We all know that prices can’t go up in large leaps the same way that they can drop significantly in a short time. It takes a lot longer to go up than down, due to appraisal issues.
It will take many weeks to build up enough data post Obama $8,000 Stimulus Credit to form any conclusions. But you have to start somewhere 🙂 Stats prior to the credit are somewhat irrelevant at the moment except to later see if in hindsight pre-credit was “bottom”. We won’t know that until next 4th Quarter and January of 2010. Until then, we’ll track week to week until we build up enough data to do larger market segments.
I am using MPPSF Pending Inspection King County SFH, as these are the most recent “went under contract” homes. The green columns are properties that went under contract pending inspection Monday March 2nd through Sunday the 8th. The purple columns went under contract pending inspection Monday the 9th through Sunday the 15th.
I broke the stats down into under $500,000 (2 columns on the left) and $500,000 to $1M (2 columns on the right). The lower priced segment is doing better, but both show slight improvements. These are asking prices, so all this is telling us at the moment is that buyers seem to be making offers on houses that are not priced quite as low on a median price per square foot basis, as they were pre-homebuyer credit. We won’t know if actual prices close higher until we get at least 45 to 60 days in front of the credit passing.
Data is not compiled or posted by NWMLS (required disclosure)
King County Home Prices inching Upward?
but prices typically start to inch upward as we get into Spring anyway, right? YoY prices are still down considerably, I’m sure.
I’ve been very closely watching the 500K – 1M market in Seattle proper for the past 6 months. In the last 4 weeks or so, a lot of homes have come on the market that are significantly nicer that what was available in December and January. And some of these are selling — some in the first few days.
It’s hard to know what’s going on with prices when looking at a time frame of 1 – 3 months because the mix of inventory changes. Nicer homes come of the market in the spring that fetch a higher price per sq foot than the junk that was left for sale in December/January.
I also wonder about the impact of the tax credit for homes above $500K since the credit disappears at a certain income level needed for expensive homes. But, maybe people don’t know that.
I’d love for this to be the bottom of the market because I’m a little tired of renting. But the 100% increase in foreclosures, the rapidly rising unemployment, and tightened credit standards suggests to me that we’ve got further down to go.
I’ve been very closely watching the 500K – 1M market in Seattle proper for the past 6 months. In the last 4 weeks or so, a lot of homes have come on the market that are significantly nicer that what was available in December and January. And some of these are selling — some in the first few days.
It’s hard to know what’s going on with prices when looking at a time frame of 1 – 3 months because the mix of inventory changes. Nicer homes come of the market in the spring that fetch a higher price per sq foot than the junk that was left for sale in December/January.
I also wonder about the impact of the tax credit for homes above $500K since the credit disappears at a certain income level needed for expensive homes. But, maybe people don’t know that.
I’d love for this to be the bottom of the market because I’m a little tired of renting. But the 100% increase in foreclosures, the rapidly rising unemployment, and tightened credit standards suggests to me that we’ve got further down to go.
I like your positive thinking Ardell and hope it is contagious!
I realize there is alot of wishful thinking on this site. But keep in mind that prices peak every year in the second quarter (Apr-Jun – seasonality).
Back to this particular post, I don’t understand how, if the under $500k segment went from 43.6% to 44.2% of all pending sales, one could infer that prices are moving up???
As for the 500k-1mm market, one of those 5 houses is in my neighborhood – it was listed last year for 675k and received an offer when they relisted it in the 540’s.
Nothing in the national economy suggests a quick rebound for real estate. The same goes for the Seattle metro area economy as well. Banks themselves are counting on a continued drop for at least another year and are lending accordingly.
I realize the large influence of positive thinking philosophies on realtors. However, in my humble opinion, it is a substantial personal financial risk to continue in a profession without being grounded in the reality of the prospects for that line of work.
Dr. Short “I’ve been very closely watching the 500K – 1M market in Seattle proper for the past 6 months. In the last 4 weeks or so, a lot of homes have come on the market that are significantly nicer that what was available in December and January. And some of these are selling — some in the first few days.”
Of the 4 properties I put in escrow since 2/15/09, 3 of them had another offer and one even had an escalation clause. None went over asking price. I remember seeing an agent on the news several weeks back saying the same thing. Multiple offers does not equal a “bid up” over asking price, though many suspect that to be the case. Often it just gets it closer to the asking price.
Happy Renter,
Prices are still considerably down from peak and YOY. I don’t expect the stock market to get back to 14,000 (8,500 give or take is my guess) and I don’t expect the housing market to get back to peak either.
DismalScientist,
“As for the 500k-1mm market, one of those 5 houses is in my neighborhood – it was listed last year for 675k and received an offer when they relisted it in the 540’s.”
If you email me the address privately, I’ll check it out and post my thoughts. If the $675,000 was an unrealistic asking price, it tells us nothing. I see many, many homes listed above where they should be. When they “come down” that is not reflective of values moving down.
