Sunday Night Stats on Monday Morning

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

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.)

Seattle Real Estate

I left December out, since most of the month end closings aren’t posted yet, and month end could be a large percentage of a month’s sales.  But we want to start off 2008 with some kind of benchmark and expectation for the year in front of us.

I could have called this “and then came September…”, but the single family market actually had a double whammy.

Condo sales in 2007 actually started out UP 3.8% over 2006 until we hit September closings.  (that’s units sold, not pricing)

Single Family Homes were conversely DOWN by 9.4% under 2006 when we hit September closings. (again, # of units sold and not pricing)

So first we had people priced out of the Single Family Market moreso than the condo market, and then the Mortgage Crisis hit both markets in August which reflects in the September and subsequent month closings. 

I posted most of the data for King County for 2005, 2006 and 2007 over at my blog, for those who want to pull the data and draw their own conclusions. 



I’ll come back to this topic, and include inventory issues, after December closings for 2007 are posted.