As a reminder, the affordability index is based on three factors: median single-family home price as reported by the NWMLS, 30-year monthly mortgage rates as reported by the Federal Reserve, and estimated median household income as reported by the Washington State Office of Financial Management.

The historic standard for affordable housing is that monthly costs do not exceed 30% of one’s income. Therefore, the formula for the affordability index is as follows:

For a more detailed examination of what the affordability index is and what it isn’t, I invite you to read this 2009 post. Or, to calculate your the affordability of your own specific income and home price scenario, check out my Affordability Calculator.

So how does affordability look as of April? Good, but definitely not great:

I’ve marked where affordability would be if interest rates were at a more sane level of 6%. An affordability index of 89.0 is slightly above where the index was in August 2005 when I first started Seattle Bubble (rates were 5.82% at the time). We’re definitely on an unsustainable trajectory right now, and the affordability index is only good thanks to still-crazy-low interest rates. Hopefully prices will level off before things get really out of hand.

Here’s a look at the index for Snohomish County and Pierce County since 2000:

Similar situation, but things haven’t taken quite as steep a plunge over the last few months.

Tomorrow I’ll post updated versions of my charts of the “affordable” home price and income required to afford the median-priced home.

The post Home Affordability Tanking in 2013 appeared first on Seattle Bubble.

In order to explore this concept, we break King County down into three regions, based on the NWMLS-defined “areas”:

• low end: South County (areas 100-130 & 300-360)
• mid range: Seattle / North County (areas 140, 380-390, & 700-800)
• high end: Eastside (areas 500-600)

Here’s where each region’s median prices came in as of April data:

• low end: $208,000—$328,975
• mid range: $318,000—$631,000
• high end: $465,000—$1,240,000

First up, let’s have a look at each region’s (approximate) median price (actually the median of the medians for each area within the region).

The median price in the low end regions inched up, while median in the high and mid-tier regions both saw another sizeable bump in April.

Next up, the percentage of each month’s closed sales that took place in each of the three regions. The dotted line is a four-month rolling average.

Month over month the low end regions accounted for a slightly larger share of sales. The high end lost share again while the mid-tier gained. As of April 2013, 34.7% of sales were in the low end regions, 32.7% in the mid range, and 32.6% in the high end. A year ago the low end regions had less of the share and the high end more: In April 2012 the low end made up 33.3% of the sales, the mid range was 33.6%, and the high end was 33.1%.

Here’s that information in a visual format:

Finally, here’s an updated look at the percentage of sales data all the way back through 2000:

As the low end gains share we’re heading toward a market that looks similar to what we experienced during the bubble, when the low end regions consistently made up 35% to 40% of the sales. So far things are not that extreme yet though.

The post Cheap South King Sales Gain More Share appeared first on Seattle Bubble.

As usual, you should check out Looney Listing for similar content throughout the month from across the USA.

The idea for this series stems from the ongoing forum thread Detrimental Listing Photos. If you’ve got a nomination for a listing photo that should appear here, drop me a line.

No particular theme this month. Just enjoy a collection of odd listing photos submitted by readers and found by yours truly.

Enough explanation. Let’s get to the photos! Click the photo to view the Real Actual Listing.

“Nice Home in a great location & neighborhood”

Not that we’re going to show you any of that. All you get to see is this one blurry photo.

“Views of Mountain and Puget Sound possible if a second floor was added.”

I can’t believe they didn’t mention this awesome basement “bedroom” in the description.

“Enjoy sunny summer days on the deck.”

Enjoy dark winter days on the toilet.

“This would make a large owner occupant home with a business or a great investment.”

His and hers toilets? That’s an… interesting “feature.”

“Expansive and bright home”

Bonus “feature”: Kitchen doubles as the laundry room, apparently! Found by Peter.

“Great home for a first time home buyer or investment property. .!”

I just love it when the sellers can’t even be bothered to undertake the bare minimum amount of cleaning. Really? You couldn’t even clear the dining table?

Let me know if you have an idea for a future “Real Actual Listing Photos” theme, and be sure to check out Looney Listing for listing photo amusement throughout the month.

The post Real Actual Listing Photos: Interesting “Features” Edition appeared first on Seattle Bubble.

With two full years of home ownership/debtorship now behind me as of today, it’s time to share some more highlights, stats, and thoughts from year two.

First up, the financial highlights from the first two years:

• Initial Loan Amount: $179,950
• Current Loan Amount: $160,700
• Total Spent in Year One: $24,294
  • Principal Paid: $8,907
  • Interest Paid: $8,357
  • Insurance Paid: $596
  • Property Tax Paid: $3,022
  • Repairs: $308
  • Improvements: $636
  • Appliances: $2,468
• Total Spent in Year Two: $34,788
  • Principal Paid: $10,343
  • Interest Paid: $4,333
  • Insurance Paid: $638
  • Property Tax Paid: $2,638
  • Repairs: $8,820
  • Improvements: $8,016

Thanks to some major repair and improvement work, our monthly costs increased from $2,025 a month in year one to $2,899 in year two. If you back out the $10,343 we paid down on the mortgage, the monthly “down the drain” expense drops to $2,037.

You may notice that the balance between how much principal and interest was paid on our mortgage changed dramatically between year one and year two. That’s thanks to a refinance we did last June at the prompting of a number of readers in the comments on the the year one recap post. We refinanced from a 30-year fixed at 4.75% to a 15-year fixed at 3.125%. Our monthly PITI payment went from $1,253 to $1,478, but since we were paying $1,750 a month to put some extra toward principal every month, what we actually pay didn’t change.

Back to that repair and improvement work. Most of the repair expense was incurred replacing 38 feet of crumbling concrete sewer pipe with a new PVC sewer line. Thankfully, it was an expense we had planned for ahead of time since the sewer scope inspection we had done when we bought the house brought the impending failure to our attention before we even closed on the home.

On the improvements front, we spent about $2,000 to have a backflow prevention valve added when they replaced the sewer line (to prevent this from happening to us). We also had a heat pump installed along with some duct work and a new Nest thermostat, on which we’ve paid $5,500 so far (we financed a few thousand dollars of that work, which we’ll pay over the next year). Other improvements include some new exterior lighting and electronic locks.

As I’ve mentioned numerous times before, we plan to pay off this home and keep it indefinitely, so I still don’t care what it’s “worth” right now. That said, if you’re keeping score at home, Zillow’s current black-box computer-generated guess of my home’s value is $225,122 — about three percent more than what they said a year ago and almost exactly what we paid in 2011. On a related note, a home on our block was listed last month that is 35% smaller than ours and sits on a 20% smaller lot. The asking price was the same price we paid for our home, and it went pending within two days of hitting the market and closed today at $229,400 ($5k over asking). The current market is officially nuts.

I still receive instant Redfin listing alerts, and I still haven’t seen any homes come on the market in our price range that I wish I could have bought instead. At the rate that we’ve been paying down our 30-year mortgage, we’ll have it completely paid off by March 2024, a little less than 13 years after we purchased the home.

Is there anything else you would like to know about our second year? Let me know in the comments.

The post Knife-Catcher: Year Two Recap of Tim’s Home Purchase appeared first on Seattle Bubble.

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.

This poll will be active and displayed on the sidebar through 05.25.2013

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In this chart I’ve grouped zip codes into their approximate NWMLS regions, which break South County into SE King and SW King and display Seattle and N King separately.

Southwest King County is still much more distressed than the other regions, but steep declines in the last two months have dropped its share of bank-owned sales from 28% in February to just 19% in April. Seattle and the Eastside have decreased as well, and now sit at just 2.4% and 3.3% respectively.

After shooting up from 1.4% in December to 11.9% in March, bank-owned sales fell to 9.0% of the total in North King County in April.

Overall, the effects of distressed inventory and sales are mostly behind us in the Seattle area, save for Southwest King County, which still seems to have a bit to work through this year.

The post Bank-Owned Sales Drop Below 20% in SW King County appeared first on Seattle Bubble.

As of April, the non-distressed median price for King County single family home sales sits at $444,000, up 6.5% from a year earlier and up 3.3% from March. Last year the month-over-month increase was about the same, up 3.0% March to April.

The bank-owned median sale price was at $200,100 in April, up 9.9% from a year earlier. The short sale median price came in at $255,100 in April, up 6.3% from 2012.

Here’s a look at the price per square foot broken down by distress status:

The median price per square foot of non-distressed homes was up just 4.2% from 2012. The bank-owned median price per square foot shot up a whopping 20.7%, while the short sale median price per square foot was up 7.4%.

It seems that most of the big price gains right now are in bank-owned homes, while the overall median is increasing more dramatically thanks to the overall shift away from the cheaper distressed properties.

The post Non-Distressed Median Price per SqFt Up 4.2% from 2012 appeared first on Seattle Bubble.

The low point of the last few years was 5.7% in November. I wouldn’t be surprised to see us drop below that level in the next few months.

Short sales inched up a bit in the month, rising from 9.2% in March to 9.9% in April. A year ago 11.6% of sales in the county were short sales.