To all: “prices inching up” could simply be a function of an area having fewer short sales and bank owned sales “in the mix”.
In some areas, the only things selling were short sales and bank owned properties, so the prices were dragged down to that level. As Dr. Short pointed out, as more homes come on market and sell that are not distressed properties, “prices will move up” as a result.
Good houses sold with normal inspections and normal process will always sell for more than “as-is” take it or leave it properties. Sometimes the prices going up and down is about the type of properties in the mix and the % of properties that are not distressed.
It’s spring, and the spring selling season is off and running. Add to that a short covering rally in the markets, low interest rates, and our naturally optimistic natures and suddenly we’re off to recovery! Oh how I wish that were true, but in reality I can’t identify one single fundamental economic indicator that has even leveled out, let alone stopped falling. Even our false market rally came to an end today.
On the “good news” front, the home across from ours, originally for sale for $995K, then $950K, then $895K, then $850K, then $799K, then $749K has been rented to a nice couple transferred up from CA. They have it for a year (while the seller waits for the market to recover). Bets, anyone?
Scotsman,
“A recovery” to me is simply prices not continuing to fall from here. We won’t know that until we see if this “burst” is simply people who were waiting for the credit to pass. It can all unravel in the next 45 days. That’s why I’m doing 7 day tracking from Monday through Sunday of the most recent sales gone pending inspection.
I used Pending Inspection vs. straight Pending as it bypasses some (not all) of the as-is investor transactions. It only bypasses those that don’t ask for an inspection in the contract. Flippers usually don’t ask for an inspection as they are going to make improvements as needed anyway, and usually evaluate defects prior to offer. Those sales are counted after they come back on market to an “end user” and not on the first sale to the investor at deeper discount.
“Even our false market rally came to an end today.” We didn’t lose any ground…unless you call a measly 7 points “losing ground”. That’s pretty darned good for a Monday.
As to the neighbor’s house coming down and then renting:
1) send me the email privately and I’ll see if the price reductions ever hit a realistic asking price. That is more important than tracking reductions. If the start price was “pie in the sky” pricing…it’s irrelevant.
2) People need to be aware IF they have equity that the rule of no capital gains if you have lived in your house 2 of the last five years has changed. Bush changed it effective 1/1/09. If you know the neighbors, warn them to check the tax code change on that. Obama could change it back, but best to assume he won’t at this point.
Scotsman,
Lost track of the Dow for an hour or so while scheduling a home inspection. Was doing pretty darned well…until that last hour. The 4 day rally of last week was the first since November of 2008. As long as it stays in the 7s for 30 days or so and heads towards the 8s…I’m a happy camper. Will breather easier when and IF it is “hanging in the 8s” again. That’s where I think it should be.
We all know that prices can’t go up in large leaps the same way that they can drop significantly in a short time. It takes a lot longer to go up than down, due to appraisal issues.
I didn’t know that. I thought that RE prices were “sticky” and went down more slowly than they went up.
Alan,
Back to my “down 3-5; up 5-7”. Up takes longer than down, when up follows a down vs slightly up market. The down is only slow because of cause and effect. Cause in this case being tight credit = fewer buyers = lower prices…once everyone “gets on board” as to pricing for tight credit and fewer buyers.
If agents and sellers decided on 8/1/07 that tighter credit would = fewer buyers and lower prices, they could have gotten in front of that quicker. But most people want to price at what the last house sold for…and most agents use a CMA based on “comps”…so the process of down is slowed a bit.
The process of UP is even slower because 3 comps equals a “market price” and less sales equals longer to get 3 comps and these other factors.
Lenders get very skittish right after a down market and the appraiser gets tighter in his analysis. MUCH tighter. Here’s an example:
In a hot seller’s market, each sale was 5% more than the last one (I have a specific townhome complex in mind as this example). 6 sold in one season as follows:
Sale #1 $300,000
Sale #2 $315,000 5% more and appraiser said sure…no problem
Sale #3 $330,750 5% more and appraiser said sure…no problem
Sale #4 $347,000 5% more and appraiser said sure…no problem
Sale #5 $365,000 5% more and appraiser said sure…no problem.
If there were only 2 sales in six months, that complex would have appreciated by only 5% or 10%. Because of high volume in a short period of time, that complex went up 21% in 4 months time with 5 sales back to back. The appraiser is allowed to add 5% for “appreciating market conditions” but doesn’t “cap” the overall effect in a short period of time (which they should). They work one sale at a time allowing for massive appreciation in a short period of time in an UP market. High volume hot market equals up fast. Not so in a “maybe up” market during or following a “depreciating market” with a red flag to appraisers.
Same neighborhood:
Sale #1 after the $360,000 sat on market for 6 months while the lenders decided what their “new” criteria would be. Lenders raised credit score needed. Lenders raised % down needed. FHA was an unknown lending source for most agents and lenders in that area. Took 6 months for the next sale to happen. By the time the first sale happened there were NO comps within the last six months, so appraiser went out of area to a lesser neighborhood and would only appraise it for $325,000.
