Whoa Baby! To say these numbers are interesting is an understatement. I better put that MLS required disclaimer that this data was hand calculated by ARDELL using the MLS system, but not posted or compiled by NWMLS.
We’ll start with the January data Year Over Year (YOY). Remember a few more sales will trickle in since we are so early in February, and some agents don’t post immediately after the sale.
But as of tonight, the Jan. month end closings (drumroll please):
**UPDATE FOR LATE POSTINGS OF JANUARY CLOSINGS as of 2/7/08 and again on 2/10/08):
King County SFH sales for Jan. 2008 came in at 861 895 902 vs. 1,357 in 2007. A 36% drop.34%
King County Condo sales are down about 43% 39% from 511 in 2007 to 293306311.
Remember that for every city that is performing better than those percentages, like Bellevue and Redmond whose SFH sales are only down about 15%, there are other cities and areas whose performance was worse than the overall King County numbers.
People ask why I always calculate Kirkland, Bellevue and Redmond statistics. I expect these areas to outperform King County as a whole. Bellevue and Redmond did. Kirkland did not. Living close to Microsoft is still the criteria that gives homeowners the edge in certain parts of Bellevue and Redmond, though not all of those two cities.
For instance if Factoria performed the same as King County overall, then close to Microsoft is virtually unscathed. I didn’t break that down, but I expect that is the case given Bellevue and Redmond’s overall performance of down 15% or so. Next week when we see if there are any more month end closings posted, I’ll break that down to see where really close to Microsoft is coming in.
I’m also tracking which homes are selling and which aren’t. By visiting the properties in person and picking the ones that should sell, we can tell if there is any impact at all. If the properties that should sell do sell, then that area ( close to Microsoft) is not affected.
Now for the weekly stats. I’ll keep this running with closings on a YTD basis throughout the year and compare the YOY at the end of each month.
Inventory being “down” means that the sales are happening faster than new listings are coming on market this week. So a slight, very slight, reduction in inventory for the first time this year. Sales are keeping pace with, and exceeding, new listings on market by a small margin.
King County – Residential
For sale – 8,638 – DOWN 22
In Escrow – 2,154 – UP 90
Closed year to date – 888 – UP 280
King County – Condo Market
For sale – 2,983 – down 26
In escrow – 795- down 28
Closed year to date – 293 – UP 89
Seems a bit odd that In Escrow is down also, but I expect that is because of month end closings. We’ll see how that shakes out next week and in the weeks to come.
I can’t help but think of the commenter whose monicker is “bored”. Don’t know how anyone can be bored with this housing market.
“Statistics not compiled or published by NWMLS.
“King County SFH sales for Jan. 2008 came in at 861 vs. 1,357 in 2007. A 36% drop.”
What number in the monthly NWMLS report is this comparable to – pending sales or closed sales? I’m guessing closed, but I wanted to confirm because I think people generally use pending when referring to sales… Would the “In Escrow” number you list be equal to the pending number in the NWMLS report then?
That’s very similar to what I was coming up with, but it’s going to be interesting where the mean and median prices come out at when you mix the county all together. Like you I’m seeing strength in the northeast part of the county (and north in general) and weakness in the south, and I’m seeing that in both volume and pricing. But there seemed to be a lot of areas where the median was up (perhaps due to my observation that lower priced properties are not selling???), so it will just be a matter of the overall mix.
I didn’t look at all at condos.
I am definitely seeing lower inventory – less new listings coming on for my buyers… I have some great buyers right now that I am working with, but no one with the right criteria seems to be willing to list their home:)
Good stats, ARDELL – very interesting!
Topdog, I believe your assumptions are correct (but only Ardell can tell you that for sure). The number is closed sales and in escrow is pending.
Typically when you see a “Sold” sign on a property it really means it’s pending (in escrow waiting to close). The sign typically disappears right away on closing. I’ve actually moved to using signs that say Pending Sale just so that it’s clear to people. I’m not sure why we’re using the term “in escrow” here rather than pending, since pending is the term used by the NWMLS.
Topdog,
I don’t know how NWMLS compiles their data and posts them into reports. I prefer to do the stats myself. There is a rule that I can only post their stats as they do them without alteration of any kind, OR do them myself with a disclaimer that I did them, and they did not. I prefer to hand calculate them on my own.
I can tell you how I do them.
“For Sale” means “Active”-ly for sale.
“In Escrow” means in contract. I do those by including all sales not yet closed escrow. Contingent sales, Pending sales and Sold Subject to Inspection all combined.