Later this week we’ll take a look at how the median prices are moving for bank-owned homes, short sales, and non-distressed sales.

The post Bank-Owned Sales Inched Down Again in April appeared first on Seattle Bubble.

Homeownership is a good thing, for the individual and for society. Or so American governments, whether Republican or Democrat, have long believed. The benefits have been cited repeatedly in justifying the existence and expansion of the tax breaks given to home buyers.

But maybe it isn’t nearly as good as had been thought.

A new study by two economists concludes that rising levels of homeownership in a state “are a precursor to eventual sharp rises in unemployment in that state.” As more homes are owned, in other words, fewer people have jobs.

This week’s poll is inspired by the story, but since I only linked to it in the comments and I’m interested in seeing more broad discussion on the topic, I’m dedicating a regular post to the topic. Commenter “whatsmyname” weighed in, accusing the study authors of having ulterior motives:

English translation:

Cutting taxes for the rich without decreasing tax revenues will require increasing tax revenues from the not rich. We think they’re too stupid to notice when we say it openly. Oftentimes, we are right.

Here’s the problem with that claim, though. It has been well-documented by numerous sources that most of the benefit from the mortgage interest deduction is in fact collected by “the rich.” The “not rich” have been duped into thinking it’s a great deal for them when in reality they get very little from it. Here are a few links on that topic:

• Despite Benefit Disparities, Middle Class Supports Mortgage Deduction
• Only Rich People Benefit From The Home Interest Mortgage Deduction
• The Stark Geographic Inequality of the Home Mortgage Interest Deduction
• Who Really Benefits From Interest Deductions

So what do you think about the claim that increasing homeownership in a region leads to a later increase in unemployment? I think the authors make a compelling case, although I admit that I have not yet read the entire original study. I’m a fan of homeownership, but I also understand that it’s not right for everyone, and it is ill-suited to the increasingly mobile workforce of today’s economy.

[Update: Here's the link to the original paper from the Peterson Institute for International Economics: Does High Home-Ownership Impair the Labor Market?]

The post Rising Homeownership May Lead to Rising Unemployment appeared first on Seattle Bubble.

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April 2013
King: 746 NTS, up 69% YOY
Snohomish: 420 NTS, up 53% YOY
Pierce: 598 NTS, up 124% YOY

Same story as most of this year: still above last year’s levels but down month-over-month across the board.

Here’s your interactive Tableau dashboard updated with the latest foreclosure data:

The percentage of households in the chart above is determined using OFM population estimates and household sizes from the 2000 Census. King County came in at 1 NTS per 1,108 households, Snohomish County had 1 NTS per 655 households, and Pierce had 1 NTS for every 524 households (higher is better).

According to foreclosure tracking company RealtyTrac, Washington’s statewide foreclosure rate for April of one foreclosure for every 878 housing units was 14th highest among the 50 states and the District of Columbia. Note that RealtyTrac’s definition of “in foreclosure” is much broader than what we are using, and includes Notice of Default, Lis Pendens, Notice of Trustee Sale, and Real Estate Owned.

Hit the jump for a larger version of the chart that shows the percentage of households in each county receiving a foreclosure notice each month:

Note: The graphs above are derived from monthly Notice of Trustee Sale counts gathered at King, Snohomish, and Pierce County records. For a longer-term picture of King County foreclosures back to 1979, hit this chart and drag the date slider to its full range. For the full legal definition of what a Notice of Trustee Sale is and how it fits into the foreclosure process, check out RCW 61.24.040. The short version is that it is the notice sent to delinquent borrowers that their home will be repossessed in 90 days.

The post Foreclosures Still Shrinking Around Seattle appeared first on Seattle Bubble.

I attended a meeting last week sponsored by the National Association of Hispanic Real Estate professionals (NAHREP). This group has brought many high quality educational events to the greater Seattle area and I’m so impressed with NAHREP that I decided to join.  I have been following the success and growth of NACA, the Neighborhood Assistance Corporation of America, for several years. They are a non-profit association born out of disgust with predatory lending and the use of subprime loans by banks, lenders, and brokers during the housing bubble.  It’s founder, Bruce Marks, was featured on 60 Minutes, and many other national news programs.  NACA has two main goals:

1. To extend the reach of affordable lending and homeownership to every working person; and,
2. To combat discrimination and exploitation of working people by lenders and financial institutions.

NACA has offices in many states and is in the process of coming to the greater Seattle/Puget Sound. They have no physical office here but they are on the way.  NACA, a non-profit organization, also holds either a lender or mortgage broker license in the states in which they do business.

“Best Mortgage in America”

NACA is bringing their “Best Mortgage in America” to WA State. They hold a WA State Mortgage Broker license MB-4082 and currently have one licensed loan originator assigned to WA State with the intent to hire more, though their compensation plan is best served by loan originators who prefer salaries in line with working for a non-profit….because one of the many duties of NACA employees is to spend many hours thoroughly counseling their clients before the client becomes a homeowner, and requires long face-time office hours of 830-6PM.  So what is the “Best Mortgage in America?” Let’s find out.

• NACA acts as the mortgage broker; loans are funded by Bank of America or Citi
• Purchase money loan only (there is no refinance program)
• Less than perfect credit—Okay
• No credit score—Okay
• Affordability and Character-based lending
• Below market interest rates
• Interest rate buy downs at purchase are encouraged
• 30 or 15 year term
• 1-4 single family home, condo, coop
• Loan limits: Home or Condo for King, Pierce Kitsap. Snohomish county loan limit not yet available…SFR: $341,516, Duplex: $416,254, Triplex: $488,153, Fourplex: $583,514
• Rehab/Renovation Lending: 110% of after-repairs-completed value
• Owner occupied only
• Owner occupied for as long as the NACA loan is in existence
• No down payment
• No closing costs

NOTE: Actually there ARE closing costs.  The representative from NACA said, and I quote, “There is a fee, and there are non recurring costs but these are paid for by the lender.”

Before NACA goes wild with their “no closing costs” marketing program in WA State, I recommend their compliance department read our WA State Mortgage Broker Practices Act:
WA 208-660-440

(3) Is it a violation to advertise that third-party services are “free” when the licensee has paid for the services? Yes. Advertising using the term “free,” or any other similar term or phrase that implies there is no cost to the applicant is deceptive because you can recover the cost of the purportedly “free” item through the negotiation process. This is a violation of RCW 19.146.0201 (2), (7), and (11). See the Federal Trade Commission’s Guide Concerning Use of the Word “Free” and Similar Representations (16 C.F.R. §251.1(g) (2003))

Misc

• NACA fully underwrites the credit portion of the loan before the borrower is released to purchase a home from the Realtor and the pre-approval letter will contain the monthly payment including taxes, insurance, and homeowner’s assoc dues, if any, instead of just a sales price.
• One purchase every 5 years to discourage flipping.
• RE Condos: Requires 51 percent owner occupied in the complex w less than 10 percent of the units delinquent. Complex does not have to be FHA approved.
• Not just for first time homebuyers: Home buyer cannot own another piece of real property when receiving the NACA loan.  Note: the Homebuyer CAN own land or timeshare because we can’t “owner occupy” our land or timeshare.
• If purchasing a short sale, NACA buyers do not pay any of the seller’s fees including any third party short sale negotiator fee
• No income limits
• No time limit required to stay in the home
• ITIN (individual taxpayer ID number) okay
• Also avail: mixed use commercial-residential
• Buyer pays for home inspection
• Cannot use a NACA loan to purchase property at a foreclosure auction.
• NACA selects the title company
• Homebuyer’s loan closing will take place in the local NACA office.

Real Estate Brokers

Real estate brokers go thru a NACA training program. Since NACA does a lot of homebuyer outreach education, if a buyer is referred from NACA to the real estate broker then the real estate broker will pay a referral fee to NACA of 33%.  They do not yet have a real estate license in WA State but will soon and mentioned “buyer broker representation” as part of their goal for WA State.  Their real estate broker program is not up and running yet but the NACA rep says plans are in place to bring the program into the Seattle/Tacoma area soon.

REOs: 14-Day First Look with B of A

NACA-approved home buyers have an exclusive option to purchase REOs from Bank of America before they are listed in the MLS. Not all REOs, and not all of B of A’s REOs…just some.  This “first look” list goes from Bank of America to NACA.  NACA sends the REO list to Realtors affiliated with NACA. B of A has three BPOs completed to determine the price.  Selling broker makes sure NACA-approved buyer can qualify.  If yes, then the NACA-approved buyer can view the home before it is listed on the MLS.  If a NACA-approved buyer submits a full list price offer within the 14 day “first look” window, then the offer must be accepted by B of A, even if other offers are higher.  IN ADDITION: If NACA-approved buyer makes a full price offer within the first 14 days…are you sitting down? Get this—B of A will give 10 points to the buyer to buy down the interest rate.  Typically 1 point = .25 of a rate buydown so this means the NACA-approved buyer could end up with a 2.5 percentage point interest rate buydown. The opportunistic side of my brain started thinking about how I could buy a home this way but the skeptical side of my cold black heart tells me that maybe the First Look homes are going to be mostly dog house former meth labs in Granite Falls.