Sale #2 3 months after Sale #1 uses $325,000 as the comp, reduces for declining market, takes two comps from nearby lesser neighborhood and only allows $315,000 on the appraisal.
The market gets dragged down sale after sale this way in the down market…slow but sure prices drop.
New year…better market…
Sale #1 a buyer is willing to pay $340,000…YAY…not so fast…appraiser looks at comps from last 6 months and will only appraise it at $310,000 taking a “down market” discount from the last comp of $315,000.
Appraisers using hindsight AND a “depreciating market” vs. “appreciating market” directive…will hold the up market back considerably, as lenders are overly cautious for usually a couple of years after being burned while licking their wounds.
Pendulum swings…as they say. Appraisers in an UP “appreciating”
market will FUEL the fast up. But in the up market following a down market, they use a “depreciating market” directive and slow the process of homes and neighborhoods appreciating.
Capish?
Alan,
Back to my “down 3-5; up 5-7”. Up takes longer than down, when up follows a down vs slightly up market. The down is only slow because of cause and effect. Cause in this case being tight credit = fewer buyers = lower prices…once everyone “gets on board” as to pricing for tight credit and fewer buyers.
If agents and sellers decided on 8/1/07 that tighter credit would = fewer buyers and lower prices, they could have gotten in front of that quicker. But most people want to price at what the last house sold for…and most agents use a CMA based on “comps”…so the process of down is slowed a bit.
The process of UP is even slower because 3 comps equals a “market price” and less sales equals longer to get 3 comps and these other factors.
Lenders get very skittish right after a down market and the appraiser gets tighter in his analysis. MUCH tighter. Here’s an example:
In a hot seller’s market, each sale was 5% more than the last one (I have a specific townhome complex in mind as this example). 6 sold in one season as follows:
Sale #1 $300,000
Sale #2 $315,000 5% more and appraiser said sure…no problem
Sale #3 $330,750 5% more and appraiser said sure…no problem
Sale #4 $347,000 5% more and appraiser said sure…no problem
Sale #5 $365,000 5% more and appraiser said sure…no problem.
If there were only 2 sales in six months, that complex would have appreciated by only 5% or 10%. Because of high volume in a short period of time, that complex went up 21% in 4 months time with 5 sales back to back. The appraiser is allowed to add 5% for “appreciating market conditions” but doesn’t “cap” the overall effect in a short period of time (which they should). They work one sale at a time allowing for massive appreciation in a short period of time in an UP market. High volume hot market equals up fast. Not so in a “maybe up” market during or following a “depreciating market” with a red flag to appraisers.
Same neighborhood:
Sale #1 after the $360,000 sat on market for 6 months while the lenders decided what their “new” criteria would be. Lenders raised credit score needed. Lenders raised % down needed. FHA was an unknown lending source for most agents and lenders in that area. Took 6 months for the next sale to happen. By the time the first sale happened there were NO comps within the last six months, so appraiser went out of area to a lesser neighborhood and would only appraise it for $325,000.
Sale #2 3 months after Sale #1 uses $325,000 as the comp, reduces for declining market, takes two comps from nearby lesser neighborhood and only allows $315,000 on the appraisal.
The market gets dragged down sale after sale this way in the down market…slow but sure prices drop.
New year…better market…
Sale #1 a buyer is willing to pay $340,000…YAY…not so fast…appraiser looks at comps from last 6 months and will only appraise it at $310,000 taking a “down market” discount from the last comp of $315,000.
Appraisers using hindsight AND a “depreciating market” vs. “appreciating market” directive…will hold the up market back considerably, as lenders are overly cautious for usually a couple of years after being burned while licking their wounds.
Pendulum swings…as they say. Appraisers in an UP “appreciating”
market will FUEL the fast up. But in the up market following a down market, they use a “depreciating market” directive and slow the process of homes and neighborhoods appreciating.
Capish?
I don’t think that you can draw any trend conclusions based on comparing 2 weeks of price per square foot data. Price per square foot is too “noisy” time series to use in this way.
For example, I took a look at 3 months of sales for Seattle – +500 sales. The weekly time series looks like a random walk. Off a mean of $287 per square foot, the standard deviation is $40. That’s a pretty good variance
Here are the numbers – weekly average $/SQFT for three months ending Feb 24 2009 (from Redfin)
12/15 $322.82
12/22 $281.73
12/29 $265.20
01/05 $218.85
01/12 $262.43
01/19 $307.12
01/26 $286.16
02/02 $376.64
02/09 $260.32
02/16 $294.41
02/23 $283.06
I wouldn’t try to call any trends from that data – and it is based on a much longer time series. FWIW, The 28 day moving average that Radarlogic uses seems to do a pretty good job – but it is not just King County – and it comes out 60 days in after the fact. If I had access to all the KingCo numbers I could run a comparison but with Redfin you are limited to 500 listings.