I am looking at the willingness of buyers to buy in the “In Escrow” segment, even if something comes around and nixes the sale before it closes. All completed and signed around contracts that would result in escrow being opened. So “Pending Escrows” might be a better title. If Closed does not keep pace with “In Escrow”, then you will be able to tell if a substantial number of Escrows are opening, but not closing.
Inventory equals “For Sale”/Active. So Contingent, STI and Pending are all statuses that reduce inventory. If those come back on market instead of closing, that will be reflected as the inventory being in subsequent weeks. If an “in escrow” does not close and that property becomes Active again, it will be added to the For Sale category the same as a new listing.
Remember that I am calculating Residential and Condo sales ONLY. I am excluding commerical property, business opportunities, vacant land, multi-family, farms, double-wides and manufactured homes, etc. Anything that is not Residential or Condo, which DOES include townhomes, but not duplexes or tri-plexes, etc…are noted in my stats.
I don’t think NWMLS breaks theirs down the same way that I do, so you can look at them both, but they should not match exactly as to actual numbers.
Kary,
I will be doing some price calculations on a monthly vs. weekly basis. So far I am seeing that homes are still selling for more, unless there is a considerable negative, like one house in from Aurora as an example. Prices are down only where prices did not go up as much in the first place. So buying in the cheapest area is not a good strategy, as that is the market that lags on the upswing, and also goes down first.
Still better to buy the best area you can afford, and on the lower end of price range for the area. I don’t think that ever changes.
Courtney,
YUP! That part is the same as every year. I also have clients whose top five properties are not even on the market 🙂 We are approaching those properties direct and off market instead of waiting for them to be listed.
If more sales happen outside of the MLS, that will affect the stats as well. As we move into the year I will be using closings as recorded in the tax records, vs. the mls. Will be interesting to see what percentage of sales are happening outside of the mls. I think those are growing in number and will account for some of the reduction in mls recorded activity. But, sometimes an mls transaction is recorded twice, as in area 380 and area 390. So that could compensate for the difference, if the double mls postings equal the sold outside of the mls.
Kary,
I’m not making a distinction between STI and Pending plus I am including contingent sales. I am including any and all “signed around contracts” in the “in escrow” portion.
I’m concerned with buyers going into contract to purchase, whether that be subject to an inspection or only IF they can sell their property in order to buy it. This way I account for all property in its various stages from the time it is listed for sale until the time it closes.
Contingent accounts for about 3% of condos and 6% of SFH property. More people are buying contingent than in recent years, when that method was not as readily available. If they are “bumped” then that escrow still closes…just with a completely different buyer. I am seeing more of those as well.
Couple of questions for you realestate pros:
1. I’ve noticed inventory for single family homes in Bellevue $1M performing? There seems to be a glut of these in the area.
3. What are the trends for a buyer in this market (from #2)? I’ve heard everybody selling “green” these days. Is that true or does the granite counter tops, stainless steel appliance formula still work for these buyers?
Ardell –
Where do your inventory numbers come from? The Tim at SB grabs from three source and all show inventory about 800+ units higher than both your SFH and condo numbers.
Hi Ardell –
I track these stats too. How do your off market (expireds, cancelled, withdrawn) numbers look compared to last year? I’ve noticed in my area that the sellers who don’t really need to sell, are now pulling their listings to wait for better times. So, our inventory is slightly reduced while our sales volume is still very low by historical standards.
#2 didn’t show for some reason. Here it is again:
2. How are sales of homes >=$1MM in the Microsoft area (140th and 40th) performing?
b,
I go to the mls. I put in King County. I check off “Active” and I hit enter 🙂 Pretty simple stuff. I do that twice. Once with Residential checked and then again with Condos checked.
I don’t know where “The Tim” gets his. I get mine in the same place an agent finds properties that are actively for sale. If an agent doesn’t know if it’s for sale, it ain’t.
If one of The Tim’s sources is Craig’s List, then that could account for duplication, since many listed on Craig’s List are also listed in the MLS, and not always at the same price. But that’s another post.
Q-Diddy,
I’ll be doing Microsoft within the next few days. I can tell you that I saw three homes priced at $1.2 in the Microsoft area recently, two of which clearly needed to be no more than $999,950 (“nine-ninety-niners” as I call them). So the over a million glut is caused somewhat by properties up there that don’t belong up there.
Vicki,
Most of that activity (expired and cancelled listings) happened in the last quarter of 2007 and not since 1/1/08 when I started “Sunday Night Stats”.
