Category Archives: Sunday Night Stats

Sunday Night Stats – Buying at 2005 Prices

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Before posting my thoughts of the week regarding where home prices are going, I have been doing a lot of thinking about “Rethinking the American Dream”.  I found this post that I thought was worth sharing.

Now for proofs that people are buying at 2005 levels, even though sellers are not thinking about selling at those levels, to the same degree.

Let me explain what you are looking at in the graph above.  In 2001, 83% of buyers were paying under $500,000.  Economic models must hold something at a constant, in order to provide meaningful results.  What I have held as a constant are the properties themselves.  As we move through the years, only properties (condo and single family) built as of the end of 2001 are included, so we can see what people are paying for those same homes. Also, you have to look at a sample small enough to evaluate, in this case I used Bellevue which I feel is a large enough sample with somewhat cohesive property types in the sampling.

By 2005, only half of buyers could pay under $500,000 to buy those same properties vs 83% in 2001.  The most dramatic change YOY was in 2006 vs. 2005 when the % dropped from 68% to 51%.  Now look at the last two columns.  We’re back to 2005 with 67% of people being willing and able to buy these same homes for $500,000 or less.  In fact the % may end up being more than that, given pendings are based on asking prices vs. sold prices.

The last column shows that only 44% of people who have not sold their homes, and are still trying to sell them, are pricing at the levels that people are willing to pay.

It’s quite possible that by year end the statistics will show 2004 levels, but I expect that to correct back to 2005 through the 3rd quarter of 2009.  Last quarter of 2009 is anyone’s guess at this point.  Not enough data to predict that far out.  Many of the current pending sales are bank owned and short sale properties.  While some may consider that to be a relevant factor, it is not one I expect to change over the next 12 months.  There will be at least as many, if not more, opportunities to buy at the lowest price levels over the next 12 months.

Sunday Night Stats – 5 Year Hold

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Many people are asking, “What do you think will happen if I buy now and hold for five years?” 

You may be surprised to see that this “bubble” is not nearly as big as the 3 five year periods from 1973 to 1988.  1973 to 1978 is the highest appreciation period. The lowest appreciation period is the five years that followed those dramatic increases for 15 years, and still not showing a loss for any five year period going back from third quarter 2008.

Five Year Price Changes based on U.S. 3rd Quarter average prices of homes sold.

Sold in 2008 at $283,400; bought in 2003 for $248,100 – UP 14.2%

Sold in 2003 at $248,199; bought in 1998 for $184,300 – UP  34.6%

Sold in 1998 at $184,300; bought in 1993 for $148,000 – UP  24.5%

Sold in 1993 at $148,000; bought in 1988 for $141,500 – UP  4.6%

Sold in 1988 at $141,500; bought in 1983 for $ 92,500 – UP  52.9%

Sold in 1983 at $ 92,500; bought in 1978 for $ 63,500 – UP  45.6%

Sold in 1978 at $ 63,500; bought in 1973 for $ 35,900 – UP  76.8%

Sold in 1973 at $ 35,900; bought in 1968 for $ 26,600 – UP  34.9%

Sold in 1968 at $ 26,600; bought in 1963 for $ 19,200 – UP  38.5%

Note: U.S. Peak Price to date 1st Quarter of 2007

Sold 1Q 2007 at $322,100; bought 1Q 2002 for $227,600 – UP 41.5%

Data Source

Sunday Night Stats – Days on Market DO Matter

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I have to admit that it is hard to think about anything but tomorrow’s election.  It’s an historic occassion, to say the least.  Especially for those of us who grew up in the turbulent 60’s, and have been around from when President Kennedy was killed to present.  I can’t help but feel that tomorrow “is the first day of the rest of our lives” in a profound and meaningful way.

Next Sunday will be the first opportunity to capture a snapshot of October 2008 as to closed transactions.  Last week I reported that October pending sales that will close in November are obviously down in price, and fairly substantially down, from 3rd quarter sales.

This week I’ve been trying to answer the question “Where are prices?”.  Are they back to early 2006 levels?  Are they back to mid-2005 levels?  The answer is both, and days on market is what separates the two.  When comparing apples to apples and studying data within small segments of each market, virtually no sales are selling at peak levels, peak being summer of 2007.  Those that sell in 20 days or less are selling at mid 2006 to early 2006 levels.  Those that remain on market for 40 or more days are selling at mid 2005 levels.  Those that try to sell at 2007 levels, end up at 2005 levels.  If they had started at 2006 price level, they would have sold more quickly and at a higher price.

There’s really no message to anyone in this post.  Just reporting the facts.  Buyers who buy something as soon as it hits the market, will still do that, and rightly so.  Sellers who ask more than the last property sold for will still do that, because they need the market to beat them down.  Most people can’t sell for less than the neighbor by voluntarily electing to do that.  They have to be on market for 100 days or more before they “give in”, which costs them about 5% on price.  Still, that’s human nature for most people.

