Tag Archives: Market

Sunday Night Stats – King County

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An update to the Property Stats for King County from last week:

Residential – Single Family

For sale – 8376 – UP 279

In escrow – 1809 – UP 27

Closed in Janaury so far – 236 -NEW CATEGORY

Condo 

For Sale – 2,870 – UP 125

In escrow – 780 – UP 47

Closed in Jan so far – 69 – NEW CATEGORY

 

Apologies Sandy, no Bellevue Stats today.  I’ve decided to do them in map grid first, and visit some of the new on markets for commentary on how the new is comparing to old listings, and to track if the new listings are selling at a higher rate than current inventory.

Broker’s Opens are on Thursday.  I’ll report afterward.

“Statistics not compiled or published by NWMLS.

Sunday Night Stats

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I know how much I enjoy being able to check RCG for mortgage rates every Friday, thanks to Rhonda.  I’m going to try to do the same for King County Stats on Sunday nights.  Each week I will also highlight a different City or Seattle Zip Code over on my blog.  Tonight I did Kirkland Stats.

I don’t have any commentary for King County Stats tonight.  But there’s plenty of commentary on the Kirkland Stats.  There’s less than a three month supply of inventory for property priced at or below the median price sold in 2007.  There’s a very strong buyer’s market in the high end of $1M or more for condos and $1.5M or more for single family homes.

I’ll try to post the stats here every Friday night for King County, but until we get a couple of months of sales, or the full first quarter of 2008, commentary would simply be conjecture.  I don’t expect the number of homes sold in 2008 to be dramatically different in the first half of 2008, as they were in the last half of 2007. 

I expect that brown slice of December 2007 closings to change a bit each week as agents post late.  There were even a few late postings for November and October since last week.  I’ll try to update and keep the data as accurate as possible.  As always, and by mls rule, I must disclose that I, ARDELL compiled these stats using MLS as a source only.  The data is not compiled by NWMLS.

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“Statistics not compiled or published by NWMLS.

The Longest Season Ever – Spring Forward

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How much is the market influenced by the fact that it stays light longer on weekdays? 

We all know it’s true that people tend to look at property more on weekends, unless it gets dark later on weekdays.  We all know the second and third quarters of each year are stronger than the first and last quarters.  But how much does that have to do with it getting dark earlier and staying light later?

Well, this is a good year to test that, as tonight is the beginning of daylight savings time.  For the first time in, I guess my life, we will turn our clocks forward, one hour, tonight, March 11, 2007.

Compare that to April 6 in 2003, April 4, in 2004, April 3 in 2005 and April 2 in 2006, and we are adding about 36 days to the real estate high season.  Will be interesting to see how the March 2007 stats compare to previous years.  I think they will be stronger due to DST being pushed earlier.

Maybe that will transcend into April.  Maybe sellers who would have listed May 1, will be able to spruce up the home’s exterior earlier this year, with a few hours of daylight after work each night, and get their homes listed a couple of weeks earlier than expected.

I’m just happy that the daffodils are in bloom, I see pink trees everywhere, and starting tomorrow…it will get dark later.  One of Seattle’s main claims to fame, is our long, long spring and summer days.  And this year, we will have even more of it!  Enjoy!

2007 Still looking like a Seller's Market

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I ran my stats this morning to track where the market is heading for 2007, based on properties For Sale, In Escrow and Closed so far since the first of the year. I use the stats for Bellevue, Redmond and Kirkland as the basis for my market research, as this area has a huge component of housing in almost every market segment,and represents are high expectations for market conditions. When this area turns weak, we need to take notice.

So far, it appears that my prediction that 2007 will meet or exceed that of 2006, appears to be on target.

The full data is on my site, with more graphs, but here are the quotes of particular relevance.

“…75% of the market will still be a SELLER”S MARKET in 2007, based on how the year is opening up so far. We do not begin to see inventory tipping over into a balanced or buyer’s market until we get over $800,000 in price, which only represents about 25% of the housing market, in the area I have chosen to examine.”

“The dominant portion of this market is between $200,000 and $600,000…which is by and large “the safer zone” representing 63.6% of all home buyers and sellers in the Bellevue, Kirkland and Redmond markets and the area most likely to rise at 15% to 25% or greater in value by the end of this year.”

 

“Statistics not compiled or published by NWMLS.” NWMLS is the data source I used to compile the data and I created and published the graph.  MLS rule to post this.

ARDELL on "Where is the 2007 Market heading?"

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My prediction has been, that the 2007 Market will be similar to the market of 2006, that being strong and upwardly mobile.  Not necessarily as strong as 2005, when interest rates were lower, but on an even keel with, or better than, last year.