If those properties stay off market, they will not be a consideration in 2008. If they come back on market, they will be picked up as “For Sale” same as new listings.
People who decide not to sell at all, are not part of the equation once they make that decision. They go into the same pot as people living in homes who are not selling them.
Q-Diddy,
Sorry, missed your #3 there.
Green and that area does not compute…not a factor in The Microsoft Zone. Proximity to work is key and proximity to work makes new construction not a primary consideration. Geen in the remodel area does not play as well as green in new construction.
You may be seeing “granite counters” as a negative going forward vs. a positive. People don’t want to pay for other people’s improvements to the same degree, nor do lenders want to finance them to the same degree. Granite counters will not produce the same return on investment as they did in the last few years. The market is selling from the bottom up (hence the lower median prices) and mega improvements are not as important as monthly payment and being able to finance, these days.
Prices for “needs work” will be on the rise or flat. Prices for full remodels will be down. New construction will depend on site considerations.
Seattle Bubble numbers are
1) Windermere
2) JL Scott
3) Realtor.com
not craigslist.
deejayoh –
Any idea why there is such a skew? The SB numbers are nearly 10% higher than Ardell’s numbers, but all four are supposedly using the MLS as the backing data.
B, I think the broker sites include STIs in the searches which Ardell can filter out.
tj is correct. Some sites go as far as including pending sales, but most do not.
Remember here in the Seattle Area, there are three categories of properties in escrow. Some are contingent sales, some are Sold Subject To Inspection or SOLD-STI and then there is Pending. Some properties don’t go Pending until a few days before the property Closes Escrow.
Almost all sites include the Sold Subject to Inspection and the Contingent Sales. Since almost every sale, including the pendings, are subject to or contingent on financing, and there is no classification for that, it’s best to consider all properties in escrow as potentially closable or not these days. So that’ how I do it.
How many will fall apart as pending based on financing? I say at least as many as those that fall apart on inspection. So why are we not including the ones that will fall down in the pending category the same as those that will fall down on inspection?
That method is no longer as accurate as it once was when anyone who could fog a mirror could get financing.
I like the way you present the data Ardell. I’ve always paid more attention to closed sales than any pending number since there is no guessing or dependencies attached to closed sales.
Here’s another question for yah:
How is sale of SFHs
Rather than looking at how $1,000,000+ listings are doing near Microsoft, it would be better to look at how many sales closed above that price in December and January. I’ll let Ardell do that since she’s more familiar with the area, but the point is, listing something over $1,000,000 doesn’t make it a $1,000,000 property, and so by looking at those you won’t know how $1,000,000 properties are selling.
Regarding the slight reduction in inventory last week is it possible that some impact could be from sellers whose listings been lingering for months that are now gearing up for the historically hot sales months of spring by preparing more aggressive(lower) pricing? Is this normally done with a de-listing followed by a re-listing or is it done just as a price change on the current listing?
tj,
Regarding your comment #21, it’s important for me to track buyers that would buy, so in escrow is very important at this time. How many would have bought if they could have bought is very telling.
Many may look like they fall apart on inspection, but often that is just the excuse for bailing due to financing, since the buyer doesn’t have to give a reason to bail on inspection or Resale Certificate. It’s a unilateral option. Bailng on financing requires the seller’s signature on the rescission and inspection and Resale Certificate does not. So why would you ever say it was the financing, when you have another unilateral legal out to pin it on.
Q Diddy,
On the Eastside, “residential” IS SFH, as most of the townhomes on the Eastside are condos. In Seattle residential includes all SFH which includes most townhomes.
The mls does not have a SFH category. Residential = SFH including townhomes that are legally SFH. The distinction is whether or not the land under the townhomes is jointly or individually owned. In Seattle they subdivide the townhome lots more often than not. In other areas most townhomes are built on land that is not subdivided, and so they are condos.
Ardell, I understand your interrest in the “In Escrow” value as an indicator of the current volume of buyers who tries to buy. However I don’t pay much attention to it since my belief is that there is always people who wants and tries to buy a home. I’m more interrested in the number of buyers who actually can and do buy.
tj, most sales that get past to the inspection stage close.
You might want to read this piece on absorption rates:
http://workingforyou.typepad.com/feature_article_pricing_t/
Hi Ardell,
You are spot on with regard to the Microsoft area. The last few years have been great over there. Nobody wants to commute anymore and the location cannot be beat. I track inventory and sales in that area on my Redmond blog on a weekly basis.
http://westredmondrealestatebuzz.com/2008/02/02/weekly-real-estate-buzz-in-west-redmond-through-february-1st-2007/
It’s been interesting to watch. The 98052(Redmond) area near Microsoft had 44 homes, single family, for sale last week. During October, the number was more like 55 or 57.