I don’t think that you can draw any trend conclusions based on comparing 2 weeks of price per square foot data. Price per square foot is too “noisy” time series to use in this way.
For example, I took a look at 3 months of sales for Seattle – +500 sales. The weekly time series looks like a random walk. Off a mean of $287 per square foot, the standard deviation is $40. That’s a pretty good variance
Here are the numbers – weekly average $/SQFT for three months ending Feb 24 2009 (from Redfin)
12/15 $322.82
12/22 $281.73
12/29 $265.20
01/05 $218.85
01/12 $262.43
01/19 $307.12
01/26 $286.16
02/02 $376.64
02/09 $260.32
02/16 $294.41
02/23 $283.06
I wouldn’t try to call any trends from that data – and it is based on a much longer time series. FWIW, The 28 day moving average that Radarlogic uses seems to do a pretty good job – but it is not just King County – and it comes out 60 days in after the fact. If I had access to all the KingCo numbers I could run a comparison but with Redfin you are limited to 500 listings.
“If I had access to all the KingCo numbers I could run a comparison but with Redfin you are limited to 500 listings.”
Deejayoh,
One thing you need to understand about “Sunday Night Stats” is that the numbers are not the basis of the post really. I take what is happening “out there” and what I am experiencing and seeing, and then I’m seeing if what is happening is affecting the numbers.
‘
I don’t draw conclusions from the numbers. I draw conclusions from the marktetplace, which has absolutely picked up steam in the last two weeks…no question about that.
You can’t go back before the $8,000 credit, because I’m tracking the impact of that credit. BUT I’m not drawing consclusions from the measly chart 🙂 I’m drawing conclusions from other real world things that are happening every day out there in the trenches. The stats don’t really hold all of the reality.
Some sales are “in escrow” but not shown as pending (bank owned). Some groups of agents sell up to 2/3rds of their transactions outside of the mls system.
When I write a Sunday Night Stats post, I am not looking for what is happening in the market the way you are…I’m testing the broad impact (or not) of what I know is happening in the market. Slight difference.
It’s like if you had to explain in 1,000 words what you did today…it wouldn’t really compare to what you actually did. What people would read wouldn’t give them the whole picture…just enough to get some idea of what happened or what is happening.
I guess I expect people to know that about me. I’m not a “statistician”…and the data is only a small part of what I am conveying based on a myriad of factors over that two week period.
For instance if even 20% of the properties that went pending had 2 or more offers…those 2 or more people ready to buy are part of my “thinking process” even though not reflected in the “stats” yet. When I have 4 transactions go into escrow in a 40 day period and 3 of them have more than one offer…I know there are more buyers than what is currently being reflected in the pending sales and more than there have been for quite some time.
I also have a pipleline nationally via Twitter and other agent forums, so I can double check against other parts of the Country as well. The numbers aren’t telling me a story. The numbers are how I am trying to convey one…to some extent. I don’t modify the numbers to “match” the story I’m trying to tell. If the numbers don’t go in the same direction as the “story”, I scrap the story. That’s why some weeks there is no “Saturday Night Stats” post.
Hope that makes some sense 🙂 I bit of a ramble for sure LOL.
“If I had access to all the KingCo numbers I could run a comparison but with Redfin you are limited to 500 listings.”
Deejayoh,
One thing you need to understand about “Sunday Night Stats” is that the numbers are not the basis of the post really. I take what is happening “out there” and what I am experiencing and seeing, and then I’m seeing if what is happening is affecting the numbers.
‘
I don’t draw conclusions from the numbers. I draw conclusions from the marktetplace, which has absolutely picked up steam in the last two weeks…no question about that.
You can’t go back before the $8,000 credit, because I’m tracking the impact of that credit. BUT I’m not drawing consclusions from the measly chart 🙂 I’m drawing conclusions from other real world things that are happening every day out there in the trenches. The stats don’t really hold all of the reality.
Some sales are “in escrow” but not shown as pending (bank owned). Some groups of agents sell up to 2/3rds of their transactions outside of the mls system.
When I write a Sunday Night Stats post, I am not looking for what is happening in the market the way you are…I’m testing the broad impact (or not) of what I know is happening in the market. Slight difference.
It’s like if you had to explain in 1,000 words what you did today…it wouldn’t really compare to what you actually did. What people would read wouldn’t give them the whole picture…just enough to get some idea of what happened or what is happening.
I guess I expect people to know that about me. I’m not a “statistician”…and the data is only a small part of what I am conveying based on a myriad of factors over that two week period.
For instance if even 20% of the properties that went pending had 2 or more offers…those 2 or more people ready to buy are part of my “thinking process” even though not reflected in the “stats” yet. When I have 4 transactions go into escrow in a 40 day period and 3 of them have more than one offer…I know there are more buyers than what is currently being reflected in the pending sales and more than there have been for quite some time.
