King County Home Prices Up 6% YOY?

If you are out buying a house to live in, and that house is not a bank owned property or a short sale property, you are likely confused by reports that prices are not up. There have been reports that the market is flat to down, but when you find a house you really like, those reports don’t seem to ring “true”. That is because the information is technically true…but not likely true for YOU if you are one of the 70% of people who are not buying a POS or a “distressed” property.

Truth is that there is a huge variance between median price of a bank owned home ($240,000), a short sale property ($270,000) and a home that is neither a bank owned or short sale property ($426,000).

506 of the 730 single family homes sold in the last couple of weeks were not bank owned or short sale homes, and the price of those is up 6% YOY from $400,000 in May of 2010 to $425,000.

Going back to yearly 2009, that is an 11% increase in home prices, unless you are buying a short sale or bank owned home.

Getting general stats is great, but be sure to have your agent run the stats for your immediate area of interest. The above stats are for King County, but even for the County as a whole, the numbers vary dramatically for distressed property vs non-distressed property. Averaging them together to get a County-wide “median” does no one any good, given the huge variance between the two.

If your experience tells you that home prices are UP vs down…that’s because they are. But only for those nice homes you want to buy that are not short sales or bank-owned homes.

“Spring Bump” is alive and well…and running at the 5% to 7% seasonal variance expected for this time of year. Pretty much fueled by supply and demand factors vs economic “recovery”.


(Required Disclosure – Stats are not published, verified or compiled by The Northwest Multiple Listing Service).

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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

32 thoughts on “King County Home Prices Up 6% YOY?

  1. Ardell:

    Very good article.

    I have also wondered what is the difference in sales price adjustments between condos and fee simple ownership models. I know townhomes can go either way, but it seems to me that the condo market in King county has been subject to bigger down drafts than the single faily home market.
    At least that is conventional wisdom whre condos get slammed by the foreclosure blight more and thus will spring back from the bottom faster. What does the data show?

    • Dan,

      I have a friend from Romania who would read and listen and ask questions . After he gathered all of the possible facts and opinions he would come to me when things weren’t sitting right and say to me: “Ardell, What’s REALLY going on here?”

      That’s how it is with the condo market, and why I have chosen not to run condo stats by and large. The only reason to go get stats is for the numbers to convey an accurate picture…and that is not the case in the condo markets since WA changed the requirements regarding the Reserve Study. That is not the only reason or even primary reason why the stats don’t tell the condo story. The timing just happens to coincide.

      There are some condos that just can’t sell period. They don’t meet the new lender guidelines. There are other condos that no one wants because after the complex did their first ever Reserve Study under the new WA guidelines (probably a statute) they had to have a huge special assessment. Once the dues went from $165 to $325 the condo pricing went out the window as to “comps” from when the dues were $165. Some of those same condos don’t qualify for financing under new guidelines as it will take them years at the higher dues amount to accumulate enough reserves to meet new lender standards.

      So the condo story, what’s REALLY going on there, is about “distressed” vs not “distressed” but not on the same basis as single family. “Distressed in the condo market is not about bank-owned and short sale vs “regular” sales. Though one could assume that the condos with the biggest problems might end up bank owned or short sale, that is often not the case. The new requirements hit the oldest buildings the hardest, and many of those owners had substantial equity…some owned free and clear…but can not sell except to a cash buyer. Then you have a building that has always been well run with none of these problems.

      So trying to draw a conclusion from County-wide stats would give you numbers…but wouldn’t tell “the story” of what is REALLY going on, and why I don’t post them.

      • I am not entirely clear as to your point about the condo data. I understand that they now are suppose to do a reserved study (since 2008) and that has prompted many condo associations to raise the fees to cover the reserves necessary for projected capital improvements and deferred maintenance costs. And I understand that rising condo fees are inversely correlated to prices.

        But so what. Why does this make the data on condo distressed sales vs. non-distressed sales and average prices any less statistically valid? Sure there are other factors at work in the condo market, but I am interested in YOY pricing of condos and whether non-short-sale and non-REO prices have gone up by 6% like article says or whtehr condos are flatter or still heading down. In other words, what is the difference in YOY price changes between the condo and the SF home market?