I think people are out looking and even buying in this area. There has been a steady turnover with new listings and sales, although obviously at a much slower rate than in the past. Case in point, I have noticed a few listings come back on the market in the area and sell, however they were more aggressively priced. A two story home near Grasslawn Park was priced in the low 600’s, came back on the market at 588k with new flooring and carpet, and was gone in about a week. I just sold a listing near Microsoft today (Ardell showed this home, thanks) and we ended up in multiple offers after being on the market for a few months. As we were inputting the listing as “sold subject to inspection” in the MLS, I got a call from another agent whose buyer wanted to write the house up. Don’t knlow if this means anything for the market, but we will see. It will be interesting to see what happens in the next few months over in Microsoft land.
Q-Diddy asked about the $1 million plus range over by NE 40th and 140th and that is a better bet than further east on NE 40th in Bellevue and also in Redmond. There is some new construction that is sitting there priced around 1.2 million that has been on the market for about a year. There have been a few sales in the particular plat, but there still is standing inventory that has not moved. Chaffey is building a plat that is a gated community over by Microsoft and Lake Samm that actually already had some price reductions last week and the homes have only been on the market for a few months. What I found interesting was the builder reduced prices on pre-sales, homes that were not complete and ready to sell. Builders rarely lower prices on unfinished inventory or pre-sales.
tj-in general, you are right about the listing, re-listing goes on. There are many homes that are coming back on the market as re-listed. Technically, when a home is re-listed, it should reflect the total market time in the MLS. But there are a few ways to get around this. I caught one listing last week with a changed street address from Place to Lane. so when the home was relisted, it showed zero days on the market. Kind of sneaky to do. As agents, if we are not familiar with an area, we have to check the property history to confirm the true time on market.
Kary, the state of any of the pendings doesn’t interrest me much. Pendings can also be deceiving since buyers can be “pending” many times and for multiple properties without reaching a closing. In theory one buyer could make up all pendings over a year and not close one. Closed are closed and if a buyer closes multiple homes it’s multiple homes off the market and it reflects true qualifying demand.
sales picked up in Magnolia in Jan but only homes who had realistic prices or reduced previous prices. Sellers are still too un realistic. Homes have come on in Jan and sold in a week, but those were priced right.
It is going to continue to be ugly unless sellers get it!
P.S.
Multiple offers going on today on the Eastside. Can’t give details obviously. Just a heads up that rates can push these stats by the end of the first quarter. Jury’s still out.
tj 27,
I agree. Still, knowing if anyone is trying to, has some value 🙂 Clearly there’s a difference between no buyers, and fewer able buyers.
Our market is about “ready, williing and able” buyers. Two out of three ain’t bad if the lending issues shake out before we hit April. We may see more partial owner financing, more FHA, and lots of other solutions that turn those ready and willings into ables.
Multiple offers never went away. I think we’ve had four since the market allegedly tanked. Two in October, one in January and one this month.
tj, very unlikely for a buyer to have multiple pendings unless they want to give up their earnest money. Multiple STIs (Inspection) sure, but I’ve not seen anyof that either.
But I think you’re right to some extent. I would look at both the closed and pendings for the prior month(s). That way you can get two numbers to compare. When you’re dealing with smaller areas the volumes can change dramatically without it indicating a change in the market.
Kary 28,
That used to be true, prior to August of 2007.
Debra and tj,
mls allows a “start over” on the DOM count if it comes back with a significant change in condition or price. I believe as to price, it needs to be reduced by 5% or more to be considered “new on market” again with the DOM back to 0. That may have changed, and I don’t think it’s a hard rule. But was their practice at one time.
magnolia 44,
However most areas are still selling at higher prices and seller’s “getting it” is still about not over pricing.
Generally a seller can get up to 5% more than the last guy. So five sales of 3% more each can be a 15% appreciation rate in whatever time it takes for 5 to sell. That is why propensity and volume become so very important.
The 2 megaton bomb that may go off before April is the bond insurers. If insurance becomes too expensive, mortgage rates are going to fly through the roof and no one without 20 percent down is going to be able to buy…..
Kary,
I think by “multiple pendings” tj means before they actually buy something. Pendings in succession, not pendings all at the same time.
I don’t see multiple pendings in that regard either. I just don’t see a lot of pendings flip.