NACA Homebuyers Are Heavily Counseled 

All bets are against the NACA borrower.  Zero down, less-than-perfect credit sounds like your typical FHA borrower using gift funds for the down payment. And currently FHA’s default rate is 15%. Zero-down-less-than-perfect-credit also sounds like a subprime borrower.  At the peak of the meltdown/housing reset, subprime loans defaults went as high as 40%.

So why should NACA’s default rate be any less?  Here’s why: The NACA borrower goes through heavy pre-purchase counseling and has access to after-purchase default support services such as help with forbearance/repayment plans and loan modification support. In addition, if you have a NACA loan and you are in financial distress, you can receive 3 monthly payments paid by NACA to bring your loan out of default.

So what’s the catch?

NACA homebuyers must join NACA at a cost of $20 per month while they are attending pre-homebuyer counseling classes and then the cost is $50 per month for 5 years ($3,000.) In addition, NACA homeowners must agree to participate in 5 NACA activities each calendar year. Activities include community volunteer work, hosting a NACA meeting in your neighborhood, organizing a homebuyer workshop, participating in advocacy campaigns against predatory lenders, and so forth.

Reasons For

Clearly this is a great deal for first time homebuyers who want a mortgage with a very low interest rate and don’t mind going through the extensive homebuyer counseling, don’t mind paying $50/month for 5 years, and don’t mind carving out time to participate in 5 volunteer activities each year.  Some consumers were burned by predatory lenders during the real estate bubble and burned again with the 2008 recession. Maybe they are now renters…it’s been 2 years since their financial distress event and they are considering buying once again.  This sounds like a good program for people with a previous foreclosure of bankruptcy due to the extensive pre-purchase counseling they will get at NACA.. Anyone against predatory lending should welcome NACA to town.

Reasons Against

Clearly this is not a good loan program for people who don’t want to commit to owner occupancy for the life of the loan, or do not want to become active NACA members, are financially uber smart and would consider the homebuyer counseling classes beneath them. Budget? Savings? They’ve been doing this successfully for years and don’t need somebody to hold their hand. On the other side of the financial spectrum, not all buyers are going to fit into the NACA box including those with higher debt-to-income ratios.  Yeah, we are free-throwing those high DTI loans into the FHA program for as long as that will last. NACA DTI is a more manageable 31/40.

Sustainable homeownership should be our goal in mortgage lending. This is NACA’s main priority and I welcome NACA to Washington State.

By the way, NACA’s loan default rate is less than 1 percent.

The post NACA: The Largest Housing Services Organization in America Comes to Washington State appeared first on Seattle Bubble.

The following is taken directly from their follow-up email.

Here are my notes from choosing a property management firm.

Notes from before conducting interviews:

• Windermere Property Management
  • Terrible reviews online
  • Bad review by Seattle Bubble reader
• Acer NW
  • Mentioned by Seattle Bubble reader as very bad
• Apple Property Management
  • Recommended by Seattle Bubble reader
  • Found some concerning reviews online.
• Larissa at North Pacific Properties
  • Recommended by Seattle Bubble reader
  • No response to my email inquiry
• Dave Poletti & Associates
  • Found by internet search
  • Discounted fee structure (8% vs industry standard 10%)
  • Extra liability insurance requirements
  • Good reviews online
  • Charges for advertising during vacancies, which strikes me as a very bad incentive structure. (It makes vacancies less painful for them)
  • Not invited for in-person interview due to the above concern
• Real Property Associates
  • Found by searching for rental properties to see who manages them
  • Impressively large portfolio on website
  • Excellent reviews from property owners
  • Terrible reviews from tenants
  • Somewhat disorganized in early emails, but very friendly and persistent
  • Invited for in-person interview
• Sterling Johnston Associates
  • Recommended by personal friend
  • Mixed reviews from property owners
  • Invited for in-person interview on account of friend’s recommendation
• Brink Property Management
  • Found by searching for rental properties to see who manages them
  • Excellent reviews from property owners
  • Mixed reviews from tenants
  • Higher fees (extra 3% of year’s rent collected at lease renewals), but this gives them an incentive to keep tenants in place
  • Invited for in-person interview

Notes from in-person interviews of Real Property Associates, Sterling Johnston Associates, and Brink Property Management:

• Representatives who came to our house:
  • RPA: Mike and Kathy
  • SJA: Millie
  • Brink: Marcia
  • All representatives were good, but Mike and Kathy made the best overall impression
• Rent estimates for our house:
  • RPA: $1,495, and drop from there as needed
  • SJA: $1,350 to $1,450
  • Brink: $1,350 to $1,400, maybe start at $1,450
• Screening of tenants:
  • All utilize 3rd party services to perform background checks, rental histories, etc.
  • RPA: “70% intuition”, some allowances for black marks on history.
  • SJA: Some allowances for black marks
  • Brink: Very strict. Follows recommendation of 3rd party with no allowances
• Walkthoughs:
  • RPA: Only one walkthrough(!) at 12 months after new tenant moves in. More by request.
  • SJA: Every six months
  • Brink: Every six months. More than that costs $50 each.
• Number of properties managed:
  • RPA: ~1,000
  • SJA: ~500
  • Brink: ~800
• Additional notes:
  • RPA: Possibly the least picky about tenants
  • SJA: “We don’t nickel-and-dime you with fees.”
  • Brink: Lots of additional fees noted. Of high concern was the 10% fee on repairs, which is NOT a good incentive to keep repair costs down
  • All had similar requirements to keep ~$300 on hand for minor repairs
  • All took half of first month’s rent
  • All had similar policies in regards to cleaning deposits, pet deposits, security deposits, etc, with some minor variations

We ended up choosing Real Property Associates. We eliminated Brink based on our concerns with the fee structure. Real Property Associates and Sterling Johnston Associates both made a very good impression in person, and that made the choice between them difficult. Finally, we did another survey of the online reviews and chose Real Property Associates based on their excellent reviews from property owners.

Note that our house has been zoned for 4-5 story apartments with shops on the bottom. We are within spitting distance of the Mountlake Terrace park-and-ride, so we are highly motivated to hold onto the land for when a developer comes along someday. Obviously we still want to keep the house in good shape, but the next owner will probably bulldoze it.

The post Follow-Up: Seattle Area Property Management Companies appeared first on Seattle Bubble.

To kick things off, here’s an excerpt from the NWMLS press release:

Multiple offers are “the new normal” for housing market around Puget Sound

“Multiple offers have become the new normal,” remarked MLS director Diedre Haines, the Snohomish County regional managing broker at Coldwell Banker Bain. “We have literally gone off the charts in absorption,” she stated, adding the dip in pending sales in that county “is all due to lack of inventory.”
…
Prices will continue to rise as current market conditions are sustained, predicts J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. Among the conditions he mentioned are historically low interest rates, pent up buyer demand, and a shortage of available inventory.
…
Whether the market becomes more balanced may depend on listings. Northwest MLS figures show every county in its service area had year-over-year gains in new listings during April. “Let’s hope this is the start of a positive trend for inventory,” commented Mike Grady, the president and COO of Coldwell Banker Bain, but then added, “Considering the overall market landscape, it’s likely there won’t be enough sellers to fill buyer demand, at least for the short term.”

For once I’m on the same page as at least one of the real estate agents quoted in the NWMLS release (Mr. Grady). Of course, I’m hoping for more inventory so the market becomes more balanced, while they’re most likely motivated primarily by the additional commission checks that come with additional listings, but I’ll take what I can get.

Read on for my take on this month’s local news reports.

Sanjay Bhatt, Seattle Times: County home price back to $400,000

The double-digit percentage gain in home prices is triple the inflation rate and isn’t sustainable in the long run, [Glenn] Crellin said.

“We need inventory for the market to really stabilize,” he said.
…
Eastside broker Mike Chaffee said he represents a buyer who wants a house that will ensure her son attends popular Newport High School in the Bellevue School District. His buyer is well qualified, with a 30 percent down payment.

They’ve been looking for a year.

At homes in the neighborhood, Chaffee has sprinkled fliers with unsolicited offers for “top market value,” vowing to close a deal in 30 days and save the seller money on closing costs. Chaffee said it’s an example of how buyers are getting creative.

“I’m doing my best to get this buyer a house,” he said. “If I can do it without 10 other people putting in an offer, it relieves a lot of stress on the situation.”

Two people responded to the flier: One wanted $50,000 over what the house was worth, Chaffee said, while the other asked for $100,000 over the house’s market value.

His buyer didn’t bite.

Another month of great reporting in the Seattle Times. Kudos to Sanjay Bhatt for doing a great job filling the void left by Eric Pryne’s retirement.

Aubrey Cohen, Seattle P-I: King County house price back up to $400,000

“I’d been hoping to see an increase in listing activity, and I really can’t figure out what everybody’s waiting for,” Crellin said. “It’s been tight now for several months, and that doesn’t bode well for stable prices.”

