Surprise on the breakdown of First Quarter YOY. While condo volume is down 41% compared to 1Q-2007, condo prices are holding steady and may even be going up. Single family homes are down 33% as to volume, but as Case Schiller reported and I have tonight verified, single family home prices are back to August 06 levels and tipping downward.
Condo sales for the 1st quarter were only 1,210 compared to 2,042 in the first quarter of 07, but price per square foot is at $297 compared to $295 in 2007 and $242 in 2006. Plus the properties in escrow are showing $306 per square foot. While that may decrease when we see the sold vs. asking prices, so far sold prices have been pretty close to asking, so the likelihood is that those in escrow will close higher than the $297 price per square foot of 1Q-07.
So for condos, volume way down but prices up…again.
Single Family homes sales for the 1st Quarter are showing at 3,570 vs. 5,304 in 1Q-2007. Prices are down to $219 per square foot (exactly where they were 8/06) down from $222 in 1Q-2007 and up from 201 in 1Q-2006. Properties in escrow are at $214 per square foot as to asking prices. So we will likely see a continued downward trend as to price in single family homes in the next few weeks of closings.
In 1Q-2008, 33 out of 100 homes sold at 98.8% of asking price within 30 days. 20% were on market for over 120 days.
In 1Q-2007, 43 out of 100 homes sold at 100.48% of asking price within 30 days. 15% were on market for over 120 days
In 1Q-2006, 54 out of 100 homes sold at 101% of asking price within 30 days. Only 8% were on market for over 120 days.
Now for tonight’s stats:
I’m switiching out to median price per square foot (MPPSF) vs. median price. I’m also showing DOM as they look like they are coming down, so we want to track that.
King County Residential Sales
Active/For Sale – 10,426- UP 246 -DOM 53 – MPPSF Under $2M – $230 (Over $2M MPPSF $546)
In Escrow – 2,708 – UP 134 – DOM 47 – MPPSF $214
Closed YTD – 4,004- UP 285 – DOM 53 – MPPSF $219
King Conty Condo Sales
Active/For Sale – 3,684 – UP 94 – DOM 54 – MPPSF $320
In Escrow – 876 – UP 30 – DOM 37 – MPPSF $306
Closed YTD – 1,305 – UP 71 – DOM 51 – MPPSF $295
“Statistics not compiled or published by NWMLS.
I’m only showing the % to asking price in the sold in 30 days or less category, as those are the least likely to have had a price reduction prior to going into escrow.
You really should report the median price too. It’s what people are more familiar with, and quite frankly I’m not sure per square foot without median means as much.
Also, it’s a bit Elizabeth Rhodes of you to say we’re back at August 2006 levels, when that means we’re above January and February 2007 levels. Prices don’t go up and down in a straight line. Which gets to the tipping down comment. You shouldn’t say that either, not only because prices don’t go up and down in a straight line, but also because March 2008 residential was the highest since October, 2007. Having the most recent month be the highest in four months just doesn’t support the comment. But as I’ve mentioned before, one month doesn’t make a trend either. We won’t know where the market will be in September, 2008 until about October 7. 😉
Of what value am I as an agent if I can only see behind me? Trends are not about hindsight…trends are about future expectation based on hindsight. The earlier you can find the trend the better off our clients will be, or at least the better informed they will be.
I am a strong believer in “informed consent” and not just “meeting of the minds” when it comes to real estate contracts. “Informed consent” requires that an agent include cautions when appropriate. Right now they are clearly appropriate.
What I “should” do is include the mls required disclosure and I will go back and edit the post to include that this week.
If you don’t have an educated opinion as to where the market will be given all of the data at our fingertips, you have to ask yourself why not. Of course April will beat March and May will beat April. That does not mean the market is “better”. That’s spin to a not so well hidden agenda.
My theory for condos doing better than SFH on a County-wide basis as to price, is that “close-in” both SFH and condos are doing better. There just aren’t any condos in out of the way places, or many. I’ll be checking that after my appointment in Seattle this morning.