To determine momentum of the market, I look at absorption issues, and reduce the study to a somewhat predictable and mainstream market segment.  To keep apples to apples, I target that portion of the market with the highest number of sales in a year’s time.  The results are almost startling, with regard to upward momentum since the first of the year, and even better than I expected to see. 

Where “in escrow”, which is both STI and Pending, is much higher than “for sale” and/or closed in January 07, the forward momentum of the market is strongest.

Seattle has too many new properties not reflected in the stats (i.e.”1 of 8 townhomes”), as does high end.  I am using the market segment I find is best for prediction purposes using the MLS, that being Redmond (98052 only), Bellevue, Kirkland and Bothell (98011 only).  I am also using “up to $650,000” as that is the segment with the most properties changing hands in a year’s time, based on the stats I did on a running basis last year.

I also use this market segment because I can readily visualise the properties involved, and so my conclusions are more valid than areas like Tacoma or Snohomish or even all of King County.  The segment I use, accounts for both strongest and weaker markets and “residential” vs. condo.

98052 – Redmond – 37 residential for sale, 40 in escrow and 18 closed in Jan. 07; 44 condos for sale, 69 in escrow and 19 closed in Jan. 07.

98011 – Bothell – 40 residential for sale, 37 in escrow and 18 closed in Jan. 07; 15 condos for sale, 28 in escrow and 15 closed in Jan. 07

98034 –  Kirkland – 35 residential for sale, 29 in escrow and 27 closed in Jan. 07; 32 condos for sale, 37 in escrow and 25 closed in Jan. 07

98033 – Kirkland “proper” – 23 residential for sale, 15 in escrow and 19 closed in Jan. 06; 50 condos for sale, 62 in escrow and 21 closed in Jan. 07

98004 – Bellevue – 4 residential for sale, 2 in escrow and 1 closed in Jan. 07; 27 condos for sale, 21 in escrow and 8 closed in Jan. 07

98005 – Bellevue – 5 residential for sale, 4 in escrow and 2 closed in Jan. 07; 14 residential for sale, 40 in escrow and 8 closed in Jan. 07.

98006 – Bellevue – 17 residential for sale, 13 in escrow and 9 closed in Jan. 07; 20 condos for sale, 14 in escrow and 6 closed in Jan. 07

98007 – Bellevue – 5 residential for sale, 9 in escrow and 5 closed in Jan. 07; 6 condos for sale, 12 in escrow and 16 closed in Jan. 07

98008 – Bellevue – 18 residential for sale, 20 in escrow and 11 closed in Jan. 07; 1 condo for sale, 4 in escrow and 4 closed in Jan. 07

98005 is a bit skewed, as Woodbridge and Oasis are long escrows, so 40 in escrow is not reflective of a less than 30 day market activity.  New construction in escrow will always throw off momentum stats.  That is why I don’t do the high end this way when I am looking for “people’s recent decision to purchase” forward momentum.  There is some of that in others, but not as much as in 98005.

I also break it down this way, so people can see where they might most likely find a single family home priced under $650,000, or where they might most likely find a condo at an entry level price.  The highest numbers will equal the highest ongoing availability, or whether you are looking “for a needle in a haystack” in that area.

2007?  If you list it, price it well, it looks good and is priced under $650,000…it WILL sell.

Tightening Lending Standards: A market conundrum

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What will lending standards look like 6 mos. or a year from now? Will lenders with more stringent qualifying standards be a drag on the market? At minimum, it will change the complexion of the pool of buyers. Some ramifications of tighter standards that come to mind:

  • reduces ability of consumers with credit blemishes to purchase a home as easily as before.
  • it may take longer for loans to be pushed through, because
  • borrowers may have to provide more verifiable documentation.
  • lenders may look more carefully at appraisals and implement other safeguards to reduce fraud.
  • reducing the probablity of those buying a home with questionable credit from getting into financial trouble (which leads to distressed properties which leads to downward pressure of prices)
  • a more stable and credit seasoned pool of borrowers, leads to stable and healthy markets.
  • housing affordability becomes much more tied to economic fundamentals vs speculation and artificial housing appreciation.

Over the last three years or so, qualifying for a mortage has been absurdly easy. There is no doubt about it. When my wife and I bought our first house (670 sq ft) in Ballard, I barely qualified for an FHA ARM. I think the underwriters were cringing and looking away when they stamped it “approved.” We had to provide bank statements, two yrs. of tax returns and more.