New construction is more attractive than it has been for a long time, short sales are still the best values, and best homes in the best locations still sell quickly at the highest prices.  No big news there.  Once we get to early 2005 pricings, the wait will be over.  Why?  Because the prices in 2004 and 2003 and 2002 are not substantially different from one another.  Once prices roll back to January 2005 levels, we will be “at bottom” here in the Seattle Area, unless you think prices will get to 1998 levels.

So for all of the people waiting for “bottom”…your wait is about over.  Now you just have to figure out how to finance those “at bottom” prices, and interest rates will be the obstacle vs. fear of overpaying.

Now let’s all focus on the election tomorrow.  It’s an historic event.  Don’t miss it.  Vote and vote early.

Sunday Night Stats – Prices Dropping

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Recent King County pending sales continue to dip in price.  There seem to be more bargains in the single family home market than the condo market overall.  But that is starting to change.

In the condo market, of the 628 condo sales pending, only 283 have gone pending since the 1st of October, and the asking prices on those were 3.7% lower than the pending sales from before October 1st.  Considering that condo prices for the 3rd Quarter were only down 7.2% YOY, a 3.7% dip in prices is significant and should bring condo prices down to more than 10% lower YOY by year end.  We’ll have to wait and see where they close out.  Those that have closed so far in October have actually closed at higher prices than the 3rd Quarter, so we may not see the full impact of lower prices until the end of the 4th Quarter in condos. 

In the Residential market, 957 of the 1,893 pending sales went pending since October 1, so less of a backlog on a % basis than in the condo market.  The prices of the recent pendings is only down by a hair, compared to pendings from before October 1.  But pending prices overall and closed prices in October to date are down almost 10% compared to the 3rd Quarter and almost 20% YOY. 

If you are hanging in for the perfect house, you may have to wait until Spring of 2009.  But if you’re looking for an opportunity to buy based on bargain prices, the last quarter has a lot to offer.  Remember, for every bargain priced property SOLD there are 5 or more overpriced properties. So far in October it looks like buyers are choosing wisely and getting some real deals.  But you have to know what you are doing out there.

Kind of like going to a huge shoe sale and picking out the Prada’s from the Payless overstock.

As always, stats are not compiled, verified or posted by NWMLS. (required disclosure – it’s also required that I say that in bold letters, for those who’ve been wondering.)

Sunday Night Stats on Monday Morning

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The Dow’s holding its own so far today. “Hanging in the eights”; as I like to say. I don’t see the day coming yet when my week doesn’t start without checking the Dow when I wake up on Monday morning.

Last night I looked at the homes that sold in Redmond in August for the means of financing.  Where once I saw two loans as in 80/20 and 100% financing, I now see two loans as in conforming and jumbo.  One loan at exactly $417,000 and another for the difference.  I saw a couple of FHA loans in the mix and a couple of cash sales, but by and large the purchases had significant downpayments.  $20,000,000 worth of purchases had $13,000,000 worth of debt.  So 35% down overall.

Looking at who got a good buy and who didn’t, the new bogey appears to be 1.09 times assessed value, by and large.  The fabulous buys went for under assessed value, mostly in the high end near a million dollars.  The assessed values I am using are still the ones that 2008 taxes are based on, so be careful there.  The new ones for 2009 taxes should not produce this multiple.  Up to 1.17 times assessed value is pretty safe, depending on condition of the property, with 1.09 times assessed value being fairly doable and the better sold scenario.

Some of the best buys were those that listed low and sold quickly.  Some of the worst buys were listed high, and while the buyer got the property substantially less than asking price, the net result was still too high.  Remember to double check the multiple of assessed value against the main floor footprint calculation keep apples to apples as to style of home.

I’m not seeing any short sale closings in the mix.  Most are still stuck in pending.  The “decent” buys were popular homes dropping from 1.22 and 1.17 times assessed value to about 1.13 times assessed value.  Those were newer two story homes built in the mid 90s.

The waiting game is playing out where new construction is competing with resale by the same builder in the same community.  It will be very interesting to see what the builders are going to do about that as we head into Winter.  Look for some screaming “offers” from builders…BUT check that against the prices of same model resale before being lured by builder offerings.

Still hard to find a good house at a good price in this market, the best values still going quickly.  For those who see something that “looks good” out the gate, but need a method to quickly evaluate if it is a good buy, asking price divided by assessed value is still a good rule of thumb.  The closer it is to assessed value, the less time you will have to think about it.

Losers in this market are those who take too long to “think about it” and don’t have a good valuation tool.  Some of the worst buys were people who bought houses at substantially less than asking price, but still over market value.  Don’t fool yourself into thinking you “saved $50,000” just because you paid under asking price.