I also have a pipleline nationally via Twitter and other agent forums, so I can double check against other parts of the Country as well. The numbers aren’t telling me a story. The numbers are how I am trying to convey one…to some extent. I don’t modify the numbers to “match” the story I’m trying to tell. If the numbers don’t go in the same direction as the “story”, I scrap the story. That’s why some weeks there is no “Saturday Night Stats” post.
Hope that makes some sense 🙂 I bit of a ramble for sure LOL.
“I don’t draw conclusions from the numbers. I draw conclusions from the marktetplace, which has absolutely picked up steam in the last two weeks…no question about that”
Watching closely from the sidelines, I’d agree. Some of the houses that have come on the market recently have done so at much more realistic prices (priced at 2004/2005 levels).
I still think we have further to go down price wise (possibly a lot further), but there are definitely better values out there today than there were 2 months ago. I don’t see nearly as many new listings coming on at peak (or even higher) pricing. BTW, I’m only looking at Seattle 550K – 850K. With that said, there are still a LOT of overpriced homes on the market.
As prices drop, buyers will be pulled off the sidelines.
“I don’t draw conclusions from the numbers. I draw conclusions from the marktetplace, which has absolutely picked up steam in the last two weeks…no question about that”
Watching closely from the sidelines, I’d agree. Some of the houses that have come on the market recently have done so at much more realistic prices (priced at 2004/2005 levels).
I still think we have further to go down price wise (possibly a lot further), but there are definitely better values out there today than there were 2 months ago. I don’t see nearly as many new listings coming on at peak (or even higher) pricing. BTW, I’m only looking at Seattle 550K – 850K. With that said, there are still a LOT of overpriced homes on the market.
As prices drop, buyers will be pulled off the sidelines.
Ardell,
If you don’t use the stats to draw conclusions, then you shouldn’t be posting it. This is just like the last time you posted the stats. Some seasonal bump, some two random numbers used to draw a wishful conclusion.
Today there were 3 cars ahead of me at the stop light near Microsoft as compared to just 2 cars yeasterday. Microsoft must’ve increased their workforce by 50%.
Dr. Short,
My Sunday Night Stats of last week would acknowledge your statement “Some of the houses that have come on the market recently have done so at much more realistic prices.” The number of homes selling in 30 days or less had increased.
Let’s check that data for the two groups in this weeks post. Be right back…
LOL WaileaKid,
You can’t use ONLY the stats to reflect a recent change. If the change is happening as a result of the $8,000 credit, going backward doesn’t tell you enough.
Sure, two weeks does not a market make. But two weeks is what we have. Next week we’ll have 3 weeks and then 4 and 5…it’s a developing story.
There hasn’t even been enough time passed to use closed sales. Some people want to know if the Stimulus Package is doing anything…I say it IS and two weeks of data post the $8,000 credit passing is what we need to study to find out. What happened in December is now “last year’s news” which I DID report at the time.
I did not avoid the bad news…it is not fair to suggest I did. I reported it all the way down, every step of the way. I started sunday night stats in January of 2008 and tracked the MPPSF down and down and down.
Looking back there is easy for me and for anyone. Just hit the Sunday Night Stats tag to revisit the past via my past posts. I have to keep moving forward. I don’t have the luxury of “a wait and see attitude”…I have to do this every day, day in and day out.
LOL WaileaKid,
You can’t use ONLY the stats to reflect a recent change. If the change is happening as a result of the $8,000 credit, going backward doesn’t tell you enough.
Sure, two weeks does not a market make. But two weeks is what we have. Next week we’ll have 3 weeks and then 4 and 5…it’s a developing story.
There hasn’t even been enough time passed to use closed sales. Some people want to know if the Stimulus Package is doing anything…I say it IS and two weeks of data post the $8,000 credit passing is what we need to study to find out. What happened in December is now “last year’s news” which I DID report at the time.
I did not avoid the bad news…it is not fair to suggest I did. I reported it all the way down, every step of the way. I started sunday night stats in January of 2008 and tracked the MPPSF down and down and down.
Looking back there is easy for me and for anyone. Just hit the Sunday Night Stats tag to revisit the past via my past posts. I have to keep moving forward. I don’t have the luxury of “a wait and see attitude”…I have to do this every day, day in and day out.
Dr. Short,
% sold in 30 days in 7 day increments working backward from this week. Ooops…no can do. Only shows on solds not pending.
Let’s try this, working backwards from today:
Median days on market = 38
Median days on market previous week = 44
So yes, you are correct. Some of the activity is due to newer properties coming on market being worth buying for reasons that are not simply all about price, since the prices were a bit higher.
I can’t go back and do this too far back…as Pendings become solds within 30 days or so. I can go backwards as to solds, but we have to get in front of the $8,000 credit by at least 30 to 45 days before I can do that.
Ardell –
I understand what you are saying – you are seeing what you are seeing, and I appreciate you sharing. From a purely “stats” standpoint, I don’t know that it would work at McKinsey – but I’m a numbers guy 🙂
One thing I am not so sure about is the impact of that $8k credit.