Agents are not fortune tellers and cannot tell the future. Pretending you can is a disservice to clients, not a service. You don’t see appraisers giving estimated values in the future, and agents shouldn’t either. We’re about the here and now.
I wouldn’t agree with your comment that April and May will be higher than March. We’ll know that when they’re over. What’s the saying: Past performance doesn’t guarantee future results?
Kary,
If the volume doesn’t go up in the 2nd quarter vs. the 1st quarter, and if the volume isn’t down in the 2nd quarter 2008 vs. 2nd quarter 2007 or 2006…I’ll buy you dinner. I won’t quit the biz…but I will buy you dinner. Your wife too.
If that doesn’t happen, I’ll possibly need that dinner! 😀 (Unless the volume is higher than 2006-7.)
The tougher call would be prices going forward–higher or lower than Jan-Mar 2008.
I’m just saying agents aren’t in a position to tell where prices are headed. If they were then they’d either call up all their buyer (seller) clients and tell them they should wait to do something because prices next month will be headed down (up). You wouldn’t represent both buyers and sellers simultaneously because you’d be advising one of the other to wait.
Kary,
One of the reasons I am cutting out median prices, is because I can no longer do median price of single family homes for sale accurately. When the volume reaches over 10,000 units, the stat button won’t function.
Last week we had 10,000 under $2.9M. This week we had 10,000 under $2M. Next week?
By the way, diminishing returns…NOT!. PPSF for the larger square footage was almost double at $546 MPPSF for the homes with median sf of over 5,000 sf and $230 MPPSF for those with median SF of 2,225 (all the rest of homes for sale). Just in case you missed that in the post 🙂
Here’s the rundown on Median Price except for currently Active Property:
1Q-2006 Res – $400,000 (sold price) $201 PPSF
1Q-2007 Res – $445,000 (sold price) $222 PPSF
1Q-2008 Res – $434,943 (sold price) $219 PPSF
Aug. 06 Res – $438,321 (sold price) $219 PPSF
Note: Reason I mention 8/06 is because of the Case Schiller results that indicated Seattle prices down to 8/06 levels. I have no other reason to care about that particular month. I
Condos:
1Q-2006 Condo – $237,500 (sold prices) $242 PPSF
1Q-2007 Condo – $285,000 (sold prices) $295 PPSF
1Q-2008 Condo – $289,000 (sold prices) $297 PPSF
Aug. 06 – $268,000 (sold prices) $268 PPSF
As of last night:
Residential King County:
Actively for sale under $2M $512,000 PPSF $230 DOM 53
Actively for sale Over $2M $2,850,000 PPSF $546 DOM 73
In Escrow – $449,950 PPSF 214 DOM 47
Sold YTD – $435,000 PPSF 219 DOM 53
Condo King County:
Actively for sale $325,000 DOM 54 PPSF 320
In Escrow $299,i950 DOM 37 PPSF 306
Sold YTD $289,000 DOM 51 PPSF $295
It doesn’t take a rocket scientist to note that “the trend” for Days on Market is going DOWN. If days on market in escrow IS lower, NOT LIKELY days on market of solds will be same or higher. That’s not “pretending to know”…that’s just “using the sense you were born with”.
“Statistics not compiled or published by NWMLS.
Kary said, “I’m just saying agents aren’t in a position to tell where prices are headed. If they were then they’d either call up all their buyer (seller) clients and tell them they should wait to do something because prices next month will be headed down (up). You wouldn’t represent both buyers and sellers simultaneously because you’d be advising one of the other to wait.”
If agents are NOT in a position to advise their clients, then they better GET into a position to advise their clients.
Clearly if someone says I want to buy now and sell next year…an agent who is “representing” that person needs to say something different than an agent who is “selling TO” that person.”
I have to leave my computer for an appointment in Seattle…so if I hesitate to respond, it’s not because I’m stumped or chicken LOL!
Ardell wrote: “If agents are NOT in a position to advise their clients, then they better GET into a position to advise their clients.”
I have a response to that, but it probably wouldn’t make it past the filters here.
