When I did my stats for King County for the month of November, my numbers were actually worse than those reported on Seattle Bubble. I have come to rely on Seattle Bubble as being the place where I can find the worst possible news about the housing market. But I have double, triple and quadruple checked my numbers, and I still come up with only 768 sales of single family homes in the month of November.
This from The Tim at Seattle Bubble: “What immediately jumped out to me was Closed Sales, which were down a whopping 43% YOY, coming in at just 869 SFH sales county-wide.”
My figures show a drop YOY of just over 46% from 1,427 sold in November of 2007 to 768 sold in November of 2008 for Residential Property in King County. While that is only a modest difference, when I look at condo sales YOY, the numbers are even worse and down 58% from 555 sales in November of 2007 to 230 sales in November of 2008.
A more significant factor is the % down from peak volume for any month of November. For Single Family Homes, that would be November of 2004. For condos that would be November of 2005. Based on my previous research, that variance is due to the fact that by November of 2005, many people were priced out of the single family home market, which pushed the peak sales into 2005 for condos.
For single family homes, November of 2008 sales are almost 70% lower than peak volume for the month of November.
For condos, November sales are slightly more than 70% lower than peak volume for any month of November.
The Tim correctly points out that “For comparison, that is lower than any month on record (post-2000).” However, I think it is more currently relevant to point out the relationship of November 2008 sales volume to a most recent lowest volume, that being January of 2008, I have shown this figure as a dot on the graph below, green for condos and purple for SFH.
Conclusion: Both single family and condo sales in Novmeber of 2008 are approximately 70% under peak volume, and 20% under the previous, recent low point of January of 2008.
Seattle Area Home Sales Volume
I’m just getting my data from the NWMLS recap pdf, available here. If the number of King Co. SFH closed sales quoted in there is too high, nothing much I can do about that. Perhaps you should have a word with their statistician.
Any way you slice it though, November really was awful for closings.
Tim,
If I could guess, I would suspect that maybe they add an amount that they expect to be added for late postings. But I don’t think I’m allowed to guess 🙂 I doubt late postings will account for the difference, but I’ll update this post in a week or so.
I always do my own numbers, as I just don’t trust anyone these days. Though when mine were worse than yours, I must say I took an extra day to verify my facts, hence “Sunday Night Stats” on Tuesday.
I even checked the County Closed Sales, and I do see more sales outside of the mls than I did a year ago, but it’s too hard to break those down to real sales vs. foreclosure and trustee sales. I don’t want to count a sale when the bank “takes it” and again when someone buys it from the bank, so other than noting the increased variance, I make no bottom line conclusions about that variance.
Do you agree with me that November 2008 closed sales has just GOT to be “the bottom” as to volume?
The Tim,
I may be borrowing that bottom graph in your post come February 10th or so of 2009, as I believe January of 2009 sales will be the first time in 10 years that January prices come out the gate lower than the previous January price. It’s pretty much a given, isn’t it?
“Do you agree with me that November 2008 closed sales has just GOT to be “the bottom
I agree with Deejayoh’s answer. I’ll bet December closed sales come in lower, but if prices keep heading down we’ll see sales start to pick up slightly next year.
And yeah, I guess Jan. ’09 will be the first time in the 15 years worth of data I have that the January median King Co. SFH price comes in lower than the previous year’s January median. At this rate I wouldn’t be surprised to see January 2009 come in below January 2006, which was $390k.
Ardell, Charleston pretty much had the same kind of November as Seattle. I think that November closings would have gotten started in early to mid September and October; remember that the stock market was tanking, a lot of wealth vanished and consumer confidence turned non existent. Then people started to worry about job security. I think we’re in for about 4 dreadful months and I optimistically look for a spring rebound. If inventory levels in Seattle are like Charleston (our absorption rate is over one year), prices will obviously continue to be pressured.
There have been widespread rumors published that mortgage rates will drop into the 4s for purchasers only if you can just wait until after December. I would imagine that December closings will be as low as low can be.
How is the activity level at the real estate offices?