$8000/1700ft (~avg size of a KingCo house) = $4.70 a square foot. Not sure that people are so dumb to pay much more than $5 per square to earn that benefit… we shall see.
Ardell –
I understand what you are saying – you are seeing what you are seeing, and I appreciate you sharing. From a purely “stats” standpoint, I don’t know that it would work at McKinsey – but I’m a numbers guy 🙂
One thing I am not so sure about is the impact of that $8k credit.
$8000/1700ft (~avg size of a KingCo house) = $4.70 a square foot. Not sure that people are so dumb to pay much more than $5 per square to earn that benefit… we shall see.
Ardell, I do not question your expertise and the extent to which your finger is on the pulse of the market.
But when you write “I don’t draw conclusions from the numbers. I draw conclusions from the marketplace, which has absolutely picked up steam in the last two weeks…no question about that,” I am puzzled as to why these posts are called Sunday Night Stats. Wouldn’t Sunday Night Pulse or something along those lines be better, something that emphasizes your other than empirical approach? I don’t know how you can abjure “the numbers” as meaningful yet lay claim to having a statistical perspective.
deejayoh,
I don’t see anyone buying a house to get $8,000. I see them having to be $8,000 less right about picking bottom 🙂
MarkusF said, “I am puzzled as to why these posts are called Sunday Night Stats.”
Some are chock full of data back to 2,000, some are interim posts with slimmer data. Just is. If you are just tuning in, I can understand your confusion. I’ve been writing these since Jan of 2008.
This week the message just doesn’t have a lot of data to support what I need to say. How can it? It’s a two week story about an event that happened a short time ago that impacted the market.
I posted the data and graph for the time period I’m discussing. Just how it is this week.
MarkusF said, “I am puzzled as to why these posts are called Sunday Night Stats.”
Some are chock full of data back to 2,000, some are interim posts with slimmer data. Just is. If you are just tuning in, I can understand your confusion. I’ve been writing these since Jan of 2008.
This week the message just doesn’t have a lot of data to support what I need to say. How can it? It’s a two week story about an event that happened a short time ago that impacted the market.
I posted the data and graph for the time period I’m discussing. Just how it is this week.
@ardell –
For the love of whatever-deity-you-choose-to-worship… please, o please use consistent and measurable metrics when compiling your ‘statistics’.
In your opening post, you breathlessly ask if KC prices are inching ever heavenward – careful to point out that your graph is based upon asking prices – but then later in your comments, you say:
QUOTE: I see many, many homes listed above where they should be. When they [asking prices] “come down
@ardell –
For the love of whatever-deity-you-choose-to-worship… please, o please use consistent and measurable metrics when compiling your ‘statistics’.
In your opening post, you breathlessly ask if KC prices are inching ever heavenward – careful to point out that your graph is based upon asking prices – but then later in your comments, you say:
QUOTE: I see many, many homes listed above where they should be. When they [asking prices] “come down
DD,
First, everyone knows I rarely drink alcohol. Very rarely.
Second, Pending sales are always asking prices. Both columns are asking prices. When the price at which something will attract an offer increases, there is change.
If we were talking about open inventory, I clearly would agree and have written many posts about asking prices going up while sold prices go down.
No post is written in a vacuum. Last week we saw volume increasing and % sold in less than 30 days increasing.
This week we see the prices of homes that have attracted an acceptable offer increasing.
All in due time…we will see if closed prices will increase at the same rate as the asking prices of pending transactions.
One of my clients was in a multiple offer situation this weekend. The other buyer underestimated, the market and didn’t get the house. I have no desire to convince someone to buy a house…but those who are, need to see what is happening now…not look back after losing 5 houses to see what was.
You may not be one of the people who needs to hear what this post says…but recognize that some people do need to hear it.
DD,
First, everyone knows I rarely drink alcohol. Very rarely.
Second, Pending sales are always asking prices. Both columns are asking prices. When the price at which something will attract an offer increases, there is change.
If we were talking about open inventory, I clearly would agree and have written many posts about asking prices going up while sold prices go down.
No post is written in a vacuum. Last week we saw volume increasing and % sold in less than 30 days increasing.
This week we see the prices of homes that have attracted an acceptable offer increasing.
All in due time…we will see if closed prices will increase at the same rate as the asking prices of pending transactions.
One of my clients was in a multiple offer situation this weekend. The other buyer underestimated, the market and didn’t get the house. I have no desire to convince someone to buy a house…but those who are, need to see what is happening now…not look back after losing 5 houses to see what was.
You may not be one of the people who needs to hear what this post says…but recognize that some people do need to hear it.
It amazes me that people who have never commented when I was consistently reporting the market down, down and downest…get all riled up and run over here when there’s a glimmer of change in the other direction.
Maybe we have to choose sides in today’s world. Those who want the market to keep crashing, so they can buy at lower prices. Those who want the market to keep crashing so they can point fingers at the current administration, who they didn’t vote for in the first place…
vs. those who are happy at signs of improvement.