It looks to me like inventory did begin to show signs of life in April. We’ll know in a few months whether we’re finally heading toward a more normal market, but I was encouraged by April’s inventory.

Kurt Batdorf, Everett Herald: Supply of homes for sale tightens in county

It’s 2007 all over again for the county real estate market as antsy buyers rush to buy what’s available in a tight supply of homes for sale.
…
Several factors are contributing to a “recipe for a frenzied May real estate market,” said John Deely, another member of the Northwest MLS board of directors and the principal managing broker at Coldwell Banker Bain in Seattle.

“The market pace has not subsided from previous months with low inventory and low interest rates being the primary drivers,” he said.

Wait, that does not make sense. Low inventory is driving the “frenzied market pace”? Um, no. If anything, low inventory is holding back sales.

Rolf Boone, Tacoma News Tribune: Pierce housing sales, prices continue up

The Pierce County housing market enjoyed another good month, with both sales and prices rising again and extending a streak that started last October, according to Northwest Multiple Listing Service data released Monday.
…
Another characteristic of the recent housing market has been fewer homes to choose from, and that continued into April as well.

Here we go again with the qualitative language, describing the market as “good” when it is clearly only good for sellers and is in fact quite frustrating for buyers. Boo.

Rolf Boone, The Olympian: Thurston home sales, prices rise in April

Thurston home sales and median prices rose in April, the fourth consecutive month of an improved housing market, according to Northwest Multiple Listing Service data released Monday.

Once again, the full story from The Olympian is only in the print edition, so all we get online is a brief rehash of the press release.

(Sanjay Bhatt, Seattle Times, 05.07.2013)
(Aubrey Cohen, Seattle P-I, 05.06.2013)
(Kurt Batdorf, Everett Herald, 05.07.2013)
(Rolf Boone, Tacoma News Tribune, 05.07.2013)
(Rolf Boone, The Olympian, 05.06.2013)

The post Reporting Roundup: The New Normal Edition appeared first on Seattle Bubble.

“Multiple offers have become the new normal,” remarked MLS director Diedre Haines, the Snohomish County regional managing broker at Coldwell Banker Bain. “We have literally gone off the charts in absorption,” she stated, adding the dip in pending sales in that county “is all due to lack of inventory.”

Haines also reported low appraisals remain a problem as appraisers struggle to keep up with the fast paced activity and increasing values.

I love the twisted thinking that “low appraisals” are “a problem.” Isn’t the whole point of an appraisal to protect the bank from overlending on a property? Perhaps the “problem” isn’t low appraisals but over-zealous buyers willing to pay too much.

All righty, on with our usual monthly stats.

Here’s your King County SFH summary, with the arrows to show whether the year-over-year direction of each indicator is favorable or unfavorable news for buyers and sellers (green = favorable, red = unfavorable):

April 2013	Number	MOM	YOY	Buyers	Sellers
Active Listings	3,221	+8.4%	-34.6%
Closed Sales	2,096	+14.8%	+18.5%
SAAS (?)	1.37	+0.5%	-4.1%
Pending Sales	3,221	+4.0%	+7.2%
Months of Supply	1.06	+4.2%	-39.0%
Median Price*	$400,000	+2.0%	+11.1%

Feel free to download the updated Seattle Bubble Spreadsheet (Excel 2003 format), but keep in mind the caution above.

As forecasted last week in our stats preview, inventory actually gained a bit from March to April. The 8.4% month-over-month increase is the largest we’ve seen since March 2010. Perhaps the inventory crunch is finally starting to ease, but we can’t really jump to any conclusions from a single month of data.

Here’s your closed sales yearly comparison chart:

This was also one of the largest month-over-month increases we’ve seen in closed sales, so it’s a pleasant surprise that inventory was able to keep up.

Here’s the graph of inventory with each year overlaid on the same chart.

This chart puts last month’s inventory increase into perspective. We’ve got a long ways to go to get back to anything resembling a normal market.

Here’s the supply/demand YOY graph. In place of the now-unreliable measure of pending sales, the “demand” in this chart is represented by closed sales, which have had a consistent definition throughout the decade.

The direction of the listings curve is encouraging, but the sales curve took another turn upward, indicating increasing competition among buyers.

Here’s the median home price YOY change graph:

Big drop in the year-over-year price gains, falling from 19% last month to 11% this month.

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994.

April 2013: $400,000
March 2006: $405,000

I haven’t seen any articles about the numbers yet at the Times and P-I, but I’ll update this post when they’re posted.

[Update: Here they are.]
Seattle Times: Home prices reach $400K amid tight inventory
Seattle P-I: King County house price back up to $400,000

Check back tomorrow for the full reporting roundup.

The post NWMLS: Inventory Inched Up in April appeared first on Seattle Bubble.

Please note: These posts should not be construed to be an advertisement or endorsement of any specific home for sale. We are merely taking a brief snapshot of the market at a given time. Also, just because a home makes it onto the “cheapest” list, that does not indicate that it is a good value.

Here are this month’s three cheapest single-family homes in the city limits of Seattle (according to Redfin):

Only one of last month’s homes has gone pending. The third-cheapest home from last month is still on the market but has been pushed off the list.

Stats snapshot for Seattle Single-Family Homes Under $200,000 (excluding short sales)
Total on market: 15
Average number of beds: 2.3
Average number of baths: 1.2
Average square footage: 1,282
Average days on market: 120

Couple more homes on the market than last month, and a huge spike in days on market. Apparently most of what’s left on the market after the big drop in inventory over the last few months is the stale homes that buyers just aren’t interested in even at rock-bottom prices.

Here are a couple of charts to give you a visual of the trend of these numbers since I adjusted the methodology in April 2010:

Here are cheapest homes in Seattle that actually sold in the last month, regardless of condition (since most off-market homes don’t have much info available on their condition).

The post Cheapest Homes: May 2013 Edition appeared first on Seattle Bubble.

The post Poll: What’s the best outdoor activity around Seattle? appeared first on Seattle Bubble.

The post Weekly Twitter Digest (Link Roundup) for 2013-05-03 appeared first on Seattle Bubble.

First up, here’s the summary snapshot of all the data as far back as my historical information goes, with the latest, high, and low values highlighted for each series:

Summary: Foreclosures fell again, sales rose some more, and inventory looks like it actually made a decent month-to-month gain. Hit the jump for the full suite of our usual monthly charts.

Next, let’s look at total home sales as measured by the number of “Warranty Deeds” filed with King County:

Sales in King County rose 14% from March to April, and were up 25% year-over-year, which is a slightly larger year-over-year gain than in March.

Here’s a look at Snohomish County Deeds, but keep in mind that Snohomish County files Warranty Deeds (regular sales) and Trustee Deeds (bank foreclosure repossessions) together under the category of “Deeds (except QCDS),” so this chart is not as good a measure of plain vanilla sales as the Warranty Deed only data we have in King County.

Deeds in Snohomish rose 17% month-over-month and 31% from April 2012.

Next, here’s Notices of Trustee Sale, which are an indication of the number of homes currently in the foreclosure process:

Same story we’ve seen all year: Both counties are well above their respective 2012 levels, but both also experienced a month-over-month drop. It’s the third straight month of declines in King County. Unless foreclosures experience a sudden spike, we’ll probably be seeing year-over-year drops by July, possibly even June.

Here’s another measure of foreclosures for King County, looking at Trustee Deeds, which is the type of document filed with the county when the bank actually repossesses a house through the trustee auction process. Note that there are other ways for the bank to repossess a house that result in different documents being filed, such as when a borrower “turns in the keys” and files a “Deed in Lieu of Foreclosure.”

Since Trustee Deeds are on a delayed cycle from notices, they rose month-over-month, to a 19-month high.

Lastly, here’s an update of the inventory charts, updated with the inventory data from the NWMLS.

Finally some good news for buyers. Last year King County inventory fell 1.0% between March and April. This year it rose 6.6%. Similar story in Snohomish County: last year listings fell 3.1%, this year they were up 5.1%. Here’s hoping it’s the start of a positive trend for inventory.

Stay tuned later this month a for more detailed look at each of these metrics as the “official” data is released from various sources.

The post April Stats Preview: Finally Some Inventory Edition appeared first on Seattle Bubble.

Note that the tiers are determined by sale volume. In other words, 1/3 of all sales fall into each tier. For more details on the tier methodologies, hit the full methodology pdf. Here are the current tier breakpoints:

• Low Tier: < $252,611 (down 0.6%)
• Mid Tier: $252,611 – $403,620
• Hi Tier: > $403,620 (down 0.6%)

First up is the straight graph of the index from January 2000 through February 2013.

Here’s a zoom-in, showing just the last year:

The middle tier took a bit of a hit in February, the high tier was basically flat, and the low tier increased. Between January and February, the low tier rose 0.5%, the middle tier was down 0.7%, and the high tier lost 0.1%.

Here’s a chart of the year-over-year change in the index from January 2003 through February 2013.