Deejayoh and Tim comments #4 and #5,
I’ll half agree. If condo sales are fewer than 231 (another one was entered since I wrote this post) in December, we’re all going to choke on that number.
December of 2007 there were 482 condo sales. Even if we had the same YOY decrease of 58%, that would be 50 or so more sales than November.
Ardell, the official NWMLS numbers never match the Locator numbers. Usually though the discrepancy isn’t as large as it was this month (either in absolute numbers or a percentage).
Prior to the end of November I was blaming the low volume on “Paulson the Destroyer,” our not-so wonderful Treasury Secretary. It’s not so much his warning that the economy could collapse that I had a problem with, but more his inability to be coherent and consistent. He destroyed consumer confidence, which was shown in the October consumer confidence numbers and the November NWMLS sales, which would be largely based on October contracts..
As to the bottom, even though I don’t like making predictions, I could see November perhaps being the bottom for volume, absent another major economic news story. I say that because I’m attributing the low volume to a major economic news story in October. For price I wouldn’t be so sure and as typical, I wouldn’t begin to guess that. For the very short term I would note that November was the first month where the median pending was above the median closed, but it was just barely above. That’s a good sign compared to recent months. Since the end of November it’s fallen, although that could be due to higher priced homes closing at the beginning of the month. But the low volumes, if not reversed, could lead to some desperate sellers going forward.
Cautious Buyer,
Conventional Rates have already dipped below 5% here and there. FHA and VA rates have got to come down. They are unrealistically high for a Country that suggests they are doing everything possible to correct things.
FHA & VA at 4.5% would blow the big black cloud off this market. Someone whisper that in the proper ear please.
Howard/CharlestonBlog,
When did you market start to go bad (2005?) and where are your current median prices relative to peak pricing?
Kary,
I’m clearly only talking volume here…price has a long way to go as to the majority of property listed.
“But the low volumes, if not reversed, could lead to some desperate sellers going forward.”
Kary,
The volume is impacting agents and brokers more than individual buyers and sellers. 230 sold condos in King County in November with 1,300 offices and over 13,000 agents? The scarcity of food at that table is going to cause a riot.
“How is the activity level at the real estate offices?”
See comment above and do the math. Still, I’ll bet someone sent me a “good news” email today 🙂
I would agree volume affects agents and brokerages greatly, but I would also say it affects individual buyers and sellers too. It’s good for buyers and bad for sellers. The absorption rate going up (down?) so dramatically really affects sellers a great deal.
Ardell, in hindsight, I would call our peak the 4Q 06 but prices continued to be very stable through 07 and most of this year despite what I would characterize as a massive inventory buildup and sharply declining unit sales over the past 2 years.
As to median, prices held steady from 06 to 07 and continued to be steady through summer. Only in the last few months have we seen price declines averaging about an 8% decline from peak.
The bigger story is that unit sales declined by 22% from 06 to 07 and declined by 32% from 07 to 08. Combined with high levels of inventory, that spells pricing pressure. Howard
Wow! 13000 agents, 1300 offices, 768 sales? I’m calculating $1,418 average income per agent, minus whatever the broker takes, minus expenses, minus any cuts to the commission, minus any sales without commissions. (OK, 12% of agents getting $12000 minus all that)
I’d say 75% of agents need to leave the business to support that level of volume.
88 condos and 371 houses went pending since the first of December.
43 condos and 191 homes have closed since the first of December.
88 + 371 divided by 9 is 50 people a day deciding to buy something 🙂
How many of those 13,000 agents are “full time”? How many are going to be looking for other jobs soon? I’m guessing there has already been an exodus of agents, but ouch.
Gene,
Seems to me the current 13,300 or so is a drop off from 16,000 plus. That’s just King County, but since I am only doing King County sales stats, that seems appropriate. There is, of course, some cross over between Counties.
King has 16,000 listings and 13,300 agents while Snohomish has 8,000 listings to 3,700 agents and Snohomish 9,200 listings for 3,300 agents. The number of agents in King County is insane.
