Before I did the Quarterly and Weekly stats tonight, I did a few calculations on newer vs. older property. I was wondering with lower volume, if more newer properties were selling at a higher rate. Given more choices, would people disproportionately select newer homes and condos? Answer was no, not dispropotionately.
35% of residential properties for sale were built since 2000 and 33% of properties sold YTD were built since 2000. 32% of condos for sale were built since 2000 and 38% of condos sold were built since 2000. So a tad overweighted toward newer on condos, but not by much.
The significant news this year, since volume of property sold being down is really last year’s news that continues in a stablilized manner, is that this is the first time in many years that the MPPSF is lower in the 2nd quarter than in the 1st Quarter.
The scarier number is the $206 per square foot on the residential properties currently in escrow. It is quite possible that this lower number is being caused by short sales that are not closing at these low numbers. Short sales take a long time to close, so we may not know that answer until the end of the 3rd Quarter.
King County Condos
2004 – 1Q – 1,694 – $188, 2Q 2,636 – $199, 3Q 2,540 – $196, 4Q 2,176 – $195
2005 – 1Q – 2,066 – $198, 2Q 2,925 – $209, 3Q 2,769 – $226, 4Q 2,266 – $224
2006 – 1Q – 1,956 – $242, 2Q 2.748 – $252, 3Q 2,737 – $269, 4Q 2,217 – $278
2007 – 1Q – 2,042 – $295, 2Q 2,862 – $302, 3Q 2,676 – $311, 4Q 1,618 – $294
2008 – 1Q – 1,258 – $299, 2Q 1,508 – $287
Changes in condo stats for this week
Active Listings: 3,958 – UP 90- median price $319,990 – MPPSF asking $312 – DOM 65
In Escrow: 856 – DOWN 14 – median asking price $289,000 – MPPSF asking $294 – DOM – 49
Sold YTD : 2,955 – UP 178 – median list price $290,000 – median sold price $287,000 – median PPSF – $290 DOM 49
Residential King county
2004 – 1Q 5,650 – $152, 2Q 9,237 – $160, 3Q 8.737 – $163, 4Q 7,467 – $165
2005 – 1Q 6,402 – $173, 2Q 9,093 – $185, 3Q 9,131 – $192, 4Q 7,301 – $195
2006 – 1Q 5,596 – $201, 2Q 8,248 – $214, 3Q 7,771 – $216, 4Q 6,204 – $217
2007 – 1Q 5,304 – $222, 2Q 7,393 – $230, 3Q 7,944 – $229, 4Q 4,301 – $221
2008 – 1Q 3,640 – $219, 2Q 4,641 – $220
Changes in residential stats for this week
In Escrow: 2,760 – UP 2- median asking price $425,000 – DOM 48 – MPPSF $206
SOLD YTD: 8,963 – UP 648- median asking $449,950 – median sold price $440,000- DOM 49 – MPPSF $223
Actively for sale 12,339 – UP 436- MPPSF <$800,000 is $220- MPPSF >$800,000 is $335
Stats not compiled or published by NWMLS. (Required disclosure)
My thanks to everyone from Raincityguide for their insightful posts. Hearing all your views has been very helpful as our family contemplates purchasing a new home. We have two young children and it’s a little scary out there. Ardell, I’ve particularly appreciated your posts and the lively discussion that they generate. I was wondering if you could expand on the significance of the $206 MPPSF for the week. That’s a 6% difference from 2008 YTD and 10% less than 2007. In an earlier post, you mentioned dramatic drops in in the next 45 days. I know that short sales may be confounding MPPSF, but is this the beginning of the more dramatic drops we’ve seen in other parts of the country?
Hi Dan,
Thank you for your comments regarding RCG and our posts.
I’m going to assume you are going to stay in the Ravenna area. I have to go a bit broader to do stats, or they won’t be meaninful for you. I’ve targeted what we call “area 705 and area 710” on a combined bases. That includes a wide area that is bascially cohesive. Ravenna/Bryant, Green Lake, Maple Leaf…lots of areas with varying housing styles and sizes. I also only looked at Residential and not condos, given the info you provided.
There are currently very few instances of dramatic drops in any of those areas. But pending sales do have a slightly lower MPPSF from any other stats. Slightly lower than June closed sales, and that slightly lower is an asking price and not a sold price. Generally you are looking at a 5% drop from peak pricing with May and June higher than 1st Quarter 2008, but June lower than May by 1.8%.
“…is this the beginning of the more dramatic drops we’ve seen in other parts of the country?” No, it really has nothing to do with what we saw in the rest of the Country from 2005 through August of 2007. What is happening there now as a result of mortgage issues is what we are seeing here. The only difference is they already had lower prices that can in some cases help to support new purchases better. My opinion, of course. I may have more to say on that come Friday when I return from the Conference in San Francisco. I’m leaving in the morning and will come back to this thread when I return. I doubt I’ll have much time to write while I’m at the Conference as I’ll be speaking on Wednesday and partying the rest of the time 🙂
If you are buying a home for your family that you plan to stay in for 7 – 10 years, buying wisely is important. If you think you will be selling in 1-2 years, well, it’s pretty hard to be that wise.
