with a lot of them In new high rise projects that just didn’t work out well, many on the Eastside, several in Queen Anne and Capitol Hill about 10 of the 82 in Auburn.

    Hope that gives you a rough idea of what and where sales are failing. None of these are inspection snafus, as failed on inspection generally just goes straight back to Active and sells again. Some of the condos and new construction residential were just people bailing out while in waiting phase. Most were financing and appraisal issues with many of those down south, and most in first time buyer type housing and price ranges.

  14. Thanks for the birthay wishes everyone! Best of day is the phone message singing happy birthday “nana” from my grand daughter, two singing emails from my daughters, one form my future son in law (you could tell my daughter MADE him do it :). Lots of singing voice mails I can play over and over again.

  15. Alan,

    I don’t think it’s price as much as location and condition.Let’s test that by looking at the price segment of $400,000 or less.

    MPPSF of the 5,289 Sold property is $252 and MPPSF of the 6,375 for sale is less at $248. MPPSF of the 1,961 currently in escrow is much less at $227.

    Interesting drop on those in escrow, though the asking prices of those for sale are less than “the comps”. hmmmmm…looks like buyers want LESS than “the comps”. Usually “in escrow” MPPSF is higher as it usually contains a higher level of new construction than the other categories. Maybe the builders are having major price breaks. I have been seeing more bribes from builders in the last few days.

    The 4,418 for sale – MPPSF of $239 in the $400,000 to $600,000 range. Same as the comps. 3,147 sold in the last six months at $239 price per square foot. Those that sold are higher at $244 MPPSF, so I’m sticking to it’s about location and condition. People are passing over “needs work” and “busy street” for prime location and turnkey. Negatives are not being overlooked in this market.

    When everything sold, there was little or no distinction from worst to best…not so these days, and rightly so. Premiums for best and discounts for worst are back in play…and worst isn’t winning.

  16. Thanks tj! “Sunday Night Stats” is turning into “Wee Hours of Monday Morning Stats” 🙂 In this busier time I was up till 3 a.m. to meet my deadline. Put two new properties on market this week and have two closings on Friday. Not complaining! I kind of like the “must do stats” on Sunday. Keeps me from falling too far behind in my blogging.

    That you appreciate it makes it worthwhile, even if you were the only one who wanted them. It’s like cooking for people who like to eat LOL!

  17. Thanks for the stats, Ardell. I’m not sure if using the MPPSQ for the sales in the last six months gives an accurate picture of prices today. The difference between current escow and past sales supports my belief.

    If you look at MPPSQ month by month over the past six months does it trend down or stay flat?

  18. I kind of agree with Alan for the weekly stats, I’d rather see month to date accumulation than YTD accumulation. It gives more of a snapshot of the current market. When the mls numbers for the month comes out it provides the official data that can be used for YTD and YoY comparisons. What I like with the data here is that it gives weekly data that me knowing is not available anywhere else and to use month to date accumulation make sit easier to see what is going on in between the mls releases. It will also reduce the data volumes and probably make it easier and faster to run the stats as well.

  19. Alan,

    Some asked why we look at property for sale and not just “the comps”. Looks like those looking at “just the comps” are not the ones selling.

    As agents we don’t look at Price Per Square foot at all…not really. Are methods are quite different. I just listed a condo in Issaquah. I priced it to beat all competing properties on market by $10,000. That is all properties inside that complex. I also priced it $15,000 below what the owner paid for it. I did not look at price per square foot.

    The model I have listed runs slightly different. One is 950 square feet, another is 958 square feet. That makes no difference to me or a buyer or a seller. Minor differences in the square footage that do not alter anything of consequence are ignored. Two bedrooms, two full baths and the layout of the living space. Top floor vs. not top floor. Parking differences, garage, 1 reserved spot vs. 2 reserved spots. End unit vs. not end unit.

    I only post price per square foot “to feed the lions” so to speak…in my real life of pricing property for buyers and sellers, we do not use price per square foot at all.

    I’ll write a post about that. Days on Market is MUCH more important than price per square foot to me. % not sold at all is MUCH more important than Solds and In Escrow, and making sure those not sold have inherent defects, rather than simply market conditions.

    When are we in really big trouble? When the best of the best and priced “right” doesn’t sell. That is trouble. When a house on a busy road doesn’t sell, we don’t get worried. When houses that need work don’t sell, we miss the flip guys, but still…it becomes a missing link in the buyer pool. When a great house in a great location priced at or below the comps in perfect turnkey condition doesn’t sell…then there is trouble.

    Where is that trouble? Condos in Renton for one, especially those trying to turn over condo conversion properties within two years of purchase. There is an old rule of thumb, if the resale condos don’t move, that will have a lagging affect on every leg up property. That is what I am watching…the stats are for you guys to play with, not for me to do my job.

    If you would prefer that I base the stats on reality and what really impacts real estate, I’d be more than happy to switch out from what has been requested to what really matters.