It reminds me of attorneys who would get cases by promising great results at low cost. If you’re getting clients by promising things you can’t do, that’s simply not right.
Agents are not qualified to predict the future. Many of them don’t even understand the past and present. None know the future–but some might get lucky and guess it. Clients should not make money decisions based on the guesses of real estate agents.
Ardell wrote: “By the way, diminishing returns…NOT!. PPSF for the larger square footage was almost double at $546 MPPSF for the homes with median sf of over 5,000 sf and $230 MPPSF for those with median SF of 2,225 (all the rest of homes for sale). Just in case you missed that in the post :)”
Larger homes are probably appointed better. You need all things being equal. Like two houses built in the same development by the same builder using like features. I can’t believe we’re even debating this. Clearly the first 1000 feet of a house is the most valuable, the next 1000 feet the second most valuable, etc. But more to the point, if you think that you’re going to get $30,000 more for your house because it’s 100 square feet bigger than a house that sold for $300 a square foot, you’re going to be over-pricing, not under-pricing. That extra 100 square feet won’t even be noticed, let alone be worth $30,000 to a potential buyer.
Come on Kary, yeah nobody can tell the future but if agents shouldnt let clients know what they “think” about the market – who should? I think what agents “think” is very valuable information for the clients who pay them 3% commission.
Ardell I liked your idea to track the percent of sales price only for homes listed within the last 30 days. The issue of original list price surfaced in an earlier thread and you came up with a creative solution working with the data that is available. Unfortunately (for sellers) properties that sell within 30 days only accounts for 1/3 of sales, and I don’t think it considers concessions like seller paid closing costs.
Still, that data point along with the median $sqft for closed vs. active listings gives a pretty good indication that there’s a pricing gap between buyers and the majority of sellers. Is it any wonder inventory keeps climbing?
Kary, I can tell the future- it’s a gift that grows from education, experience, and common sense. In this case, I can predict that home prices will continue to decrease, YOY sales volume (the only metric that matters) will continue to decrease, and Realtors that don’t have the best interests if buyers and sellers ahead of their own will rapidly lose credibility and business. At least Ardell is grounded in reality, and tries to do the right thing. And while I’m not her biggest fan, I do have a ton of respect for her.
“There’s a little bit of Lawrence Yeun in every Realtor…”
Kary,
In my previous background I had to advise clients when to buy and sell stock,and which stock, and I had to make educated guesstimates based on data and historical trends and current economic climate,etc….
In your background you were an attorney and had to suggest a strategy based on your best guess of what a judge or jury might do.
Neither comes with guarantees, but clearly neither of us could as what we used to be, or can as the agents we are now, simply scratch our heads and say “I dunno; what do you think?” to our clients.
Kary re #11,
It doesn’t work that way in real estate. The law of diminishing returns does not kick in until the excess is an extra in excess of 10% of the value without that extra.
A 2nd bath has a huge return, a 5th doesn’t.
A 3rd bedroom has a huge return, a 4th has a good return a 5th has some return, a 9th has almost none.
Much depends on what that “additional” square footage contains. A dead space wider hallway? Nice to have, but you likely won’t get paid for it. A half bath…small square footage but decent return for the increment of more square footaage.
In general, here in the Seattle Area including the Eastside, above ground extra square footage DOES value out and does not have a diminished return.
The #1 mistake buyers and agents make in the Seattle Area is not acknowledging the difference between main floor footprint vs. basement square footage and above ground vs. below ground. I see buyers overpay because of that, I see sellers overprice because of that and arguing it doesn’t make any difference, is just an accident waiting to happen.
Conrad,
There may well be “a little bit of Lawrence Yun in every Realtor…”
I’m not a Realtor and I have no Lawrence Yun in me. An economist should have no opinion that stems from a vested interest in the outcome…nor should a fiduciary.
One of the hardest things I do every day is put aside my self interest and it does not happen naturally or easily or ever, I’m sure…completely. I clearly haven’t met anyone who does it better than I, and that’s just how it is. I may be one of the only agents who was a fiduciary for many years prior to becoming an agent…and that gives me an edge in that regard.