Lots of agents are very part time. There are a lot of low cost options for hooking up with a broker. If they require that you be a “Realtor” that could cost an inactive agent more than what they pay the broker.
Re. accuracy of the stats, my purchase doesn’t show up on Redfin or Zillow even though I closed about two weeks ago (it shows up in the King County records just fine.)
Of course, mine was a short sale at a very discounted price. I wonder if short sales, foreclosures, and REOs are screwing up the NWMLS stats in some way…
Sales volume will rise as prices drop.
I can see your sale, Sampai, so it is clearly included in my lower number. I can see it in the mls and on the tax records, both.
It is the listing agent who “records” the sale in the mls. Usually within 24 to 48 hours of closing.
Alan,
I think the middle months will sell at higher medians, same as last year. April through July will carry a higher median sold price. The end of next year may look a lot like the end of this year, especially if interest rates are in the 5% or lower range including FHA, for most of 2009.
Ardell must be a mind reader… How did she know that I predict sales will be considerably lower in 2009?
To be clear, I wouldn’t be surprised to see an uptick in sales for 2, 3, or even 4 months. The increase in foreclosures will likely goose sales somewhat, if nothing else (places like California have witnessed this phenomena), but things are hardly healthy when the majority of sales occur only in distressed properties.
Nevertheless, at this time next year I suspect we will be looking at an even more dismal year for sales than 2008. My reasons, of course, are that we are entering a deflationary cycle during which people will become increasingly reluctant to buy assets which have a growing likelihood of depreciating. This expectation of declining prices will only gain more of a grip as 2009 progresses.
Mortgage rates will continue to stay low, and possibly drop even further, but that won’t do anything to increase sales volume.
I have podcasts on this phenomena at http://msurkan.podbean.com.
One thing that could help the market is the hopefully immanent repeal of the bad portions of the Distressed Property law. That would most likely cut down on completed foreclosures considerably.
Sniglet: “Mortgage rates will continue to stay low, and possibly drop even further, but that won’t do anything to increase sales volume.”
I don’t think you can say it won’t do “anything to increase sales volume”. Clearly there is some % of buyers who will be inflenced by “payment” buying. We can disagree on what that % may be…but it won’t be none.
Kary,
What does it matter if a “sale” is a short sale or a foreclosure? It’s still a property changing hands at the end of the day. I’m still not convinced that anyone is better off doing a short sale vs. a foreclosure…except the agent participants.
I agree there were more sales in November done at the Courthouse steps, accounting somewhat for the drop in sales done within the mls system. But from a pure “property sold” standpoint, what does it matter if a buyer bought it at the Courthouse or with an agent through the mls?
Not all foreclosures are avoided through short sales. Many of them used to be avoided by someone coming to the door and offering the owner $5,000 to move. The legislature decided that those owners were better off being foreclosed out on the street, and having a foreclosure on their record, than they were having $5,000 in their pocket and no foreclosure on their record. It’s the nanny state where the state thinks it knows what’s better for people. The nanny state is a bit naive.
BTW, back when I was a practicing attorney, if someone had come to me in that scenario, where the only options were the $5,000 sale, foreclosure or bankruptcy, I would have probably advised them to take the $5,000 sale unless they had either a ton of equity or a ton of other debt, making bankruptcy a more attractive option. Foreclosure is clearly the least attractive option.
If the lender buys the property at the foreclosure auction, is it considered a sale?
Kary,
I’m still stuck on if foreclosure is the best means of being absolved of future liability for the shortfall, how can it be the least attractive option? Seems it could be the most attractive option.
I wouldn’t call a bottom on anything in this economic environment. It’s no longer only bubble items as homes and oil that suffers, it’s everything. People consumes less and spend less in a recession. There are currently no signs of an economic recovery instead it’s further deterioration. So I think volume will stay depressed well into the economic recovery, it can be years from now. For housing in specific you also need affordability in the current lending environment and the buyer will need to think that he gets a very good deal to get into a falling market. I agree with sniglet that due to the unwillingness for sellers and agents to accept the reality of lower home values and price accordingly the majoirty of sales will likely be short sales and foreclosures since they fill both those requirements. The contraction of jobs has just started, though a very rough start with the +3000 unfortunate WaMu employees. That we have a bottom now in volume is unlikely.