Mostly these are some tips for people who are buying in today’s market.  But sellers can take note as well.  After you come up with your list price, divide it by the assessed value used for 2008 NOT 2009 assessments, and see where that leaves you.  If you have a view  property, the multiples will be higher.  Buy if you don’t, and the calculation comes up at 1.5 times assessed value…think again.

Some stats on sold in September homes without basements:

Redmond – median price per square foot $233 in 08 vs. $284 in 07 prices down 18% volume up 25% from 43 to 54.  Median price down from just under $700,000 to just under $600,000 plus more home for the money as to total square footage.

Bellevue – MPPSF $332 in 08 vs. $318 in 07 prices up 5% volume unchanged at 37/38. Median price up from $685,000 to $739,750. (lots of very pricey homes in that mix vs. Redmond and Kirkland)

Kirkland – MPPSF $268 in 08 vs. $286 in 07 prices down 6% volume down 25% from 32 to 24.  Median price up from $526,500 to $570,000.

King County – MPPSF $193 in 08 vs. $223 in 07 prices down 13% volume down 10% from 788 to 704.  Median price down from $449,975 to $382,884

Asking Prices of unsold homes on market today:

Redmond $260 asking vs. $233 sold; 6.5 months of supply.

Bellevue $311 asking vs. $332 sold; 8 months of supply.

Kirkland $284 asking vs. $268 sold; over 12 months of supply.

King County $210 asking vs. $193 sold; just over 8 month supply.

When you consider prices and volume, you see that the deep dip in price sold in Redmond (down 18%) is giving them an increased volume of sales, up by 25%, and a shorter timeframe on existing inventory at 6.5 months in Redmond vs. 12 months plus in Kirkland.

Volume up 25% in Redmond proves that when buyer’s perceive real value, they buy. Buyers with money for downpayments do exist, but they are very, very value conscious. Bellevue stats are a bit screwy, but Kirkland and King County as a whole show that when prices are down slightly the volume is down a lot.  When prices are down moderately, the volume is up somewhat.

So buyers appear to be “happy” at 18% down in price, OK with 13% down in price and not so happy about only 6% down in price.  Remember, I removed basement square footage to evaluate pure living square footage, and never buy without looking at 2008 assessed value.

Stats not compiled, verified or posted by NWMLS (Required disclosure)

Sunday Night Stats on Monday Morning

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I’m repeating this graph because it’s all about the last quarter now.  If you are watching the stock market today, (and who isn’t) you know that yesterday doesn’t matter anymore.  Right now we’re waiting to see if a “Black Friday” or a “Black Monday” or both as we experienced many years ago, can turn into a Black Monday, Tuesday, Wednesday, Thursday and Friday.

The reason I started Sunday Night Stats back in early January of 2008 was to help people pinpoint a trend.  Well if you haven’t gotten the picture as to the trend by now, Sunday Night Stats isn’t going to help you.

To buyers and sellers of real estate, and agents advising buyers and sellers of real estate, all you need to know today is that September performed as expected.  If you take the brown line as to median price above  and draw it equidistant from the 2006 or 2007 line, you will be exactly at where we are, $377,000.  Who cares.  What we care about is which way that line is going from here. 

Look up at that chart and what happened to median prices from October through year end in all the previous years shown.  Now look at the stock market.  If the stock market is an indicator of consumer confidence, and I believe it is, then we will not see a repeat performance in the last quarter of 2008 as to median home values.  Instead we will see the brown line trending down toward 2005 prices.  In fact, if you have a house on market that you bought in 2005, and you can break even today, consider yourself to be very lucky indeed and DO IT! 

Going back to my Prediction post “My price predictions are: $429,000 for the 2nd quarter of 2008 $400,000 for the 4th quarter of 2008”, I am right on target with the September median at $413,000 and the 3rd quarter at $425,000.  The graph above is the median on a combined basis for Single Family and Condos, hence the variance between $377,000 this month as to the graph and $413,000 in the sentence before this one.  At this point, and hitting my refresh button on the Dow as I write this post, I think we’ll be damned lucky to see the median fall to only $400,000 by year end, per my April prediction.

Usually I talk to buyers and sellers of real estate and to real estate agents.  But the handwriting on the wall today is to the people who are planning to spend 2009 real estate taxes.  DON’T EVEN THINK ABOUT IT!  The market crisis is all about who didn’t see the handwriting on the wall, and who needed to see it.  Today that message goes out to anyone who thinks the new assessment values are a means of increased revenue.  The appeals are going to hit you so fast your heads are going to spin.  In fact, save yourselves the expense of receiving and evaluating those appeals and revise your numbers before you solidify the 2009 real estate tax increases.  If you come up with a budget for spending 2009 real estate taxes based on the valuations everyone received in the mail, you will have no one to blame but yourselves for doing that when the scream and shout hits the fan.