I see signs of improvement…get over it. I see signs of improvement. There is no question but that Obama’s actions had some positive effect. No question. Will it be enough to add some balance and “prop up prices”? Time will tell…and no one can speed up the clock. In the meantime…I see signs of improvement.
Ardell, I believe you are correct. Activity is on the upswing.
The most important stats to watch right now are supply /demand ratios. Lower end housing is starting to tighten, especially in the core areas. Top end is still abysmal. As the supply tightens, prices will stabilize.
Make no mistake. Recovery will come with first time buyers. In this region we are looking at anything under $600K. These purchases will free up Sellers to make their relocation move or their move up purchase.
Here is a list of things that have happened in the last 4 weeks:
1. $8,000 Tax Credit
2. Raise of conforming loan limits
3. Jumbo rates falling to <5% in certain banks
4. Local banks flush with money becoming very aggressive with their builders creating buy down programs. Currently buy down programs with some builders are starting as low as 3.75% on arms and under 5 percent on 30 year fixed up to $1,000,000.
5. Fannie Mae forbids lenders to reduce real estate commissions in short sales on their loans.
Here is what we’re seeing ANECDOTALLY:
1. Title companies have been slammed with purchase title orders in the last two weeks.
2. First time buyers are starting to inquire about the tax credit.
3. Offers are being written all over the region.
4. Stories of multiple offers are surfacing regularly.
5. We are hearing strong rumors that Down Payment Assistance Programs (Nehemiah) are coming back. This will particularly assist builders.
In short, interest rates are at all time lows. Jumbo interest rates are falling. Homes are on sale. There is plenty of selection. Seller motivation is currently high. The government is supplying an $8,000 tax credit.
Like it or hate it, the Government is pretty much “all in” with their investments in Fannie, Freddie and the banks. I think they will do what it takes in the short term to get things moving.
Ardell, I believe you are correct. Activity is on the upswing.
The most important stats to watch right now are supply /demand ratios. Lower end housing is starting to tighten, especially in the core areas. Top end is still abysmal. As the supply tightens, prices will stabilize.
Make no mistake. Recovery will come with first time buyers. In this region we are looking at anything under $600K. These purchases will free up Sellers to make their relocation move or their move up purchase.
Here is a list of things that have happened in the last 4 weeks:
1. $8,000 Tax Credit
2. Raise of conforming loan limits
3. Jumbo rates falling to <5% in certain banks
4. Local banks flush with money becoming very aggressive with their builders creating buy down programs. Currently buy down programs with some builders are starting as low as 3.75% on arms and under 5 percent on 30 year fixed up to $1,000,000.
5. Fannie Mae forbids lenders to reduce real estate commissions in short sales on their loans.
Here is what we’re seeing ANECDOTALLY:
1. Title companies have been slammed with purchase title orders in the last two weeks.
2. First time buyers are starting to inquire about the tax credit.
3. Offers are being written all over the region.
4. Stories of multiple offers are surfacing regularly.
5. We are hearing strong rumors that Down Payment Assistance Programs (Nehemiah) are coming back. This will particularly assist builders.
In short, interest rates are at all time lows. Jumbo interest rates are falling. Homes are on sale. There is plenty of selection. Seller motivation is currently high. The government is supplying an $8,000 tax credit.
Like it or hate it, the Government is pretty much “all in” with their investments in Fannie, Freddie and the banks. I think they will do what it takes in the short term to get things moving.
“get all riled up and run over here when there’s a glimmer of change in the other direction.”
It’s not the direction so much as the rationality that has been the cause.
Joel,
I totally understand that, but “hindsight has 20/20 vision” just doesn’t apply at the moment, and looking a few feet in front of you doesn’t come with all that many stats as proofs.
Just how it is on this one.
Joel,
I totally understand that, but “hindsight has 20/20 vision” just doesn’t apply at the moment, and looking a few feet in front of you doesn’t come with all that many stats as proofs.
Just how it is on this one.
Greg,
Agree with you on all counts..as usual 🙂 I just heard about a 15% down jumbo program for a 5/1. The problem I’ve had with jumbo is the downpayment requirements, especially for high end condos. If the 15% down jumbo pans out as true, I’ll let you know. That would help the high end considerably.
BTW to ALL,
I am not changing my tune as when one of our regular readers, Cautious Buyer, said back in the 4th Quarter of 08 “I’m going to wait until May when prices are lower” I cautioned him that waiting was OK as long as he was willing to wait until the 4th quarter because prices would likely not be lower in May of 09 than November of 08.
It is very important to move without the PROOFS in hand IF you are a buyer “waiting for lower prices in May”.
This advice will not apply for someone waiting for three years and willing to buy or not buy at all. But if you are waiting for May for lower prices…this post is very important, if not conclusive.
DD,
“In your opening post, you breathlessly ask if KC prices are inching ever heavenward -”
I said “inching” I also said prices can not go up quickly due to appraisal issues. Your addition of “ever heavenward” is well…what is it?