The biggest gainer in year-over-year growth was the high tier this month, which had a 1.5-point boost. Here’s where the tiers sit YOY as of February – Low: +10.0%, Med: +10.5%, Hi: +9.0%.

Lastly, here’s a decline-from-peak graph like the one posted yesterday, but looking only at the Seattle tiers.

Current standing is 37.9% off peak for the low tier, 29.1% off peak for the middle tier, and 22.5% off peak for the high tier.

(Home Price Indices, Standard & Poor’s, 04.30.2013)

The post Case-Shiller Tiers: Low Tier Gains, Middle Tier Loses appeared first on Seattle Bubble.

Down 0.2% January to February
Up 9.3% YOY.
Down 26.7% from the July 2007 peak

Last year prices fell 0.8% from January to February and year-over-year prices were down 2.9%.

I was actually expecting a bit of a bump up from January to February, so it’s a little surprising to see a slight drop. I’m 99% certain we’ll see an increase next month though.

Here’s an interactive graph of the year-over-year change for all twenty Case-Shiller-tracked cities, courtesy of Tableau Software (check and un-check the boxes on the right):

Seattle’s position for month-over-month changes dropped slightly from #13 in January to #15 in February.

Hit the jump for the rest of our monthly Case-Shiller charts, including the interactive chart of raw index data for all 20 cities.

In February, twelve of the twenty Case-Shiller-tracked cities gained more year-over-year than Seattle (one more than January):

• Phoenix at +23.0%
• San Francisco at +18.9%
• Las Vegas at +17.6%
• Atlanta, GA at +16.5%
• Detroit at +15.2%
• Los Angeles at +14.1%
• Minneapolis at +12.0%
• Miami at +10.4%
• San Diego at +10.2%
• Tampa at +10.0%
• Denver at +9.9%
• Portland at +9.4%

Eight cities gained less than Seattle as of February: Dallas, Washington DC, Charlotte, Cleveland, Boston, Chicago, and New York.

Here’s the interactive chart of the raw HPI for all twenty cities through February.

Here’s an update to the peak-decline graph, inspired by a graph created by reader CrystalBall. This chart takes the twelve cities whose peak index was greater than 175, and tracks how far they have fallen so far from their peak. The horizontal axis shows the total number of months since each individual city peaked.

In the sixty-seven months since the price peak in Seattle prices have declined 26.7%.

Lastly, let’s see just how far back Seattle’s home prices have “rewound.” As of February: January 2005.

Check back tomorrow for a post on the Case-Shiller data for Seattle’s price tiers.

(Home Price Indices, Standard & Poor’s, 04.30.2013)

The post Case-Shiller: February Home Prices Dipped Slightly appeared first on Seattle Bubble.

Don’t forget to check out Looney Listingthroughout the month for similar amusing listing photos from all around the country.

The idea for this series stems from the ongoing forum thread Detrimental Listing Photos, which is where you should post your nominations for next month’s Real Actual Listing Photos post.

No particular theme this month. Just enjoy a collection of odd listing photos submitted by readers and found by yours truly.

Enough explanation. Let’s get to the photos! Click the photo to view the Real Actual Listing.

“Property is located just far enough away from 145th and Lake City Way to make it a desirable project.”

And also just far enough away to make the listing agent run out of time to actually get out of his car to take any photos of the home. Spotted by Aaron W.

“Legal duplex updated w/ new kitchens, plumbing, wiring.”

Neat! I’ve always wanted a glowing, radioactive dining room.

“Location ideal for: home care, students attending nearby schools, first time buyers or investors.”

It’s hard to tell on the small photo, but there appears to be a power cord running from beneath the bed to under the mattress. Um. What. Also: nice hat.

“Classical early 1900 Farm House with large level lot in the town of Silvana famous for “Silvana Meats” just up the road!”

The shot above is what the home looks like after you’ve eaten some famous “Silvana Meats” that have been sitting out way too long.

“Don’t miss this diamond in the rough.”

Guess who couldn’t figure out how to turn off the time/date stamp on their camera? No problem, just fix it in MS Paint!

“…custom tile bathroom and Playhouse’s signature modern kitchen tile backsplash & custom cabinetry.”

Okay this one is a dupe from Looney Listing, but it was too good not to share here. Can’t say I’ve ever seen a dinner table staged with rubber chickens before.

Let me know if you have an idea for a future “Real Actual Listing Photos” theme, and be sure to check out Looney Listing for listing photo amusement throughout the month.

The post Real Actual Listing Photos: Driveby, Radioactive, Timestamp appeared first on Seattle Bubble.

The post Poll: Old or New: If you had to pick one, which would you prefer? appeared first on Seattle Bubble.

The post Weekly Twitter Digest (Link Roundup) for 2013-04-26 appeared first on Seattle Bubble.

Shame on you, Tim, for publishing misleading data. You cannot say that unemployment has dropped nationwide without also commenting on the record high not in the labor force number. I trust you are not turning into a NAR cheerleader at this stage. Remember, if there were zero jobs, and folks stopped looking, the unemployment rate would be zero, and yet no one would be working. Tsk, tsk…

The jobs posts, like most of the content on this site, are intended to be primarily about what’s going on in the local area, and as the first chart showed, the number of jobs in the Seattle area has been growing since late 2010. That’s hardly a “zero jobs” scenario.

That said, I love a good data request, so here’s a chart of national labor force participation alongside the unemployment rate:

Indeed, in 2006-2007 when unemployment was at its lowest (~4.5%) before the housing bubble popped, the national labor force participation rate was at 66.3%. As of March it is three points lower at 63.3%, while unemployment stands at 7.6%.

Here in the Seattle area the picture is somewhat different, though:

In early 2007 when Seattle’s unemployment was as low as 3.6%, the local labor force participation rate was at 69.5%. As of March, unemployment is at 5.5%—nearly two points higher than it was pre-bust—but the labor force participation rate is virtually the same, at 69.0%.

Even when you include the labor force participation rate in the local picture, the jobs situation is clearly improving. That’s not to say that the jobs that are being added pay well compared to those that were lost during the bust, but there’s no denying that the Seattle area is adding jobs and unemployment is falling fast.

The post Seattle Labor Participation Outperforming National Rate appeared first on Seattle Bubble.

First up, year-over-year job growth, broken down into a few relevant sectors:

Construction growth dipped again, dropping from a 5.9% year-over-year gain in February to 5.2% in March. With 6.4% year-over-year growth, the retail sector was again the fastest-growing in March.

Here’s a look at the overall Seattle area unemployment rate compared to the national rate:

Unemployment had another big drop yet in Seattle between February and March, and dipped at the state and national level as well. Washington State’s unemployment is still below the national rate, while the Seattle area continues to do much better than Washington State and the nation as a whole. March unemployment came in at 7.6% for the US, 7.3% for Washington, and 5.5% for the Seattle area.

The post Seattle Unemployment Drops Again as Job Gains Continue appeared first on Seattle Bubble.

Talk about the upside of the bubble in terms of neighbor quality

I really enjoyed one aspect of Seattle’s bubble. I loved the “rising tide” effect that seemed to be transforming my neighborhood. Hard to quantify. More of a qualitative discussion.

I really enjoyed newer buyers who invested in their homes and yards, doing long-overdue maintenance and painting, as well as some remodels and improvements, bumping out some long-term neighbors who were letting their paint peel off, let their yards go, parked jalopies on the street, burned trash in their fireplaces to save a buck, etc.

Not trying to be judgmental, but I do miss that dynamic, that feeling that the neighborhood was on the “up and up”.

It’s an interesting observation that is similar to my post from last week: Foreclosures Benefit a Neighborhood, Not Hurt It, only from the pre-bust perspective.

While many neighborhoods no doubt felt like they were improving during the bubble, the problem was that most of the “wealth” that was fueling these improvements was illusory. Rising equity was being immediately converted into debt and spent on things like “long-overdue maintenance and painting, as well as some remodels and improvements,” in addition to expensive cars, vacations, and other creature comforts.

I’m reminded of Douglas Adams’ flying party, which I posted about a few times before the bubble burst and the economy collapsed, taking with it all of that imaginary wealth.

The longest and most destructive party ever held is now into its fourth generation, and still no one shows any signs of leaving.
…
The problem of when the drink is going to run out is, however, going to have to be faced one day.

Sure, it would have been a blast if the party could have gone on forever. But it couldn’t, and it didn’t.

I’m interested to hear your take on this reader’s comment. Were there positive aspects of the housing bubble that could somehow be brought back without the all of the unsustainable economy-destroying side effects that came along for the ride last time?

The post Reader Question: What About the Upside of the Bubble? appeared first on Seattle Bubble.

Sales across all price tiers got a big boost in March, while the sales curve stayed basically the same shape as February. The mode (i.e. the bucket with the most sales) for non-distressed sales moved from the $400,000 to $450,000 bucket in February down to the $300,000 to $350,000 bucket in March, but all four buckets between $250,000 and $450,000 were within 6 non-distressed sales of each other.