Volume is only down 27% or so YOY in that area which is better than King County as a whole. The best thing you can do, in my opinion, is buy something you can see adding some value to. Buy a house that needs a little something. Exterior painting (not new roof) and some updates. Don’t buy something that someone has already done everything that possibly can be done to improve it. That way if the market recedes, you can add value if and as you lose some value.
I have moved many times with my family over the years, and never lost money in up and down markets. I almost always bought something where I could rip up the rugs and refinish hardwood floors. Put in new kitchen countertops. Good bones but weak aesthetics. That served me well when buying in markets just before a downturn, and I was always able to sell even in down markets at a gain or in short hold periods, at break even after costs.
It is a little scary out there. Be scared enough to be cautious and choose the right “product”. Best location your money can buy…not best aesthetics money can buy where the tradeoff is location. Don’t look at poor aesthetics as a weakness…look at them as an opportunity to make improvements that may serve you well if the market is weak when you need to sell.
Sorry I don’t have more time to run stats and examples…I have to pack. But I will be happy to come back to this if I have time while I’m in San Francisco, or if not then on Friday.
For the most part, what happens in areas with massive short sales and foreclosures doesn’t impact areas that are pretty far away from them. Stay as close to or in a neighborhood of strength as you can. Best schools help support market values and of course are also good for you children. Focus on schools and getting the best school your money can buy (and live in that neighborhood). That should serve you well. I always bought in the best school neighborhood. It’s a good plan.
Thank you, Ardell! I’ve noticed that the market has been more stable in 705 and 710. Strangely enough, it doesn’t really feel like a buyers market here. The best homes in our price range in the best neighborhoods still seem to go fast – particularly in View Ridge and Wedgwood. There just seems to be a large inventory of mediocre listings. Your comments about buying a solid home in a good location – with room to add value – are excellent. Very wise advice in a changing market. Enjoy San Francisco!
Dan,
Remember new depreciates from new, like a car. That includes most anything new, and you usually pay a premium for new. New carpet, new kitchen, new baths. That’s why flip projects “suck out future equity” for a time. New roof and or new windows don’t do that, especially if the interior and or exterior needs painting. Would you pay the same price for a two year old car as you would a new one? People don’t notice that when the market is appreciating at a higher rate than the depretiation factor.
Usually when one of my clients is looking at homes, I point out the things that they can do at low cost to improve the property, just in case they need to sell it unexpectedly. But my clients who had to have everything perfect, couldn’t do that. Avoid “needs nothing” absolutely perfect properties when the future of home values is uncertain. Larger main floor footprint needs some upgrades is better than small and totally remodeled, in this market.
I have clients who recently purchased a property over on 39th Ave. They pulled out the older white carpet and refinished the hardwoods before they moved in. Not a huge expense and they could likely turn around and sell it at break even if they had to. Though I certainly hope they don’t have to.
I have clients who bought a low priced rambler in Meadowbrook last April before the market turned. They put in new windows before they moved in and painted, tore down wallpaper, etc. They too would easily sell it without a loss even though they bought just prior to peak market.
It’s good to be a bit scared. It helps keep your thinking in the right place. The motto of real estate ownership is “Leave a place better than you found it.” Keep that in mind and you will have a long life of good stories to tell.
Having my morning coffee before finishing my packing 🙂
Interesting thought on it being short sales. Another explanation would be builders starting to dump new construction at lower prices. Perhaps the banks are putting pressure on them to sell? I’m working off list and sold prices, rather than square foot prices, but I’m seeing less of a premium for new. And new would explain the buildup in pending, if they are managing to sell before completion. Whatever the explanation, it’s appearing fairly certain that July’s median won’t be above June’s median.
Dan, as to inventory including a lot of mediocre listings, that is putting it politely, and it’s been a growing problem for about a year. I’ve attributed it to sellers not adapting to the changing market.
Kary,
If the seller could pull it out of mediocre…better if the buyer does that. A diamond in the rough is absolutely the order of the day for value protection into the near future. Not TOO rough though, unless you are really handy. Look a little differently at “the mediocre” and look for correctible negatives.
That’s the problem with “payment buying”. Too many people not looking at value and only looking at monthly payment and saying “for this monthly payment I want perfect”. That’s pennywise and pound foolish.
Many will overpay by $15,000 because “it’s only $95 more in payment”. When they later lose that $15,000 at time of sale, it won’t look anything like $95.
Apparently I’m ready too early and have an hour to kill before leaving for the airport. THAT never happens.
Kary,
That’s too deep a dip for the builders to be causing it. Plus I already checked the relationship of “new” and pendings are not overweighted in “new” or even “newer”.
I just heard an agent whining that the lender on a short sale countered $20,000 higher with a 3rd part negotiator. These 3rd party negotiators are counseling to list at such LOW prices, that the pending price is sometimes not very close to what the lender will take. I’m pretty sure that’s a big factor. Those that close at those levels will pull the market down…but my hunch is fewer are closing now than they were a year or more ago. More than a hunch actually…
I do think South King County is pulling that number to the extreme. But all pendings seem to be lower…though by not as much. So if seeing that $206 creates a yellow light caution signal…I’m glad.
You said you checked new for solds, but new is a fairly significant number for the pendings. From memory I think they were about 20% of the solds for July, but more like 40% of the pendings.