Tom,
I would not consider it to be a sale until the bank owner resold it. Using mls stats, you don’t have to factor in these issues. But when I used County Tax Records, I could not do all of King County for many reasons, including the question you raised. That was the least of my concerns though, as the number of properties I caqn search is greatly limited in the Tax Record General Query vs. the mls search function.
On a small scale, I could see recorded sales being higher outside of the mls by about 4%. Most of that 4% was not banks taking back the property as much as it was private party purchases either on the courthouse steps or by some other means.
The number of people willing to buy at higher than the lowest possible prices will increase March through July. That’s a prediction; not a fact 🙂 It’s one of those, “If median price in the 2nd and 3rd quarter of 2009 is not higher than 4th quarter of 2008, I’ll ______”
Ardell, I was addressing the situation where an owner with some equity is being foreclosed. The distressed property law makes it less likely they’ll realize anything in that situation.
Well, let’s not think that way, Kary 🙂 Most properties going into foreclosure do not have equity. If equity equals Price at which it can sell (vs. purchase price) less what is owed, it would be sold vs. foreclosed upon.
Someone with lots of real equity going into foreclosure must have no family or friends to assist them in their decision making process. How many people are there that fall into that category?
How many foreclosures today are with equity vs. not with equity. That latter has got to be the majority. Let’s keep the majority as the basis for discussion as in the greatest relvancy to the most amount of people.
With hundreds of agents beating the bushes for business, how likely is it that a house with equity would not end up being listed for sale vs. going to foreclosure? I would think most foreclosures are upside down.
Ardell, never underestimate the ability of people in financial trouble to procrastinate or otherwise be dysfunctional. Many times over the years I had someone call me for bankruptcy representation the last week or even the last day of a four month foreclosure process. As to agents beating the bushes, the Distressed Property law makes them Distressed Home Consultants–so that would be a risky thing to do. That’s another reason why houses are more likely to end up in foreclosure. There are fewer agents trying to contact them.
The portion of the Distressed Property law not written by the AG does not look to punish people for doing bad things. It looks to punish them for doing things which are necessary to try to help people in distress. Therefore, there are fewer people contacting people in foreclosure.
Connecting the two points up, the part of the act written by the AG went after people who made too good of a deal with sellers in distress. By definition they had a lot of equity (many thousands), and by definition they had not sold on the open market. It was common enough that the AG thought we needed additional legislation to deal with the problem, and I’d agree it was common. This type of situation is brought about by the procrastination (and other dysfunction) of people in distress.
Do you have one concrete,real world example where your law has definitely harmed a seller, Kary?
From what I’ve read, when a foreclosed property is sold at auction, the proceeds are distributed as follows:
(a) to all expenses of the sale, including, but not limited to, reasonable Trustee’s and attorneys’ fees; (b) to all sums secured by this Security Instrument (i.e., pay off the mortgage); and (c) any excess to the person or persons legally entitled to it.
So excess equity is returned to the (former) homeowner.
Does the Distressed Property law change this for Washington?
Bili, read Dugald’s piece over in PI land.
http://blog.seattlepi.nwsource.com/realestate/archives/153603.asp
I was skeptical of his numbers at first, but I think later on in the comments he nails it down a bit. I suspect hundreds of people have been harmed. You can’t have the attorney for WR advising everyone to use form 22 NFW, which allows certain sales offers to be voided, without people being harmed.
Tom, no the distressed property law doesn’t affect the distribution of funds at foreclosures. But most foreclosures don’t pay more than what the deed of trust being foreclosed is owed.
What the DPL does do is make it less likely someone can sell once they get within 60 days of a foreclosure. IMHO, anyone who actually closes a sale within 20 days of a foreclosure of covered property is either ignorant of the law or extremely risk tolerant. Given the other inventory of properties available, it’s more likely the former than the latter.