Kary –
What exactly do you offer your clients for that 3% if your response to questions is “who knows?!?”. Do you also fail to offer advice on if a neighborhood is good or not? If the area is going to be better or worse in 5 years? If a particular house is properly priced or not? I am very curious if you only draw the line at “well, it looks bad for my sale” or if you avoid anything that is not 100% predictable.
Ardell –
Couple of questions. First, do you think the drop in price/ft of in escrow compared to closed means we are heading for further price deterioration? Second, is it possible that condos are holding up well because of builder incentives keeping prices artificially inflated? I know that has skewed a lot of statistics down here in San Jose regarding condo sales, about a year ago they started to keep the price the same but threw in $50k worth of stuff (now they are just dropping the prices instead). I would think condos would be particularly vulnerable to this since I assume new construction is much more heavily represented than compared to SFH.
Ardell, I guess we’re going to have to agree to disagree about diminishing returns on square footage. I think you’re seeing the effect of other features and attributes.
And we’ll have to disagree as to the predicting the future thing too perhaps. But the stock thing might change your mind. I assume you didn’t try to predict the future of a stock price solely by the prices it has been at in the last few months, and what it did prior years in any given month. You’d also look at a number of other factors most of which you would obtain from financial reports, as well as projections of future earnings by analysts.
So I guess if you want to go out and look at projections of unemployment in King, Pierce and Snohomish County, projections of jobs added/lost in the same counties, projections of interest rates, gas prices and probably 10 or 20 other pieces of economic data, you could do something similar with real estate prices. But absent doing that, you’re just predicting price based on patterns, which again I assume was something you didn’t do with stocks. (And I say that believing in some charting theories when it comes to stocks.)
b–what I do for the 3% is things that are within my area of competence. The last thing I do is try to tell the client what they want to hear when I don’t know the answer. As I said before, no agent (or any other person alive) knows where real estate prices will be in three months–at best they might be right with a guess. Clients deserve better than being told a guess when they’re looking for information.
b wrote: “What exactly do you offer your clients for that 3% if your response to questions is “who knows?!?
Conrad wrote: “Kary, I can tell the future- it’s a gift that grows from education, experience, and common sense. In this case, I can predict that home prices will continue to decrease, YOY sales volume (the only metric that matters) will continue to decrease, …”
Nope, you’re just guessing, and you know that. Either that or you’re deceiving yourself as to your own abilities.
I agree (and have said) volume is really the important number right now, and I have reasons unrelated to real estate to be pessimistic about that number (gas and traffic related), but I would not be at all surprised to see volume numbers go either direction.
I’d close by saying: “There’s a lot of Lawrence Yeun in every Bubblehead…
Cute ending Kary :-).
Looking at the big picture is useful, to a point. But, to properly advise specific clients, we look at the market data for their price range, geographic area and take that big picture data way down to the specifics that fit the section of the market they are in. Puyallup data has no bearing on Queen Anne data, none whatsoever.
Kary is correct about condos. You have to look at each building very carefully, there is a lot more at stake than just the general ‘big picture’ data of all condos. We’ve all seen condo buildings shrouded in plastic for siding and window repairs … those repairs can get very expensive, and while you cannot always know what the future brings, you’ve got to read the Resale Certificate data carefully. The financial strength of a Homeowners Association is incredibly important to your pocketbook.
Sorry, Kary- no guessing here. I’ve never made an investment decision based on a guess or a hunch. Things happen for a reason. On a macro economic scale one can measure inputs and outputs, and come up with a pretty accurate near term projection for sales and prices. And until we see a pretty dramatic change in one of those inputs, i.e. interest rates, population growth, wage increases, or the return of non-traditional financing and loose lending standards, prices will be reverting to the mean. That means prices and volume will continue to fall. It’s not about bubbleheads verses cheer leading Realtors, it’s about reality. By the end of this year things may change, but at this time there’s nothing positive even on the horizon. But there is much to suggest it will get considerably worse.