  20. Thank you all for the birthday wishes! Back to business.

    Alan,et al…

    Say a condo sells at less per square foot, but one has a two car garage and two reserved parking spaces and storage. The other has no parking. Both in the same complex. Say two houses sell and one is on the culdesac with a 12,000 square foot lot and the other is the first house in behind the monument with the traffic light blinking in the master bedroom window. Same complex, same schools, same builder, same floor plan.

    When you track price per square foot on a month to month basis, you don’t have enough like kind data to determine if this was the month of selling off the crap vs. last month when there was more new inventory that included more prime properties in the mix.

    I visit the properties that sold in the first 30 days, as that market often predicts where prices are headed, and what you have to discount from in order to sell. If Best in Neighborhood sells for $650,000, what is the discount for busy road? For poorly maintained? For smells awful? We don’t lump it all together.

    We need to know price for best to determine price for worst. Days on Market does help to sort the pile into its relevant categories. Rarely is time on market about price alone…it is about insufficient discount for comparative negatives.

  21. Because I post the stats weekly, anyone can go back four Sundays and calculate a month’s worth of difference, or 6 weeks worth. The reason I only do month end stats the week after the month ends is due to late postings on the sales data. It is a gross misrepresentation to post month end sales at the end of a month. I did it once, and will never do it again as a large number of month end postings come in the week following and continue to trickle in for quite some time.

    To post them from the 1st to the 31st on the 31st gives you a false negative perspective. The truth is bad enough…I certainly don’t want to make things look worse than they are. If I posted month to date instead of year to date on the solds it really would produce a false negative result as the closings in the first week would be accurate and in the last week would not. So weekly change and then month end after the first week into the new month is the only way to be accurate and not misleading.

  22. This is the best times in recent times to buy. I am pretty sure market is going to roar back at the beggining of 2009. I wonder what buyers are waiting for! I see lot of savvy investors jumping in right now and walking away with bargains

  23. Alan,

    “priced correctly” is a moving target. Generally speaking, recently SOLD equals “correctly priced”. To value something you have to do a “comparative” valuation. That’s where the word “comps” comes from. Compared to these that have sold, and these that aren’t selling at X price, what is the value of “the subject property”.

    You add and subtract for strengths and weaknesses. You can start at low and work up, or high and work down. When valuing a property for a seller and assisting in the strategy to establish an asking price, I tend to start at best case scenario and work down from there.

    If the highest price recently attained (same complex) is $500,000 for a property assessed at $385,000 and the property I am listing is assessed at $370,000, it starts like this. $500,000 divided by $385,000 equals 1.2987 times assessed value. Then you take that factor times $370,000 (assessed value of subject property) and you get $480,519. So even though the two townhomes have the same square footage, they would not be “worth” the same price.

    That will account for inherent differences for the most part, like 1 car garage vs. 2 car garage, better location, view vs. non view, 2 bedroom plus den vs. three bedroom, etc… The assessor will have adjusted for inherent differences to some extent.

    Then you have to look at supply and demand. Are there more properties on market and more buyers “in play” both? Are there fewer properties for sale due to recent sell off and more buyers in play due to seasonal changes?

    Then you look at the differences not accounted for by the assessor, wood floors vs. 12 year old original carpet with stains. Granite counters vs. 4″ tile countertops from 1995 with dirty and deteriorating grout. New heater and hot water tank, vs 14 year old heater and hot water tank.

    Price per square foot is not a factor used by most professionals when valuing property. The valuation scenario works more like the one above, though I tend to use differences in assessed value more than appraisers or most agents.

    Price per square foot is an easy concept for many to grasp, but not really of much use in the real world. If you don’t account for the inherent differences by comparing assessed value, and separate the land assessment from the property assessment when doing so. If you don’t account for the “improvement” differences not accounted for in the assessed value. If you don’t adjust the assessor’s value spread for market considerations. You can easily overpay for a property by using a price per square foot comparison.

    As to “houses in desirable locations…priced correctly”, pretty much yes. If a house that just sold in the neighborhood in a very quiet location recently sold for $600,000, then you have to determine the “discount” for noisy location, or backs to main street, or can count 10 cars per five minutes from master bedroom window. Generally if you can see traffic going by at a steady clip from any room in the house, that discount is greater than simply hearing the noise. A deeper discount if you can see those cars from the master bedroom or main living areas than if you can only see them from the smallest 5th bedroom.

    Then there’s good side of street vs. bad side of street if there is a slope. High side sells higher price per square foot than lower on same street, if slope causes house across the street to sit below pavement level. If you pay the same price per square foot for the lower side of the same street, even the same house directly across the street, you will be overpaying.

    Price per square foot only works where all other things are equal…and rarely, if ever, does that happen.

    So if best of neighborhood sells for $500,000 and 45 days later worst in neighborhood sells for $475,000, the market didn’t “go down”.

  24. Thanks Lindsey! It’s The Year of the Rat and I’m a Horse…next year will be a better year for me…it’s a double sighted year. I think that two of my daughters and I will all be getting married next year. It’s the best year for weddings as next year has both forsight and hindsight. 🙂 This year (until 1/26/09) is a double blind year. So if anyone feels like they can’t see far enough ahead AND hindsight isn’t giveing them a clue…that’s why. We’re all kind of flying blind this year. I love Chinese Astrology!

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