Sales of non-distressed homes over $1 million shot up from just 66 in February to 105 in March, close to the highest point we’ve seen in over three years.

To generate the chart below, I took all the sales data for single-family homes sold in King, Snohomish, and Pierce Counties from the beginning of 2010 through the end of March. Since my data download puts late-reported sales into the month that the sale actually took place rather than in the month they were reported, there is a slight difference in the number of sales I’m counting vs. what the NWMLS reports each month.

By default the chart shows just King County sales in March. Use the controls below to scroll through different months, or to see what the mix looks like for Snohomish or Pierce County. I’ve also added color-coding and controls to separate out “non-distressed” sales from the sales of bank-owned homes and short sales.

As you explore the data for yourself I’d love to hear what stands out to you. Let me know in the comments!

The post All Sale Price Tiers Bumped Up in March appeared first on Seattle Bubble.

The post Poll: Neighborhood Smackdown: Greenlake vs. U District appeared first on Seattle Bubble.

The post Weekly Twitter Digest (Link Roundup) for 2013-04-19 appeared first on Seattle Bubble.

’07 home prices not so bad after all

With all the dismal national news about home sales, wasn’t 2007 supposed to be the year the local real-estate market died?

Well, surprise. Although home sales indeed were down 14.5 percent in King County and the number of for-sale homes was up almost 9 percent, prices more than held their own.

Compared with 2006, the county’s single-family home prices climbed 7.1 percent last year, according to the Northwest Multiple Listing Service’s annual report released Tuesday.

Surprise. Prices continued to fall unabated for the next four years.

Except it wasn’t a surprise if you actually bothered to look at the 2007 data with a critical eye, as I pointed out in my post at the time:

Anyone who has actually been paying attention to the market knows that something is fishy about that 7.1% figure. To figure out what’s behind that number, take a look at page 19 of the report. Basically, they arrive at that figure by comparing the median price for all sales in 2007 with the same figure for 2006. In a market that is consistently and steadily headed in a single direction, that kind of comparison would make sense. However, in today’s volatile market, such a statistic is totally meaningless.

Thankfully today’s real estate reporting Seattle Times is a thousand times better than the cheerleading, PR-rehashing junk that they published during the bubble, but it’s a good reminder to take everything you read (including posts here on Seattle Bubble) with a grain of salt. Look at the data yourself and draw your own conclusions.

The post Friday Flashback: “Prices more than held their own.” appeared first on Seattle Bubble.

In order to explore this concept, we break King County down into three regions, based on the NWMLS-defined “areas”:

• low end: South County (areas 100-130 & 300-360)
• mid range: Seattle / North County (areas 140, 380-390, & 700-800)
• high end: Eastside (areas 500-600)

Here’s where each region’s median prices came in as of March data:

• low end: $197,995—$407,000
• mid range: $250,000—$650,000
• high end: $425,000—$1,262,500

First up, let’s have a look at each region’s (approximate) median price (actually the median of the medians for each area within the region).

The median price in the low end regions was basically flat, while median in the high and mid-tier regions both saw a bump in March.

Next up, the percentage of each month’s closed sales that took place in each of the three regions. The dotted line is a four-month rolling average.

Month over month the low end regions accounted for basically the same share of sales. The high end lost a little share and the mid-tier gained. As of March 2013, 34.3% of sales were in the low end regions, 31.8% in the mid range, and 33.9% in the high end. A year ago the low end regions had a bit more of the share and the high end less: In March 2012 the low end made up 35.8% of the sales, the mid range was 32.1%, and the high end was 32.1%.

Here’s that information in a visual format:

Finally, here’s an updated look at the percentage of sales data all the way back through 2000:

We’re still in odd, uncharted territory, with the low and high ends both taking up about the same share of sales and the middle tier coming in last. We haven’t seen a market with this kind of mix at all, as far back as this data goes.

The post South King and Eastside Sales Neck and Neck appeared first on Seattle Bubble.

In this chart I’ve grouped zip codes into their approximate NWMLS regions, which break South County into SE King and SW King and display Seattle and N King separately.

Southwest King County is still the leader, where nearly a quarter (22.5%) of sales are still bank-owned homes. Unsurprisingly, Seattle and the Eastside are still the lowest, where bank-owned homes made up just 4.3% and 4.4% of sales in March.

Interestingly, sales of bank-owned homes in North King County (Shoreline, Lake Forest Park, Kenmore) have shot up from just 1.4% in December (lower than Seattle and the Eastside) to 12.7% in March. From what I have seen of the inventory situation in those areas, this is probably just because very few non-distressed listings have been hitting the market in the last few months.

The post Southwest King County Still Most-Distressed appeared first on Seattle Bubble.

As of March, the non-distressed median price for King County single family home sales sits at $432,000, up 6.7% from a year earlier and up 1.6% from February. Not much of an increase for this time of year. Last year prices jumped 5.0% month over month in March.

The bank-owned median sale price was at $186,500 in March, up 3.6% from a year earlier. The short sale median price came in at $250,000 in March, down 6.0% from 2012.

Here’s a look at the price per square foot broken down by distress status:

The median price per square foot of non-distressed homes was up just 5.0% from 2012. The bank-owned median price per square foot shot up a whopping 23.4%, while the short sale median price per square foot was up 6.3%.

The post Non-Distressed Median Price Gains Slow appeared first on Seattle Bubble.

All of these claims focus on the just-foreclosed home—an empty, run-down shell with an overgrown lawn, missing appliances, and disconnected utilities. But the fact that a home was foreclosed at one point in time doesn’t mean that it will remain vacant and derelict forever. In fact, I contend that foreclosures benefit a neighborhood, and areas that have experienced the most foreclosures are poised to improve the fastest during a recovery.

Before I get into the benefits of foreclosure for a neighborhood, I want to be clear that the personal experience of foreclosure is not positive. Going through a foreclosure is disheartening, and losing your home takes an emotional toll, no matter the circumstances. I have a handful of friends who have been through foreclosure. It was not something any of them enjoyed, and I would not personally wish the experience on anyone.

At the national level, consider the markets that were the hardest-hit by foreclosures after the bubble burst. Las Vegas and Phoenix were both overwhelmed with foreclosures a few years ago, and yet today they are experiencing some of the largest price gains in the nation—15% and 23% year-over-year as of the latest data from Case-Shiller.

Just in the handful of blocks around my home there have been at least half a dozen foreclosures in the last few years. Instead of becoming worse with each new foreclosure, the overall character of the neighborhood has been noticeably improved through these foreclosures.

Some foreclosures are purchased, fixed up, and lived in by the family that bought from the bank. Some are bought by flippers, dramatically refurbished (often after being gutted to the studs), and sold for a decent profit. Others have been bought, fixed up, and are now rentals. In every case, within a year of being repossessed by the bank each the foreclosed homes in my neighborhood has become nicer, as evidenced by the photos throughout this post.

Homes that—even before foreclosure—were the most run-down and neglected in the neighborhood have often become the nicest home on the block. Former homeowners who could not afford even the most basic maintenance have moved on to more affordable rentals, replaced by investors and families who have both the resources and the motivation to keep these homes looking nice.

Here’s a quick rundown of what’s happened with a few of the foreclosures near my home. The homes listed below appear in the same order as their photos in this post.

• 3431 Oakes: Purchased by a family. Since foreclosure they have refurbished the interior, added a railing to the front porch, put in a nice fence, and cleaned up the yard.
• 3609 Wetmore: A small investment group that has fixed and flipped a number of homes in Everett bought this home. After their high quality work was complete, the home sold to the new owner for over double what they paid.
• 3331 Wetmore: Totally gutted, remodeled, and refinished over the course of nine months. Major work includes a whole new front porch, all new windows and doors, a new back porch, and an all new interior. Currently on the market.
• 3616 Rockefeller: The family that bought this home built a matching garage with second floor living space on the back of the lot (not seen in the photo) and is completely renovating the main house.
• 1710 36th: Purchased by a small investor, totally gutted and refurbished with new windows, doors, insulation, floors, all-new kitchen, etc. The finish work was nice enough that he was able to charge above-market rent.

The house directly across the street from mine was foreclosed in January. Rather than causing me concern about the detrimental effect that this will have on the “value” of my home or worrying about how the neighborhood is going downhill, instead I am excited to see how the home will be improved by its eventual new owners.

Foreclosures are not the dark cloud over neighborhoods that they are claimed to be. On the contrary, they are the leading edge of positive changes that improve the character of a neighborhood and lay the groundwork for a sustainable recovery.

The post Foreclosures Benefit a Neighborhood, Not Hurt It appeared first on Seattle Bubble.

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Be sure to enter your real email address into the form when you leave your guess in the comments, because the winner gets a $25 gift card to the restaurant chain of their choosing. Don’t worry, I’m the only one that can see the emails that are entered. The winner is the person whose guess is closest to the final sale price, above or below. If there is a tie, whoever guessed closer to the correct closing date will be declared the winner.

Contest closes to entries at midnight the morning of April 22nd, or when the home goes pending, whichever comes first. Note that last time the home went pending just a few hours after the contest opened, so get your guesses in early!