The bigger problem with looking at pendings is it doesn’t tell you a thing about price, other than the listing prices that aren’t too high to get someone to look.
Hi Ardell,
You are right about the DOM, Days on Market. This is how it should happen. However, I have seen some things where the days are not truly accurate, such as what I described with regard to the chance in address. Another new construction listing in Kirkland came back on the market after expiring without a change in price and it showed zero days on the market, which floored me. By the way, it was the same agent, so that was not the reason. In reality, things like this happen rarely and we do get the accurate count. I just think it is prudent to double check the property history to make sure something weird did not happen with DOM.
Is there anyone else irritated by the fact that builders in the last few years have really tried to squeeze as many homes on a plat as possible? A lot of developments around Old Redmond Road is like this. I guess if it sells why not, but I just feel it ruins the aesthetic appeal of these neighborhoods.
Another question about Bellevue:
How is sale of homes
Another question about Bellevue:
How is sale of homes less than or equal to 600K performing? I feel there’s been an increase in inventory, but not sure.
Kary,
I just did a quick check of Active listings, condos under $300,000 in Federal Way. I found one Pending flip back to Active after checking only six properties. Financing since August 07 is the issue, not our years of recollection. It doesn’t take long to find Pendings flipping back to Active status due to financing, if you limit your search to low price and since 9/1/07.
I guess it could have been coincidence for me to need to check only six properties to find a Pending flipping to Active, but I don’t think it was just dumb luck.
Debra,
For the benefit of the public you should call the mls and ask what the reasoning is, and usually they do have one. Price drop of 5% or more, or substantial change in condition.
For New Construction, as you indicated, I would guess that they may give them a new status when it shifts from pre-sale to completed spec home. That would make sense.
Q-Diddy,
In exchange for more affordable housing, smaller lots are necessary, and is and has been the trend nationally. Everyone can’t afford a new home on a big lot. Many love new homes on small easy to maintain lots. Many think old houses that are not well maintained on big lots are not all that aesthetically pleasing. It’s just a matter of preference. Neither annoys me.
Q-Diddy,
Residential is “homes”, and as I reported in the post, the volume is down 15% YOY Jan 07 to Jan 08. That is for Bellevue in it’s entirety. 50 homes sold this January vs. 60 last January. 60 minus 15% would be 51. So a hair off that.
Q-Diddy,
The price point of $600,000, is not a realistic break point for determining market trend in Bellevue. The $599,950s of 2007 may be the $619,950s of 2008.
Some run down neighborhoods where homes sell in the $500,000 give or take price range do terribly at $600,000 or slightly less. Others where $600,000 is the minimum price for the neighborhood do exceptionally well. Same style, same house, different neighborhood = different answer.
Q – I’ll go do SFH under $800,000 for you. That may be more telling than $600,000 or less. Be right back.
Q – Excellent Results!!!
Bellevue Residential (SFH) under $800,000
243 For Sale
53 In Escrow
36 Closed January 08
38 Closed January 07
Only down 2 YOY and that could be mere circumstance.
I’ll do $600,000 and under now, though I think that is not as relevant.
Also Excellent, but more expected and not a surprise.
Under $600,000 Residential (SFH) Bellevue:
129 For Sale
26 In Escrow
27 Sold in Jan 08
24 Sold in Jan 07
So Virtually no change in Bellevue SFH priced under $800,000.
King County Residential as a whole UNDER $800,000 is down from 1,207 sales in Jan 07 to 766 sales in Jan 08. So same price range outside of Bellevue, not so good.
Now you’ve got me thinking and going for more…
Kirkland, not so good. Under $800,000 Residential is down to 26 in 08 vs 49 in 07.
Redmond is virtually unchanged, same as Bellevue, at 32 in 08 vs. 34 in 07
Of course you could do this all day and night, but the point is, the closer to Microsoft the better 🙂
Regarding the seller financing – aren’t the sellers generally carrying second leins when this option is used? Given the exceptionally poor performance of prime seconds in the banks portfolios, is it advisable that an individual carry a second?
I’d guess that most people that need seller financing are in that situation because none of the big banks are willing to take a risk on them. How can an individual possibly shoulder this risk if a big bank can not?
Rob,
It depends on how hard it is to find a buyer for the house, and how much equity the owners have. One of my buyer clients used a 10% seller back in 2004 with 10% down and an 80% loan. He sold the property in 2007 and everyone is very happy. In fact the buyer and seller got to be very good friends during the ownership and are still friends to this day.
Not to be entered into lightly for sure. But for homes near a freeway or on a busy road, it could be a good option for sellers who are having more trouble these days finding a buyer.