Kary said: “Where a neighborhood is well kept up, I will point that out, but where there’s a mess across the street I’ll let the buyer notice that (it might not bother them).”
That’s the point in a nutshell, Kary. Agents are quick to point out the good stuff that will impress people, but lax at pointing out the weaker points. When the market was good no one said “you shouldn’t say” and it does appear that you don’t want me to say anything but “March is better…rah, rah, sis-boom-bah”…wait, let me go get my pom-poms.
When I represent the buyer (vs. the seller), I consider it to be “my job” to find the BAD stuff to the best of my ability and point that out, and make sure my client didn’t miss any bad stuff…not point out the good stuff. I’m a little “odd” that way.
Call that “fiduciary” or call that The Golden Rule. Clearly if you hire someone to represent you in the purchase of a home, you would hope they would tell you about every “bad” thing they can find, and you would expect them to do their best to find it. Inspectors do not look at aesthetics and my clients should not have to pay an inspector to find out the obvious, if knowing that obvious would have precluded them from making an offer in the first place. That’s a waste of their money on an inspection fee.
Often when we go into a property they go see the good stuff and I’m saying “come over here and see this mold” and Kim is down in the basement saying “stuff” about the wiring and checking the date on the hot water tank and looking for a service tag on the heater.
The clients can find the good stuff without my help. It’s the bad stuff they tend to overlook 🙂 Often because of the “staging”. I am very careful not to “stage away” defects, but many are not. Often buyers get distracted by the great furniture, while I’m trying to make sure they didn’t miss what the place looks like without it.
Honestly Kary, I can’t believe you said, ” “Where a neighborhood is well kept up, I will point that out, but where there’s a mess across the street I’ll let the buyer notice that…” Even if you do that, even if you let yourself think that…I can’t believe you said it here in print. You sure you don’t want me to delete that? 🙂
This blog has always been very informative. Thanks not just to bloggers like ardell but also to the readers who care to post informative comments.
Kary, you are a regular poster in the comments section and it was surprising to see that you do expect prices to recover in near future. Most of the indicators are pointing south and though the long term outlook for the area might be bright but next couple of quarters sure don’t look rosy.
It is necessary that we see some contraction for the health of the economy and I am glad that we are seeing it finally.
“Ardell – Couple of questions. First, do you think the drop in price/ft of in escrow compared to closed means we are heading for further price deterioration?”
First, let’s be fair and note that the price/ft of in escrow is UP for condos and not “dropped”. For the best answer, I think you have to also note the decrease in DOM. Condos are up PPSF to $306 (asking prices in escrow) with days on market down to 37 from 51. That means the better stuff new on market is making an impact on prices and days on market.
The single family homes are not YET following suit because the weather has been exceptionally sucky. Cold, rainy…and not conducive to the influx of good new inventory on a larger scale. When the best comes out to play, I expect to see the Residential side following suit with shorter median days on market and a higher PPSF during “high season”…we ain’t there yet. Condo owners aren’t as worried about waiting until they can plant the flowers. They usually plant “winter flowers” and then replace them with “summer flowers”. The average homeowner doesn’t do it that way. In another 45 days, I think you will see new on market residential creating the same impact of shorter median days on market and higher MPPSF. Residential is just lagging the condo market as to “opening of high season” and the stats are reflecting that.
“Second, is it possible that condos are holding up well because of builder incentives keeping prices artificially inflated?…”
To be fair and accurate I would have to split out new from all categories and not just in escrow to do the comparisons. I have to leave for an appointment in 9 minutes and started the research, but don’t want to post anything without triple checking it. I’ll catch that one when I return.
Chaina,
I think what Kary is referring to is that the second and third quarters will be better than the last and first. I agree with him, but it is very important not to suggest that means we are past some “bottom”, as that is a seasonal experience we could all predict will happen. It’s just the way the cycle works.
Comparing that portion of the cycle, the good part, to that same good cycle of the last two years and noting the downward trend is important. Otherwise buyers and sellers will think it is something that it is not, and become complacent or mislead by the good news of Spring and Summer. There will be good news in Spring and Summer compared to Fall and Winter. That is not a sign that things are better or a suggestion that the market has “recovered”.