It’s too early to talk about YOY volume, we’ll do that next week.  Today it’s all about expectations as to value, and I expect the 4th quarter to slide down toward that green line of 2005 vs. the trend of the last three years.  I don’t think it will hit the green line by year end…but it’s going to get pretty darned close.

(Required disclosure: Stats in this post are not compiled, verified or posted by NWMLS…never are; never will be.  I do my own stats and no one is responsible for them but me personally.  Sorry to have to repeat this disclosure every freakin’ week…but unfortunately it’s required.)

Sunday Night Stats

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Last week when everyone was talking about median price being down in August, it seemed to me that median prices is generally down in August…or at least flat.  The graph shows the relationship in median price for 2005 through present from June through year end.  It may give you an idea of what to expect to happen to prices for the balance of 2008. I also find the nexus points fascinating and the 2005 vs the three years following to be very interesting.  Hope you do as well.

 

 

 

 

 

 

 

 

 

 

 

 

As usual, I calculated these myself.  We expect the YOY volume paths to cross eventually.  But I doubt that is going to happen this year.  The spread will become narrower beginning at the end of September.  But there will still be a spread, I think.

For these grapsh I combined condos with SFR because over this 4 year period, tracking what buyers are doing is more important than whether they chose a condo or a single family residence. 

During this period we saw many choosing condos vs. SFR because they could not afford SFR.  Now we are seeing the reverse with SFR prices getting lower than townhome prices.  That is putting pressure on townhomes to be cheaper to compete with the single family home market.  During swings from condo to SFR and vice versa, it is best to combine them to see total buyer activity and trends.

Required Disclosre: Data not compiled, posted or verified by NWMLS

Sunday Night Stats – Seattle Real Estate

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Median price per square foot for condos sold is starting to fall below 4th quarter of 2006 numbers, and is down 11.8% from peak pricing. 

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 1,535 – $287, 3Q to date 895 – *$274

 

Active Listings: 3,983 – DOWN 47 – median price $319,950 – MPPSF  asking $307 (Down $3) – DOM 67 (up 2)

In Escrow:  804 –  UP 10- median asking price $289,700  – MPPSF asking $291  – DOM – 53 (up 3)

Sold YTD :  3,710- UP 650 – median list price $289,000 – median sold price  $282,450 – MPPSF – $287 (down $2) 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 4,676 – $220, 3Q to date 3,106 – *$215

*Residential median price per square foot is down another $2 per square foot since I ran the numbers two weeks ago.  That brings prices back very close to where they were in the 2nd Quarter of 2006.

Some sigificant changes for property in escrow.

In Escrow: 2,429 – DOWN 139- median asking price $409,950 (down $10,000) – DOM 51 (up 3) – MPPSF $197 (down $7)

SOLD YTD: 11.451 –  Actively for sale 12,027 – DOWN 280

Sold Year to Date and currently for sale are getting very close.

 

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

Sunday Night Stats – King County

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We’re just past the halfway point on the third quarter, and condo prices are getting much lower.  Unless we see a major change in the next 5 to 6 weeks, the MPPSF is showing down over 11% from peak At $274 vs. $311.  Not a big surprise, as pending stats have been low, so it was only a matter of time before those low numbers in pending status started showing up in the closed sales.  Still I wouldn’t be surprised if they bounce up a little by the end of the 3rd Quarter.

Inventory is getting pretty darned flat.  For condos the number of properties for sale hasn’t changed much since May.  3rd week of August – 4,082, July 3,958, June 4,049, May 3,953.  Pretty much flat for four months in a row.

I’m not even going to talk about pending sales as there is so much junk stuck in there and not closing.  For now I’m not counting anything until it actually closes.

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 1,535 – $287, 3Q to date 685 – $274

Residential properties seem to be holding on to value a little better than condos, but still showing more weakness now than they have since late last year.  MPPSF is only down 5% – 6% from the peak of $230 to current numbers of $217, and we may not see much of a change in those numbers by the end of the 3rd quarter.

Inventory in the single family markets has flattened out a bit, but only in the last 30 days or so.  Some of that is being caused by people renting instead of selling or pulling their properties off market to wait for next Spring.

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 4,676 – $220, 3Q to date 2,366 – $217

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

As is true most years, the prices will start to be better for buyers from now through year end.  In the hot markets of the past few years, that only meant that appreciation would slow down.  But this year and last year, the prices just kept getting better and better…for buyers that is.  If you can wait a year or two, I think prices will be even lower.  But if you plan to buy in the next 6-9 months…the next 3 may be better than waiting just a few months longer.