Today’s “Guess the Price” guest star is 4214 Midvale Ave N in Seattle’s Fremont neighborhood.

This round’s home hit the market yesterday with an asking price of $415,000. This is not the first time it has been for sale in the last few years—it was originally listed in September 2011, had a couple of price drops, and was delisted in December 2011. The market today is quite a bit different than it was in late 2011, so I suspect they’ll have better luck this time. There is an open house scheduled for this coming Sunday for those of you who would like to go check it out in person.

The home is neither bank-owned nor a short sale, and it’s not a flip. In fact, the last sale was long enough ago that it doesn’t even show up in King County’s online records (which go back through sometime in the early 1980s). It sits in the northeast corner of Seattle’s Fremont neighborhood, where the median price of single-family homes sold in March was $492,000. Here’s an excerpt from the listing agent’s description:

Sweet location and charm galore. Bring your paintbrushes and roll up your sleeves-this home is ready to shine.

Built in 1923, this 1-story home (with basement) sports 3 bedrooms, one full bathroom, and one three-quarter bathroom. The main floor has one bedroom, the other two are in the basement. The three-quarter bathroom is also in the basement. According to the King County Department of Assessments, 860 of the home’s square feet are above ground, with an additional 760 in the finished basement.

The exterior of the home appears to be in decent condition, though there appears to be some wear on the front porch steps. The yard is small, but well-kept. Off the rear of the home there is a good sized deck, but it’s not covered and the wood does look somewhat weathered. There’s also a small storage shed in the back yard. The listing claims there is “off-street parking,” but there is no garage, and no driveway is apparent in any of the photos or Google’s satellite view.

Inside, the paint job looks somewhat new. The wood trim that surrounds most of the windows and doors also appears to be painted. The hardwood floors appear to be in good condition, but the linoleum in the kitchen is a somewhat dated pattern. Heating appears to be provided by both a central forced-air system and supplemental baseboard heating evident in many of the rooms.

The kitchen is a simple, narrow, single-counter layout, with tiled countertops. Cabinet space appears to be somewhat limited, and there does not seem to be a dishwasher. The dining space is at one end of the kitchen, and is currently staged with a small two-person table. It looks like fitting a table much larger than that would be difficult.

The main floor sports a wood stove. The basement appears to have slightly short, but adequate ceilings. Windows throughout the basement let in a decent amount of light.

Overall, this home looks like it has been decently maintained throughout the years, although there are not many modern updates (e.g. appliances, kitchen cabinets, heating, etc.). The asking price is slightly lower than what other similar nearby homes have been selling for, so they may be looking for a quick sale. There are just 5 houses for sale in all of Fremont right now), so chances are they’ll get their wish.

Summary of 4214 Midvale Ave N

• Pros
  • desireable location
  • reasonably well-kept
  • nicely manicured lot
  • garden shed
  • large deck
  • not on a busy street
• Cons
  • no garage or driveway
  • kitchen and dining room are small
  • dated kitchen, no dishwasher
  • limited counter space
  • short ceilings in basement
  • baseboard heating throughout

So, what say you? How much will this home sell for, and when will it sell?

The post Guess the Price Round 6: “Ready to Shine” in Fremont appeared first on Seattle Bubble.

March 2013
King: 795 NTS, up 33% YOY
Snohomish: 462 NTS, up 32% YOY
Pierce: 605 NTS, up 57% YOY

All three counties still above their levels from a year ago, although the difference is rapidly shrinking. Month-over-month was a mixed bag: King was down 5%, Snohomish was flat, and Pierce increased 5%.

Here’s your interactive Tableau dashboard updated with the latest foreclosure data:

The percentage of households in the chart above is determined using OFM population estimates and household sizes from the 2000 Census. King County came in at 1 NTS per 1,060 households, Snohomish County had 1 NTS per 600 households, and Pierce had 1 NTS for every 538 households (higher is better).

According to foreclosure tracking company RealtyTrac, Washington’s statewide foreclosure rate for February of one foreclosure for every 687 housing units was 9th highest among the 50 states and the District of Columbia. Note that RealtyTrac’s definition of “in foreclosure” is much broader than what we are using, and includes Notice of Default, Lis Pendens, Notice of Trustee Sale, and Real Estate Owned.

Hit the jump for a larger version of the chart that shows the percentage of households in each county receiving a foreclosure notice each month:

Note: The graphs above are derived from monthly Notice of Trustee Sale counts gathered at King, Snohomish, and Pierce County records. For a longer-term picture of King County foreclosures back to 1979, hit this chart and drag the date slider to its full range. For the full legal definition of what a Notice of Trustee Sale is and how it fits into the foreclosure process, check out RCW 61.24.040. The short version is that it is the notice sent to delinquent borrowers that their home will be repossessed in 90 days.

The post Foreclosure Notices Around Seattle Flat in March appeared first on Seattle Bubble.

As predicted, after bumping up in January and February, the sales of bank owned-homes fell in March.

Short sales also decreased in March, falling from 12.2% in February to 9.4% in March. Down from 10.3% in March 2012, and the lowest point since October 2011.

Next week we’ll take a look at how the median prices are moving for bank-owned homes, short sales, and non-distressed sales.

The post Distressed Sales Tumbled in March appeared first on Seattle Bubble.

Here’s the data as of March:

At 57.9, the Present Situation Index has gained 187% from its December 2009 low point, but fell 6% from its February level. The index is at roughly the same place it was in September 2008. The expectations index also fell in March, dropping 16% from its February level.

It will be interesting to see if the ongoing “sequestration” cuts combined with the increasingly noisy posturing from North Korea have an effect on Consumer Confidence this month.

The post Consumer Confidence Dips Again in March appeared first on Seattle Bubble.

Today’s “Guess the Price” guest star is 304 NW 74th Street in Seattle’s Phinney Ridge neighborhood.

This round’s home hit the market yesterday with an asking price of $439,950. This is not the first time it has been for sale recently—it was originally listed on October 2, went pending on October 9, but was delisted on October 12. It was relisted on October 29, had a price drop on November 12, went pending again on November 17, but was delisted again on November 28.

Just 11 people managed to get in guesses in the less than 5 hours between when the contest posted and when the home went pending. Guesses ranged from $418,000 to $495,000. The average price guessed was $452,177, and the median guess was $450,000. Here’s the plot of all the guesses, with the final close price & date marked in green:

According to the NWMLS, the home sold on March 29 (just four weeks after listing), with a closing price of $440,000—which was exactly what was guessed by commenter Beau. Congratulations! I’ve contacted Beau and we’re making arrangements for his prize.

The final sale price came in dead on the original asking price, and pretty much right at what it last sold for in March 2006.

Here’s the difference between the average guess and the final sale price our contests so far:

1. -2.2%
2. +5.5%
3. -10.5%
4. +10.0%
5. +2.8%

Stay tuned in the next few weeks, when we’ll kick off another round of Guess the Price.

The post Guess the Price Round 5: We Have a Winner! appeared first on Seattle Bubble.

The post Poll: Climate: I live in the Seattle area… appeared first on Seattle Bubble.

The post Weekly Twitter Digest (Link Roundup) for 2013-04-05 appeared first on Seattle Bubble.

To kick things off, here’s an excerpt from the NWMLS press release:

Prices "spiking" as home buyers compete for scarce inventory

CASH MONEY

“All price ranges are feeling a lift,” reported Dick Beeson, principal managing broker at RE/MAX Professionals in Tacoma. Northwest MLS director John Deely echoed that comment: “We are seeing many homes in Seattle meet and exceed pre-bubble price levels,” stated Deely, the principal managing broker at Coldwell Banker Bain in Seattle.

“The recovery continues on a slow and steady pace in most areas and surging hard in others,” concluded Darin Stenvers, vice chair of the MLS board.
…
The upward spike in prices is largely the result of limited supply. “Whenever we get down to a severe shortage of homes for sale, we get double-digit home price appreciation,” observed J. Lennox Scott, chairman and CEO of John L. Scott Real Estate.

Demand continues to outpace supply, creating high absorption rates, Deely stated, adding “Open houses are drawing large crowds.” For example, he reported several open houses from the past weekend experienced traffic exceeding 50 people per day.

Sweet, we’re back to using the old realtor standby of “open house traffic” as a measure of market demand. Never mind that pending sales had their first year-over-year decline in nearly two years. Open house traffic is on the rise! The market will expand forever!

Read on for my take on this month’s local news reports.

Sanjay Bhatt, Seattle Times: King County house prices jumped almost 20 percent over year

About a quarter of buyers are paying all cash for homes, said OB Jacobi, president of Windermere Real Estate in Seattle. The rest are putting down, on average, between 20 and 50 percent cash, he said.

“I think that is pretty shocking,” Jacobi said. “It’s crazy.”

Foreclosed properties are drawing an even higher rate of all-cash offers. Seattle real-estate broker Keith Brown, who sells only foreclosed homes, estimated that roughly half the offers on a property he lists are all cash.