        • Dan,

          Technically non-distressed townhomes are up 10% YOY. But I wouldn’t rely on that statistic because overall volume and absorption rate do not support that as “market conditions”. Market conditions are more reflected in what is not sold than what is sold in the condo and townhome market. In other words, it’s a crap shoot. That is merely the luck of the draw. They are really closer to their previous bottom because the prices are flip flopping and not trending.

          I don’t like to post misleading information, even though it is technically correct. Unlike the 24/7 news cycle, I don’t have to create a story where there isn’t a story.

          We are in a market where people should not be buying for the most part if they can’t see themselves living there for 10 years. For most people that rules out the smaller 1 bedroom or less condos. So even if the stats would say the prices are up…that would be misleading, as the story is in what is not selling at all and not the statistics of price for the ones that are lucky enough to sell.

          In the single family market you have people waiting for a better product and jumping on a better product so the 6% increase is a real indicator of price increase for good product. In the condo market, that is not the case. Also when you look at a diminished volume in a small class with fewer sold, the result is less reliable as a market indicator.

          I know what you want…I simply choose not to do condo stats because the result would be misleading. We don’t need to agree on that.

          If you are buying or selling a condo these days it’s more like buying or selling a car. Without an underlying land value…or a trend up or down that is reliable…the market forces are similar to cars and the price variance is more product dependent than a market trend.

          The danger in condo buying is in information not readily available by statistical analysis, as the analysis is more about the likelihood of future special assessments. The bigger monster in condo buying lies in the potential restriction on being able to rent it. No way to see the future. If you choose not to live in it five years from now and the then current Board and location specifics do not allow you to rent it, you are dead in the water. You don’t have those issues with single family housing.

          Whether the statistics generally say up or down…for condos…the Devil is in the Details.

  2. Ardell — I’m having a hard time wrapping my mind around the difference in values between distressed (both types) and non-distressed properties — 56.3%/63.3%/100% per your numbers above. Are high value properties less likely to be distressed? And if so, wouldn’t that skew the numbers?

    I wonder what you’d find if you compared apples to apples by breaking down the totals into various price ranges. If you did so, you’d be able to compare values between similar properties. I wonder if that would still result in YOY price increases…

    • Craig,

      No, breaking it into price tiers will not help you with “wrapping your mind around the difference…”, as it is more about local market influence than price tiers.

      More helpful would be to take the two leading news stories:

      1) Overall, prices are not up to the degree they should be for “Spring Bump”.

      2) Buyers are frustrated with lack of “good” product on market.

      Think of it this way, for a market to achieve a zero result, half might go UP 6% and the other half down 6% to equal zero. Zero result never equals no movement. It means the UP forces are equal to the DOWN forces on an overall basis. That does not mean the UP force does not exist. It simply is not strong enough to carry the dead wood.

      In the Bubble Period people were paying insane prices for the “dead wood”. Now no one wants the “dead wood” except at a huge discount. The value of the “dead wood” has reduced MUCH more so on a % basis than the value of “good product” has gone up. That’s why you can find a “dead wood” property at 2002 prices but at the same time see “good product” selling at 2006 prices or higher.

      “Dead Wood” can be an abused property, but it can also be a great house on a busy road, built backing up to the freeway, areas where the school ranking is a 1 to 4 vs an 8 to 10, far out vs close in. There is “Dead Wood” in every price tier…so no…tracking by price tier will not help you. The answer does lie in % of distressed property…but more in the WHY there is a higher % of distressed property in a particular area.

      At the end of the day the “dead wood” tends to become bank owned or short sale and the “good product” does not (newer construction in an area with massive newer construction, the exception). That is the reason for the extreme variance. Not that it IS bank owned or short sale, but WHY it is bank owned or short sale.

      Once in a blue moon I see some blowhard say that “distressed properties are EVENLY distributed throughout King County” and so the overall answer is uniform. That is clearly NOT the case.

      Going back to my “Best Places to Live” post:

      If you did the stats based on school ranking you would see more distressed property in the lowest ranked schools for reasons that have little or nothing to do with the school, as explained in that linked post. That would include every price tier.

      In an UP market that is up 20%, one neighborhood is up 30% and another is only up 10% to equal 20% up on a combined basis. Seller’s in the 10% UP neighborhood try to get the 20% they read in the paper…and get frustrated at not being able to get the 20% noted as “King County up 20%”.