Today, borrowers with average to low credit scores could get a loan with virtually little oversight. What program buyers qualified for largely depended upon borrowers credit scores. In the end, it really came down to the interest rate you were going to pay. It was never a matter of “if” you could get a loan, rather, it came down to the interest rate and program you were placed in.

A conundrum

In hindsight, most first time homebuyers that closed their purchase transactions though our escrow office put little to nothing down over the last three years. It is still going on today, but not nearly at the tempo that our office experienced in all of 2005 through summer of 2006. First time home buyers drive the market, providing impetus for sellers to move up into a home that suits their current lifestyle. For many, that meant moving to new construction housing. If the first time buyer market slows, everything down stream slows as well.

Through my direct discussion with loan officers, some have indicated that lenders are scrutinizing transactions more carefully. One indicated that a recent appraisal was required to add more comparable homes and provide interior photos of the subject property being purchased.

WMC, a large national lender and a wholly owned subsidiary of GE Finance (my spouse has now informed me that WMC is no longer, but is now taking the GE name) is slated to eliminate all 100% financing with borrowers having FICO scores below 700. Further, they are financing first time home buyers (FTHB’s) at a 95% cap. I take this to mean that FTHB’s will need a 5% down payment. This is quite the turnaround from the loose lending standards we have seen.

If lending standards tighten with or without government intervention, certainly it will have an impact on the ability of buyers with marginal credit to become a homeowner. Those with existing mortgages may find it more difficult to refinance. I can’t help but think of all the 100% financed borrower transactions our office has closed—borrowers that may not have qualified (nor closed) if these guidelines were in place today. In 2005, that meant 71% of our purchase/sale business would have never existed as it did (hard swallow).

Generally, with sales trending slower than in months past, stricter qualifying standards may have enough impact to slow sales further. I hope it does not, but I don’t see the alternative as being realistic. The upside is that the pool of homebuyers may move towards more traditional mortgage products, such as fixed rates. More stringent qualifying standards is a good thing for the market long-term, even if the short-term prognosis is discomfort.

To Landlords and sellers in City of Seattle – new rules w/ fines… Get up to speed!

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Important Fair Housing Notice for Seattle

The City of Seattle has recently adopted a new ordinance that requires all real estate professionals (including brokers and property managers) within the city limits to prominently display a fair housing poster in their place of business. The poster is available at http://www.seattle.gov/civilrights/outreach.htm under the link for “Housing Issues.

Buying wisely in any market

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[photopress:seg.gif,thumb,alignright]I find that most people who track countywide stats, looking for bubbles and market trends, are not people who are buying and selling property. Anyone who is actually buying or selling property knows, that countywide stats tell you both everything and nothing. It is in the small subsections of any given market that you will find the information you need to make wiser choices.

For instance, can you really compare ramblers built in the 60s to newer housing choices? Can you compare “too small for anyone” condos of 400 square feet, to the saleability of 2 bedroom 2 bath condos? Lumping everything together tells you nothing. Houses on busy roads, for example, will not sell as well, and will sell worse at times like this when buyers are being more cautious. I think of houses on busy roads when I hear comments like, “The market is getting weak! I see more and more for sale signs every day while driving to work!” Well let’s assume that most people do not drive on quiet 25 mi. per hour residential streets when driving to work. So what they are seeing is the weakness of properties situated on busy roads, not the market in general.

A good example is tracking newer townhomes, in the $300,000 to $500,000 range, within 3 miles of Microsoft. This is a market segment that is driven by its own forces and outperforms the market in general. In the last six months there were only 21 townhomes sold, built since 1990 and within 3 miles of Microsoft, between $300,000 and $500,000. Of these 21, 16 sold AT or better than full price in less than 30 days. Several in less than 10 days and most in less than 20 days. At the moment there are only 3 available, all on market less than 15 days and two at less than 5 days on market and there are 3 in escrow.

So of the total six month inventory, you can expect four to sell per month and there are only 3 on market, two of which have only been on for two days and three days, respectively. Those are some pretty strong market stats. What are the odds that these will start dwindling on market for excessive periods of time or go down in price? Slim to none. Making offers on this product, based on what you are reading about the King County market in general, would make no sense whatsoever.

So Chicken Little, maybe the sky IS falling for older ramblers built on busy roads with only one bathroom. But conversely the sky is still the limit in newer townhomes for sale within close proximity to Microsoft. There’s a whole lot of varied stats in between. Make sure you are making your choices based on the product and market segment that YOU are considering buying. Buying the biggest “bargain” on market, could lead you into buying in that segment of the market that will not appreciate, and will be difficult to sell later for at or more than what you paid.