I have often said I’m expecting a Spring Bounce and then flat or slightly down in the fourth quarter. This year we may have an extended Spring Bounce because the credit applies to purchases that close before December 1, so if someone is waiting for whatever reason, they may feel pressure to buy after the regular Spring Bump period and before the door closes on the credit.
“Heavenward” is for dead people…and I ain’t dead yet 🙂
DD,
“In your opening post, you breathlessly ask if KC prices are inching ever heavenward -”
I said “inching” I also said prices can not go up quickly due to appraisal issues. Your addition of “ever heavenward” is well…what is it?
I have often said I’m expecting a Spring Bounce and then flat or slightly down in the fourth quarter. This year we may have an extended Spring Bounce because the credit applies to purchases that close before December 1, so if someone is waiting for whatever reason, they may feel pressure to buy after the regular Spring Bump period and before the door closes on the credit.
“Heavenward” is for dead people…and I ain’t dead yet 🙂
You are correct there is activity. As for the multiple offers yes that is happening also.
The Real Estate sales business never changes, I say that all the time.
There are good deals to be had for sure so there is no reason to bid anything up.
If you are a buyer in today’s market or anytime you should be very careful in who you hire.
You are correct there is activity. As for the multiple offers yes that is happening also.
The Real Estate sales business never changes, I say that all the time.
There are good deals to be had for sure so there is no reason to bid anything up.
If you are a buyer in today’s market or anytime you should be very careful in who you hire.
Statistical measures of home prices have a seasonal component. The link below is a great historical representation of it.
http://1.bp.blogspot.com/_pMscxxELHEg/SLXDhT64AzI/AAAAAAAADY0/R6dco2fC9Eg/s1600-h/FreddieMacPrices.jpg
Increased signs of life are normal this time of year. Does it indicate the market is shifting from declining to stable? Who knows. Maybe.
I try to look at the fundamental factors that would drive housing demand and supply for the next 6 – 36 months. Aside from low interest rates, I don’t see a whole lot of be excited about. Unemployment, inventory, and distressed sales are at historically high levels and rising. Stock losses are staggering. And the availability of mortgage credit has reset to a significantly tighter level for the foreseeable future.
I think Ardell’s stats and observations are useful and interesting, but I think you also have to pull back and look at the larger situation driving the market. Unlike the stock market, housing prices are sticky both upward and downward and it will take awhile for the full impact to play itself out. Is the current economic situation and new credit standards fully recognized in current prices, or are we still correcting to new levels? To me, that’s the key question.
Statistical measures of home prices have a seasonal component. The link below is a great historical representation of it.
http://1.bp.blogspot.com/_pMscxxELHEg/SLXDhT64AzI/AAAAAAAADY0/R6dco2fC9Eg/s1600-h/FreddieMacPrices.jpg
Increased signs of life are normal this time of year. Does it indicate the market is shifting from declining to stable? Who knows. Maybe.
I try to look at the fundamental factors that would drive housing demand and supply for the next 6 – 36 months. Aside from low interest rates, I don’t see a whole lot of be excited about. Unemployment, inventory, and distressed sales are at historically high levels and rising. Stock losses are staggering. And the availability of mortgage credit has reset to a significantly tighter level for the foreseeable future.
I think Ardell’s stats and observations are useful and interesting, but I think you also have to pull back and look at the larger situation driving the market. Unlike the stock market, housing prices are sticky both upward and downward and it will take awhile for the full impact to play itself out. Is the current economic situation and new credit standards fully recognized in current prices, or are we still correcting to new levels? To me, that’s the key question.
Any news is good news! Its stats like this that need to get out there amongst the forever negative press that seems to be there no matter what!
Dr. Short,
My transactions have not been affected (yet) but the thing to watch is sales that can’t sell at the price the buyer is willing to pay, because the appraiser is being stingy as all get out on price.
With 4 months of crap behind us, the appriaser’s comps really suck. Many sales are stuck in escrow due to appraisals coming in lower than the contract sale price.
So even if my stats are correct and buyers are willing to pay higher prices, the closed sale data may be pushed down by the appraisers for the lenders.
While some areas may be having more luck with 500k to 1m range, that price range is at a standstill in Beaufort, SC. I personally think that homes are still overpriced. While the median price is lower, it was so high to begin with this is going to take a while to correct itself. Yes, it’s already been a while but just recently have owners realized unless they drop their price, they are going to be out of luck.
Sorry guys. We’re still overpriced and have a very long way to go.
San Diego, Riverside, Phoenix, Miami and Detroit (yes, even Detroit) are all still way overpriced as well.
Deflation is here to stay for awhile, might as well welcome it with open arms and have a little patience. (hoard your cash!)
Sorry guys. We’re still overpriced and have a very long way to go.
San Diego, Riverside, Phoenix, Miami and Detroit (yes, even Detroit) are all still way overpriced as well.
Deflation is here to stay for awhile, might as well welcome it with open arms and have a little patience. (hoard your cash!)