      The same is true today. Many someone’s are paying 6% more YOY and 11% more from early 2009…even though the overall County stats show flat to a hair up.

      Spring Bump is about people jumping on “good product” and ignoring stale and defective inventory. That forces the “dead wood” down even lower and the “good product” up on a Supply and Demand Basis giving the result of good product UP (Spring Bump) and dead wood down…or simply not sold at all.

      Not about price tiers.

      • “Wrapping my mind…” was just my polite and understated way of saying, “Those price differences are so extreme that I doubt your conclusions.” I understand that some up and some down averages out to even, but I believe that your method of anlaysis skews the data.

        It would be very helpful if you simply answered my question: Are distressed properties evenly distributed across all price tiers? If the anwer is “yes” then you’ve addressed my criticism. If the answer is “no” then I’ll explain in greater detail the flaw in your analysis.

        • Craig,

          If I wanted to skew the data I would have broken out the areas. These are simply REAL numbers for ALL of King County – Bank Owned Short Sale vs not Bank Owned or Short Sale during Spring Bump.

          No “skewing”.

          I will say that if someone is buying a home for UNDER $300,000 that will likely bring them to areas with more distressed property. That’s a geographic distinction, not a “price tier” distinction.

          It’s pretty simple for you to get the same numbers I did, since you have access to the same data. No skewing Craig. Just run the median for distressed and non distressed. Simple calculation you should be able to get your “mind around”.

          If your clients are willing to buy in areas with 60% distressed sales…they can beat the King County Average. If not…then they can’t get the zero increase. In an area with 10% distressed sales, the drag on non-distressed property is much less (creating the up-swing) than in an area with 60% distressed sales.

          Not about price or price tiers. It’s about the % of distressed property in the immediate vicinity or lack thereof.

          • Sounds like you’re having a rough day, Ardell! 😉 I hope things improve…

            You still didn’t answer my question. Until I get an answer — whether from you, or from my own efforts if I have the time — I’ll hold of on further comment.

          • I’m having a great day, Craig! Frankly…if I moved the numbers around…SKEWED them so as to answer your question, the 6% would move higher, not lower. I’d rather stick with the real answer.

            I prefer the modest increase of 6% achieved with no skewing. It’s more authentic and honest than horsing with the data to chase your theory. Once you start skewing…the answer becomes less meaningful. Let’s not go there.

          • Still no answer to my question — which btw doesn’t require you to “move numbers around” (whatever that means). I’ll pose it one more time, maybe third time is a charm:

            Are distressed properties evenly distributed across all price tiers?

            Thanks for the insight Ardell.

  3. Craig…

    You can’t separate i.e. SKEW the data by price tier when doing this comparison and analysis of gain or loss. By doing so you would take the crossover segment and move it from one tier to another, which skews the result. It would be like mixing condos with single family homes…the result would become meaningless and not true.

    But by all means, feel free to do it.

    As example, the 6% gain in this year would include properties that crossed into the higher tier as a result of that gain. So by drawing a line by price vs geographically, you would not have apples to apples. You would be leaving part of the study data in a different tier between 2009, 2010 and 2011. In other words…it would SKEW the result.

    Look at it this way Craig, because the answer is really PURE common sense. IF the overall net gain is less than 1%, then 6% increase for non-distressed property is not beyond the reach of your mind to get around. It really is a foregone conclusion proven out by the data. How could the larger segment, roughly 70% of all homes sold, NOT be up at least 6% if the combined basis is a minor gain?

    Again, pretty simple stuff. If you are NOT buying or selling a short sale or bank owned home, prices are up. If you are not buying in an area where there are at least 20% to 30% short sales or bank owned properties…prices are up even more than that.

  4. Craig,

    I needed to move your comment down as the stacking is getting full. Hate that stacking!

    You said:

    “Still no answer to my question — which btw doesn’t require you to “move numbers around

  5. What I find interesting when talking about home price trends and the media, is a seller will read and comprehend only the good news about prices rising while the buyers seem to only see the doom and gloom articles about prices falling. Interesting selective styles that hold true in the majority of cases.

    • Gabe, I think that is only the case of sellers who list their homes for sale. Receive MANY calls from sellers who believe the bad news, and consequently are holding off on listing their homes. That is why have have increasing “shadow inventory” and low “active” inventory.

      Lots of “pocket listings”.

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