It’s interresting to see that 27 out of 36 closed SFHs in Bellevue below $800k were below $600k. Only 9 homes closed in the range $600k to $800k. It’s worth noting since the numbers show a pretty equal amount of home for sale in the 0-$600k ( 129 ) and the $600k – $800k ( 243 – 129 = 114 ). I guess it’s just another sign that people have a tough time to cough up the requirements for jumbos, even in Microsoft land?
…for homes near a freeway or on a busy road, it could be a good option for sellers who are having more trouble these days finding a buyer…
Aren’t those exactly the kind of properties that will always be hard to sell, and as a result, more likely for the buyer to walk away from?
My gut says a seller second on a desirable property is 100 times safer than on one with a big incorrectable issue like a freeway running through the yard.
The market sells from the bottom up in the first quarter in most years. The $800,000 give or take range sells better later in the game, at the end of the second quarter and into the third quarter, on average.
Often the people selling condos in the first quarter and early second quarter are the ones buying the Single Family Residences priced over $600,000, so they are “the second wave” of activity.
When I was a teenager, seller financing was rather common. I think in addition to better market conditions, the due on sale clause cut down on it because it meant the buyer would have to get a loan anyway.
Does anyone know whether you can still do the 250/500k tax free on the sale of a residence if you take back a second? I know the interest would be taxed, but what about the gain?
My Mom prefers to carry the paper than to sell outright. She says the interest earned is better than what she could get in a savings account. She’s a good judge of character and had no problem collecting the payments until the buyer refied the loan and paid her in full. She liked the payments better than being paid back in full.
There are good uses for all types of financing. People just have to be smart about which to use and which not to use.
Ardell, I just did my one test–actives in 360 (Skyway), because I figured that would be an area where credit might be an issue. Only one out of the first 25 I checked, and it never went STI and was then reduce 1/6th in price, so maybe there was an issue with the property???? There was also only one STI that flipped.
I think agents are doing a pretty good job screening out the people with questionable credit—or perhaps more likely—those people are not out there trying to buy because they believe the news.
Kary,
I think I’ll stick with my “in escrow” counting STI and Pending as well as Contingent all one category where buyer’s chose these properties. I think it is important to distinguish between the ones no one wants for whatever reason, and the ones people do want, at least initially.
It will be interesting to see if there are any zero down loans closing in 2008. I’m too busy to do that kind of detail work.
That’s fair. STI’s are far more likely to flip, but they aren’t that common.
Ardell-
So, I can deduce that Bellevue is outperforming other areas with Microsoft area being the best performer? Where would you rank Kirkland, Issaquah, Redmond, Lakemont, Newcastle, Factoria.
This is great stuff btw.
Q,
We’re tryng to catch the trends for 2008, but breaking it down to neighborhoods with only one month of data is too micro and could be misleading. I’ve already noted Redmond and Kirkland.
I’m curious about Woodinville. But I’m more curious about what is selling and what is not in these areas. Fixers vs. turnkey? or vice versa. If turnkey is selling better and the fixers are a bargain, that would make me go hmmmmmm.
Q-Diddy, of the ones you mention probably only Newcastle is the weakest, but that’s a volume issue.
The fact that you like this is perhaps insightful to show why agents hate the press reporting of real estate stats. Your question is too broad, IMHO, because even within those areas you have many different markets. You have different areas, you have different types of houses, you have different eras of construction.
This is more important if you’re a seller than a buyer, because if you’re a seller your property is what it is to a great extent. But it’s also important if you’re a buyer because you can pick and choose your area based on these factors, as well as the other more traditional factors.
Kary,
I’ve always held to the principal that you buy the best area you can afford, not the best house you can afford regardless of area.
It’s a big decision to decide where first and then what. Any information we can provide to assist in that decision process is helpful.
Speaking of which, it may be more helpful to break down by schools than whole cities. But we will definitely need more data to go that route. A good end of season post and fairly siginificant issues for both Bellevue and Kirkland I think. Juanita High vs. Lake Washington for example. In Bellevue, it’s more about elementary schools same as Kenmore and Bothell.
Ardell wrote: “I’ve always held to the principal that you buy the best area you can afford, not the best house you can afford regardless of area.”
I’d agree with that fully, but prices in a neighborhood don’t indicate how good it is. Some neighborhoods are overrated, IMHO. Will they be overrated in 5 years? Some will, some won’t, but why risk it?