Conrad wrote: “Sorry, Kary- no guessing here. I’ve never made an investment decision based on a guess or a hunch. Things happen for a reason. On a macro economic scale one can measure inputs and outputs, and come up with a pretty accurate near term projection for sales and prices.”
What area are you talking about? Without specifying an area all of this is meaningless. Even within King County some areas are up and some are down, YOY. So even your saying they will continue down is incorrect, depending on the area.
But if you think it’s so simple, state what you think median SFR King County prices will be for April, 2008.
What really amazes me about this whole topic is that if a buyer or seller came in here and said their agent was saying prices were going to rise or drop, I don’t think anyone would ever advise them to listen to their agent’s advice in making a decision. That would be completely foolhardy. Given that, why should agents make predictions?
Chaina wrote: “Kary, you are a regular poster in the comments section and it was surprising to see that you do expect prices to recover in near future. Most of the indicators are pointing south and though the long term outlook for the area might be bright but next couple of quarters sure don’t look rosy.”
You’re really missing my point. I’m not making any predictions as to where the market is headed. I think it’s impossible to predict. So I don’t think it’s rosy, I don’t think it’s gloomy. I have concerns, but I don’t think those factors will necessarily drive the market one way or the other.
Ardell wrote: “Honestly Kary, I can’t believe you said,
Ardell wrote: “I think what Kary is referring to is that the second and third quarters will be better than the last and first. I agree with him, but it is very important not to suggest that means we are past some “bottom
Yes Kary, “people” CAN focus on just price alone. We can’t.
Now that the 1Q stats are in I will make some predictions, but will do it as its own post. It may be like guessing the number of jelly beans in a jar…some are better than others 🙂
While I post some relevant details and stats, my “predictions” are based on many factors. I knew the market was going to have a problem before the stats indicated such, not due to the same factors as others. I knew it when agents were working much harder to get the same results. That is the first sign of a weak market and does not reflect in the stats until that working harder does not produce the same results.
Ardell –
I like the change to $/sq foot. It makes sense to me. You might want to take a look at the Radarlogic stats for the Seattle MSA (vs. Case-Shiller) as they are reported in terms of $/sq foot.
They’re reasonably consistent with what you are showing – latest read (as of early Feb) was $211 sq/ft, a level last seen in June 2006. From the peak (in June 2007), that index has dropped about 10%, and is falling at an annualized rate of 17%.
Deejayoh,
I don’t trust anyone else’s data without check it myself. I know mine are real. Not perfect for sure as there are duplications in the system caused by “AREA” crap. I wish the mls would drop that antiquated and classist system.
Unless I split out vacant land and multi-family and double-wides into their own groups, and houses from condos, I don’t think the stats are meaningful. So I do them myself.
Maybe it only skews slightly, like the difference between $211 and $214. But when the market is moving in small percentages, those $3 could be meaningful and misleading.
I don’t need to look at other stats, I have access to the real deal and I’ve got peeps 🙂
Another problem with other stats is that you don’t necessarily know precisely what area it covers. As mentioned before, the larger the area, the less useful the information.
Ardell –
Well, if you know Case-Shiller – you should probably know about Radarlogic. They are kicking C/S butt on volume of contracts traded. It’s not some rinky-dink think as you perhaps are thinking. I’d wager that it will be come the pre-eminent source of “indexed” real estate values over the next couple of years.
deejayoh,
I don’t follow either, nor do I think either are “rinky-dink”. I just prefer to do my own stats and predictions. I only referenced Case Schiller because someone noted them here in a comment.
I did look at Radarlogic. But generally I don’t like to be influenced by what other people are saying, so I don’t look at what other people are saying. If several independent sources say the same thing, me being one of the independent sources, then we have a concensus. If we all look at each other, we can’t later separate how much we might have been influenced by one another.
It’s like when a seller says “I want x $ for my house.” I can’t erase that from my brain and it clouds my opinion.