Let’s go back to your “nanny state” issue, Kary. Wouldn’t it make more sense for there to be a law requiring a lender to contact a real estate company to try to sell the property before foreclosing, if there is substantial equity at time of default?
Sometimes stricter guidelines for all involved is warranted. Seems protecting someone in that situation would be fairly easy to accomplish.
Maybe they are sick or depressed or just old. Seems there could be some non-profit organization, a local church even, that the lender could call to offer assistance to an individual like that. A pro bono attorney appointment. Many answers better than what you are suggesting actually happens. If it did happen often enough, wouldn’t someone have created a non-profit agency or government agency to assist people with this problem?
Reminds me of the time I sold the house of a homeless lady. That was interesting. The City could have taken it at some point if no one got involved, but two agents a buyer and an attorney later, and the homeless woman had a check vs. a gutted property that was condemned.
Bad things happen when good people do nothing. There should be better answers for people in situations where they have a lot of equity and no income. Instead of a ton of businesses sprouting up to make money off of this mess, where are the non-profit groups lending a hand? If anyone knows of any, please post them here. I for one would be happy to do volunteer work for a program that helps people with this growing problem.
My sister does a lot of work along those lines in PA, but I have not heard of any here.
Ardell, I probably never saw the most dysfunctional ones because they probably never did anything at all to stop the process. I would think some sort of guardianship would be necessary, but you’d need someone to start that process. For other situations there are free debt clinics run by attorneys that could point a lot of people in the right direction. I’ll try to get information on those.
The thing is there probably is no one solution that would work best in all situations, and no one solution that’s bad for everyone. Unfortunately the 2008 legislature didn’t understand that.
Excellent, now maybe the prices will go lower and I can get my place in Kirkland
Did you see that 2007 built short sale East of Market between 3rd and 4th on 18th? That could be a good buy depending on where it sells. One of the other commenters here just got a screaming deal on a short sale in downtown Kirkland. It’s like looking through the shoes at Nordstrom’s rack. They’re not all winners, but some amazing deals are mixed in there.
My condo purchase finally showed up on Zillow!
For “normal” sales, I’ve noticed that the Zestimate usually changes to just below the sale price. However, in my case, my Zestimate has remained at about 25% *over* the sale price; so it looks like Zillow does not count properties with large “short sale discounts” in making Zestimates. Good news for my neighbors! I’m assuming appraisers usually follow a similar methodology…
The Zestimate is not immediately reactive like that. We’ll be talking to Zillow in the morning. They have their hands full at the moment. It’s not good news for the neighbors…no. Zestimates don’t have instantaneous reaction to sold price, but in CA the real estate taxes do 🙂
I have noticed that, on my friends’ homes, the effects of the sales on the Zestimates were indeed immediate. The Zestimates immediately dropped to just below the purchase prices.
Not so in my case, though. The Zestimate was updated yesterday, and dropped by all of $2K, which it has been doing in the normal course of things over the last couple of months. It’s still over 25% above my purchase price, which leads me to think that Zillow knows how to ignore distressed sales when Zestimating.
Maybe it varies by property, or maybe they’ve changed their policy. My house was not immediate, but they did go back after the fact and change the history of the value so that it doesn’t actually reflect what they thought at the time. As I recall it took 2 months or so for the sale to start having an effect, and even then the result was not to take it down to the sale price.
They’ve been screwing around with their algorithm for a while. Last Christmas my they were putting a zestimate up on my house of nearly 400K (which was absurd). A month later there was no history of it ever being over 350K.
I don’t mind them tweaking the algorithm, but the history should IMHO accurately reflect what they thought in the past, with maybe a disclaimer that they changed their algorithm. Perhaps a broken line at the point of a sale.
I have seen property showing “sale price” of record at 1/2 the value due to a sale between family members. Clearly using sale price as a hugely waited factor can’t be…some sales show at $1.00. Would an appraiser assume a sale price is market value? No.