“I’m not quite sure where everyone is coming up with all this cash, but there’s definitely been a huge increase in the last few months,” Brown said.

Data > anecdote. All-cash deals were 38% of the Seattle-area market in 2011. I happen to have just run these numbers for Q1 in King County, and it’s up to 42%. Mr. Jacobi and Mr. Brown’s observations are both underestimating the scope of all-cash transactions, and overstating the recency of any change. All-cash deals have been growing steadily and strongly since 2007. There has been no sudden increase of all-cash sales in 2013.

Aubrey Cohen, Seattle P-I: Homes even harder to find in Seattle area in March

Observers of the local real estate market had hoped March would come with increasing listings, helping ease the area’s shortage of homes for sale. It didn’t, although there was a sign the sales surge could be starting to abate, or at least that people are running out of homes to buy.

“I’m a little surprised that we didn’t pick up more listings than we did,” said Glenn Crellin, associate director of the Runstad Center for Real Estate Studies at the University of Washington. “I was really hoping that we’d start to see some balance coming into the listing side of the equation, and these numbers indicate that we’re going to have a really challenging summer. … These numbers are just amazingly low.”

It gets old talking about how few listings there are, month after month, but when that’s still the biggest story in the real estate market, leading with something else doesn’t make sense.

No article has been posted yet in the Everett Herald. I’ll update this post later if they post an article today.

Rolf Boone, Tacoma News Tribune: Pierce County real estate market continues rebound

Pierce County’s streak of improved home sales and higher median prices continued in March, with both sales and prices rising again, likely cementing the view that the slower housing market finally is behind us, according to new Northwest Multiple Listing Service data released Thursday.
…
But the March data also show that sellers are beginning to sense a new direction in the market. For the third month in a row, new listings are outpacing the figure from last year.

Sounds like the inventory situation might be a little better in Tacoma than it is in the Seattle area.

Rolf Boone, The Olympian: Home sales in county continue to rebound

The March housing data is in for Thurston County and it looks a lot like it did in January and February, with home sales and median prices showing positive gains, according to the Northwest Multiple Listing Service.

Windermere Olympia is the busiest it has been in the past four years — particularly for those homes priced between $185,000 and $225,000, which in some cases are attracting multiple offers, owner Steve Garrett said.

“Activity has picked up ten-fold,” he said, adding he expects a very productive 2013.

Ten-fold from… last month? Last year? 1880? Hmm…

(Sanjay Bhatt, Seattle Times, 04.04.2013)
(Aubrey Cohen, Seattle P-I, 04.04.2013)
(Rolf Boone, Tacoma News Tribune, 04.04.2013)
(Rolf Boone, The Olympian, 04.05.2013)

The post Reporting Roundup: Spiking Prices Edition appeared first on Seattle Bubble.

“All price ranges are feeling a lift,” reported Dick Beeson, principal managing broker at RE/MAX Professionals in Tacoma. Northwest MLS director John Deely echoed that comment: “We are seeing many homes in Seattle meet and exceed pre-bubble price levels,” stated Deely, the principal managing broker at Coldwell Banker Bain in Seattle.

“The recovery continues on a slow and steady pace in most areas and surging hard in others,” concluded Darin Stenvers, vice chair of the MLS board.

I think it’s a mischaracterization to say that prices are “spiking.” I get into the reasons for this a little more below. I’m also having a hard time rectifying the “spiking” headline with the “slow and steady” comment from Mr. Stenvers. Whatever.

All righty, on with our usual monthly stats.

Here’s your King County SFH summary, with the arrows to show whether the year-over-year direction of each indicator is favorable or unfavorable news for buyers and sellers (green = favorable, red = unfavorable):

March 2013	Number	MOM	YOY	Buyers	Sellers
Active Listings	2,972	+0.8%	-40.3%
Closed Sales	1,825	+39.6%	+11.1%
SAAS (?)	1.36	-3.1%	-9.9%
Pending Sales	2,936	+18.9%	-2.7%
Months of Supply	1.01	-15.2%	-38.6%
Median Price*	$392,000	+7.4%	+18.8%

Feel free to download the updated Seattle Bubble Spreadsheet (Excel 2003 format), but keep in mind the caution above.

For the third month in a row now, we’re looking at the lowest months of supply has ever been as far back as my data goes (January 2000). The number of listings on the market at the end of the month was barely higher than the number of pending sales. Remember thoug that the NWMLS changed the definition of “active listing” in July 2008, so months of supply before and after that point aren’t really directly comparable, and closed sales still aren’t coming anywhere near pending sales, but barely over one month of supply is still pretty abysmal.

Here’s your closed sales yearly comparison chart:

Same basic pattern as every year, with sales surging between February and March.

Here’s the graph of inventory with each year overlaid on the same chart.

Inventory inched up, but remains at record lows.

Here’s the supply/demand YOY graph. In place of the now-unreliable measure of pending sales, the “demand” in this chart is represented by closed sales, which have had a consistent definition throughout the decade.

The listings curve is moving closer to zero (flat year-over-year), but the sales curve turned back up again in March.

Here’s the median home price YOY change graph:

More or less the same as last month at a nearly 20% year-over-year gain. Remember that this large of a jump is mostly due to a decrease in distressed sales (short sales, bank-owned) and a geographic shift toward the more expensive parts of the county.

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994.

March 2013: $392,000
December 2005: $393,000

So far I haven’t seen any articles from the Times and P-I, but I’ll update this post later if they show up.

Update:
Seattle Times: King County house prices jumped almost 20 percent over year
Seattle P-I: Homes even harder to find in Seattle area in March

Check back tomorrow for the full reporting roundup.

The post NWMLS: Sales Unfazed by Still-Scarce Inventory appeared first on Seattle Bubble.

Please note: These posts should not be construed to be an advertisement or endorsement of any specific home for sale. We are merely taking a brief snapshot of the market at a given time. Also, just because a home makes it onto the “cheapest” list, that does not indicate that it is a good value.

Here are this month’s three cheapest single-family homes in the city limits of Seattle (according to Redfin):

Number two this month was number one last month. The other two homes from last month are both currently pending. This month’s number one cracks me up. Just 360 square feet. Zero bedrooms. From the listing description:

well i may be tres petite but i am very cute The Littlest Cottage in Seattle, promise you absolute peace & quiet, 100% privacy, blissful views of nothing.

Nice.

Stats snapshot for Seattle Single-Family Homes Under $200,000 (excluding short sales)
Total on market: 13
Average number of beds: 2.2
Average number of baths: 1.1
Average square footage: 1,083
Average days on market: 54

Huge drop in inventory, nearly cut in half. Beds, baths, and square footage all dropped as well. Days on market cut by nearly a month. The market for cheap homes in Seattle has suddenly gotten very tight.

Here are a couple of charts to give you a visual of the trend of these numbers since I adjusted the methodology in April 2010:

Here are cheapest homes in Seattle that actually sold in the last month, regardless of condition (since most off-market homes don’t have much info available on their condition).

The post Cheapest Homes: April 2013 Edition appeared first on Seattle Bubble.

First up, here’s the summary snapshot of all the data as far back as my historical information goes, with the latest, high, and low values highlighted for each series:

Summary: Foreclosures continued to fall, sales bounced up from February, and inventory might have fallen to another new low. Hit the jump for the full suite of our usual monthly charts.

Next, let’s look at total home sales as measured by the number of “Warranty Deeds” filed with King County:

Sales in King County rose 34.1% from February to March, and were up 23.7% year-over-year.

Here’s a look at Snohomish County Deeds, but keep in mind that Snohomish County files Warranty Deeds (regular sales) and Trustee Deeds (bank foreclosure repossessions) together under the category of “Deeds (except QCDS),” so this chart is not as good a measure of plain vanilla sales as the Warranty Deed only data we have in King County.

Deeds in Snohomish rose 25.4% month-over-month and 16.3% from March 2012.

Next, here’s Notices of Trustee Sale, which are an indication of the number of homes currently in the foreclosure process:

Both counties are still quite a bit higher than where they were at the same time last year, but the difference keeps shrinking, and King County fell a bit month-over-month.

Here’s another measure of foreclosures for King County, looking at Trustee Deeds, which is the type of document filed with the county when the bank actually repossesses a house through the trustee auction process. Note that there are other ways for the bank to repossess a house that result in different documents being filed, such as when a borrower “turns in the keys” and files a “Deed in Lieu of Foreclosure.”

Trustee Deeds shot up month-over-month (predictable given the spike in notices back in July) and were up 96.7% from a year earlier.

Lastly, here’s an update of the inventory charts, updated with the inventory data from the NWMLS.

Last year King County inventory fell 3.9% between February and March. This year it fell 0.1%. Similar story in Snohomish County, where listings fell 1.3% from February to March, not nearly as much as last year’s 9.6% drop.

Stay tuned later this month a for more detailed look at each of these metrics as the “official” data is released from various sources.

The post March Stats Preview: Fewer Foreclosure Notices Edition appeared first on Seattle Bubble.