Conversely, I’ve always wondered who is buying some of the new construction in areas where it’s mainly older houses that are not well kept? That’s probably the best example of not buying the best house you can afford.
We don’t get to “rate” the neighborhoods, Kary. The consumer holds the cards in that arena. When preference is by local draw point, like Microsoft, the public is always right regardless of what agent’s think. That is a change. Agent’s don’t control the show anymore. What people think and say at work is more important in defining areas.
I made a comment at Broker’s Open’s two weeks ago that I do think there will be “an erosion of the snob premium”. Good old boy network and house being near “the club” is going to go the way of the dodo bird. We’re watching a house that has a $200,000 snob premium to see if I’m correct on that one. More true for Eastside than parts of Seattle, but Greenlake took a hit last year when this trend started affecting prices.
As to New Construction, stop wondering. Kirkland and Seattle have NO problem selling new in the middle of old. Expect to see more and more of that in Kenmore, Bothell, Bellevue & Redmond, and many Eastside older communities. Clearly Green Lake and Ballard can sell new in the midst of old day and night! Cohesive is not an issue until you get to Issaquah, for the most part. Maybe Duvall 🙂
So I guess that when I see houses in disrepair and messy unkept yards that doesn’t matter? I should just assume that trend will reverse because the neighborhood is popular? I don’t think ignoring that is serving your client well at all if they happen to want such a neighborhood.
That said, it doesn’t mean you have to push the point too far. It’s like anything else. I don’t care whether I like a house the client likes. It’s finding out what they like and don’t like. But that doesn’t mean you can’t offer them advice (e.g. some buyers might not mind vinyl siding, but that doesn’t mean you wouldn’t point out that might affect resale.
As to the new and old, that wasn’t the point. It was new and run down. There’s nothing wrong with old. I like old. I don’t like run down.
LOL Kary, I practically slap an agent who tells me what they do and don’t “like” 🙂
One of the best transactions I’ve ever had was convincing a buyer to purchase the house next to the most run down house in the neighborhood. Abandoned even. Racoons and God knows what else running in and out. There was a 20% discount on the price of the house he bought as a result of the house next door,.and the house next door was totally remodeled shortly thereafter. My buyer made a killing when he sold his house next to the now gorgeous neighbor.
I personally have done something similar with great success in the past.
When the market is in a state of flux and potentially going down, looking for the neighborhoods that are going to increase in value is a great buffer for buyers as to future value considerations. Buying the perfect house in the perfect neighborhood can be a sure way to lose money in a market like this one.
We watch the market not see where it’s been, but to advise appropriately based on where it may be going. If we don’t change what we “like” during and while the market changes, we’re not much more than tour guides.
One really bad house in an otherwise okay neighborhood is a bit different than the entire neighborhood being rundown. But at some point, even the most run down neighborhood will come back. The point I was making wasn’t those extremes, however. I was saying that there are popular neighborhoods that are overrated. That doesn’t mean they are totally trash, they just are not that nice. They are on the downward slope, rather than the upslope.
Kary,
My point is there is much money to be made in identifying the next upward slope that is currently on the downward slope 🙂 It’s a bit of a risk at times, but one that many who have a great deal of foresight obtain great advantage from.
Seeing just a few new construction and tear downs in a “run down” neighborhood is the first sign that values will more than likely be on the rise.
I’d agree with that–as I said even the most rundown neighborhood will come back (although sometimes the time frame needs to be fairly long). I’m just saying don’t ignore the fact that a popular neighborhood may be heading down.
Kary,
My bet’s on the snooty golf course neighborhoods being the first to see that premium being pared down to size. Especially the old homes priced at over $1M
Hey! I live on a golf course. And it’s not a snooty neighborhood (but it’s also not $1,000,000 properties either).
My neighbors are a bit unusual–very social for Seattle. They have Halloween parties, New Years parties, neighborhood dinners and impromtu gatherings around a fire pit in the middle of the cul-de-sac. They were having one of those get togethers in the cul-de-sac when my wife and I were trying to decide on accepting the seller’s counter or bidding on another house we liked. After meeting everyone, I turned to my wife while driving away and asked: “Do we even need to go see the other property again?”
I just received an email from my friendly rep at Fidelity, and their numbers show the January median for King County at $420,000 for SFR, vs 437k+ last year. Their volume was only 787, which seems odd because it’s lower than the NWMLS numbers that Ardell and I are seeing, and they should be tracking FSBOs too. Maybe they’re backing out some townhouse sales????
Kary, maybe Fidelity backed out just new construction?
These posts are all interesting. It should be a good next few months, we’ll have inventory for buyers to select from and sellers are definitely seeing strong activity on well-priced properties.
I wonder how spring will be however, if everyone lists all at the same time. The tail end of March of 1999 is when we saw another spring like that.
Whoops, the phone rang and I typed March of 1999. I meant
March of 1990.
1988/1989 was an intensely busy time in Seattle for real estate, with lots of multiple offers, lots of CA buyers buying for speculation (remember cars w/CA license plates getting keyed?) and of course price escalation.
It all came to an abrupt halt late March of 1990. And, it took sellers a good year to come to grips with the idea that the party was over, and stabilization and price reductions were happening. Years ago, a real estate buddy and I were looking back on 1992 with fondness. It was a year of pleasant, and fair transactions, with both buyer and seller feeling like they got what they wanted.
Kary,
There are very many non-snooty golf communities. The prices at those aren’t over a million for the most part. But when prices are higher than the house appears to be worth, and golf community is the explanation…well I think maybe some are starting to question that premium.
The only time I almost bought a house that backed up to the golf course, I pictured myself in a terry robe and a green face mask waving to five guys from my bedroom window. I decided not to buy that one 🙂
Kary,
WOW! I guess it’s one of those ask ten people and get 10 answers. I don’t see why anyone would back out townhouses or how they would do that. Townhome is not a legal description of a property. It’s either SFR or Condo depending on the lot considerations
The NWMLS numbers are out!
King County Residential volume 1037 compared to 1558, so better than expected.
Mean 535,948 vs 523,951.
Median 435,000 v. 429,495.
So the mean and median didn’t get closer together as I expected.
The volume again is the big news.
Condo sales almost half (probably 60% or so.
Mean up significantly, median dow
not sure why that didn’t complete.
Condo median down >5k.
Combined volume down (obviously),
Mean and median up about 15k.
The biggest losing areas appear to be around Auburn and Des Moines, Black Diamond/Maple Valley, Skyway and Bellevue west of I-90 (but there still at high prices).
Biggest gaining areas Kirkland, Queen Anne, North Seattle and Vashon.
Kary,
What period of time are those numbers for?
January.
Why is the volume big news? I’m missing your point there. Can you elaborate?
Also, Kirkland came up pitiful in my stats, where exactly and how was Kirkland a biggest “gaining” area?
Kary,
I just updated my post as of right now and the numbers haven’t changed much. There were some late postings causing the residential be be down YOY by 34% vs 36%. Not a dramatic difference. Condo sales went from 293 to 306. Insignificant as to percentage drop YOY.
Volume in December was the lowest of any month in six years if I recall correctly. That shows decreased demand, which is not good. Prices tend to be sticky down, and thus the prices might lag the indication of demand.
Elizabeth Rhodes and company likes to report that the median is down from August (or whatever), when really that was just a short peak, and means almost nothing. They totally missed the biggest point, which is lower demand.
As to Kirkland, area 560 had a mean increase from $733k to $781 and a median increase from $599k to $665k, with volume only down about 24%.
On the topic, this is what I wrote in response to Mack’s question over at the P-I blog regarding what is the most important stat:
I think the answer to that depends on the particular time.
For example, I don’t tend to look at month to month, but last Spring early Summer the averages (mean and median) were saying something month to month. This year around the same time the YOY won’t mean so much because of what happened then (unless it’s flat YOY at that point, in which case it would be a bad sign–down YOY would be better then).
Right now I continue to think volume is the key stat (which I think both papers pretty much missed for December), but also I think the fact you’re seeing so much disparity between the areas is important. Perhaps gas prices are having an effect, or people aren’t buying the nicer houses in the more marginal neighborhoods, or something else???
Kary,
Let’s see how the first quarter pans out. I think the snow issues created a demand for living closer to work. That helped close-in areas and hurt further out areas. The market as a whole is suffering from fear and mortgage issues. Those that are doing worse or better than the average, seems to be about commute issues.
We’ll see. You know I’m not about predictions. I’m just saying of all the stats I’m seeing, it’s the low volume that bothers me the most.
That’s because of all the stats there are, volume sold is the most bothersome. 🙂
I have been keeping my eye on a few areas in seattle. I have seen about 20% of STI flip. Anybody else?
Flipped to what? If they flip into someone else bought it, I don’t call that a flip. If they flip back to For Sale, then that’s another story.
20% sounds high to me. Which areas are you looking at and I’ll double check the percentage. What area and price range? Houses or condos?
Yes, I do mean flipped back on the market. No sale. Just in the last month.