photo by Flickr user jurvetson

With friends who have also been lucky enough to land a Columbia City cottage or a Shoreline rambler, there’s a sense of shared joy and relief. I remember feeling like this in fifth grade when my best friend and I landed parts in the school play: “Thank God we both got in.” We toast our hefty mortgages and spend long evenings discussing hardwood floor finishes, crown moldings and our all-important soaring equity.

But with friends who have not yet “squeezed in” to the housing market, I am reminded of how I felt when I got accepted by my first choice for college and my best friend got nothing but rejections. What do you say to each other? I try to offer soothing assurances: “I hear there are still some great deals up north.” “600 square feet is plenty of room!”

But no matter what I say, I know we all feel like they have probably missed their chance, like they didn’t buy their ticket on the last spaceship flight off a planet that’s about to explode. I fear they’re doomed to move back to Missouri in order to afford more than a studio condo on the fringes of the city.

Got it? The renters were the ones that were doomed. Definitely not the people who took on hefty mortgages to squeeze into the housing market in 2006.

You can also read my 2006 thoughts on the piece.

February 2009
King: 722 NTS, down 13.8% YOY
Snohomish: 472 NTS, down 6.5% YOY
Pierce: 455 NTS, down 21.3% YOY

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 1,062 households, Snohomish County had 1 NTS per 636 households, and Pierce had 1 NTS for every 592 households (higher is better).

According to foreclosure tracking company RealtyTrac, Washington’s statewide foreclosure rate for February of one foreclosure for every 1,046 housing units was 33rd worst 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:

It’s a dip, but it’s still tough to say that things are anywhere near “normal” around here yet.

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, refer to the final chart in this post. 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.

This is a phenomenon we have addressed here in the past, but since it has been eight months since our last exploration of the subject, I thought it would be a good time for another brief refresher.

As you know, the median price is simply the middle point of all home sales in an area during a given month—the home sale which saw half the remaining sales come in at a higher price, and half at a lower price. This is a better measure than the average since it cannot be distorted by a single sale for tens of millions of dollars, but it does sometimes change in unintuitive ways as the mix of sales shifts from one area to another.

In order to explore this concept, we break King County down into three regions:

• 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 February’s data:

• low end: $215,475—$330,625
• mid range: $265,000—$617,000
• high end: $385,000—$1,325,000

In the following chart I have plotted 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.

Over the past year, sales in the expensive Eastside have been steadily gaining share, taken from the least-expensive South County region in early 2009, and slowly eating away at the mid range Seattle / North County region in more recent months.

Here’s a look at just February 2009 and February 2010:

Compared to exactly a year ago, South King’s share of the sales held pretty steady, but two percentage points shifted from the mid-range Seattle region to the more expensive Eastside.

The result of this shift on the median price is likely to be a median in February 2010 that is slightly higher than the February 2009 median, even if every house were to have held completely steady in price during the year. In other words, February’s 0.5% YOY median price decline was probably a slight understatement of how much the prices of homes in King County have dropped in the last year.

Lastly, here’s an updated look at this same set of data all the way back through 2000:

The big spike in sales in the low-priced South King region during the bubble years followed by a notable post-bubble increase in sales in the close-in Seattle region fits nicely with my theory that many home sales in the outlying regions were driven primarily by people jumping into the first place they could afford because they were afraid of being priced out of the market forever.

Now that prices getting more reasonable and people are realizing that buying real estate is not a sure-fire way to effortless riches through endless double-digit appreciation, people are buying where they really want to live long term.

Here’s what the YOY median price breakdown looks like at the region level:

SW King: -12.8%
SE King: -11.1%
Seattle: +1.4%
N. King: -17.2%
Eastside: +1.0%

See what I mean? Outside of Seattle proper and the Eastside, median prices still seem to be falling quite fast. Eric Pryne at the Seattle Times noticed this as well, making it the focus of his report last week.

In order to explore this further, I have taken the February data from the NWMLS and plugged it into a Tableau map. Unfortunately, Tableau does not let you draw arbitrary boundary lines, so for the full map of the NWMLS areas with the boundary lines drawn, you’ll have to go here.

Hit the jump for the interactive map.

With just three and six closed sales, Vashon and Mercer Islands saw the most extreme swings in their respective median prices, falling 38% on Vashon and rising a whopping 124% on Mercer. Most of the other neighborhoods around King County fell within a more normal range, with the exception of the Capitol Hill area, where the median shot up over 45%. That could be because last year that area saw just 17 sales in February.

Ten of thirty areas saw YOY gains in their median prices. The average gain among those ten was 22% (skewed high by Mercer), and the median gain was 6.4%.

Of the twenty areas that saw YOY declines in their median price, the average loss was -12.2%, and the median was -13.2%. In other words, in the neighborhoods where prices are still falling, they tend to still be falling pretty fast.

While there were no real estate related topics at Thursday’s event in Seattle, last week there were 65 different Ignite events held all over the world. I was browsing through the worldwide video site and I came across this talk from the Sydney Ignite event: Why journalists lie – and how you can benefit by Inga Ting.

Since picking apart poor journalism is something of a pastime here at Seattle Bubble, I found the talk to be fairly interesting.

Maybe I’ll try to put together a talk of my own for some future Ignite Seattle event. For the title I was thinking I could go with something tame like “Making Sense of Real Estate” or perhaps something a little more colorful like “How to Play the Real Estate Game and Not Get Screwed.” What do you think?

This poll will be active and displayed on the sidebar through 03.13.2010.

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Here are some choice quotes for those of you who can’t watch the video:

Host: “Because of the abundance of new construction, it’s a great time for wise investors like Christopher Togawa to get in the market.”

Christopher Togawa, wise investor: “I definitely don’t want to miss this market, because this opportunity now in Seattle is like… no other place in the country.”

Olga Dyckman, Real Estate Agent: “Seattle is a wonderful city. The housing market is extremely strong.”

Togawa: “These countertops are nice. These are granite, right?”
Dyckman: (Enthusiastically) “It’s actually glass, and that’s more expensive than granite! Very dramatic. Very contemporary.”

[Spoiler Alert] Mr. Togawa ended up paying $400,000 for unit #605 at 5th & Madison, a building that just so happens to be auctioning off their remaining inventory this month, with starting bids at $195,000. That advertised starting bid is for two units the same size as and directly above the one Christopher bought. One is on the 17th floor, the other is on the 18th floor.

Regarding his Queen Anne house, Togawa noted that “three and a half years ago, I paid $480,000, and the market value today is approximately $700,000.” I guess he waited a bit too long to sell (he still owns it now). Zillow guesses it’s now worth just $20,000 more than he paid in 2004. That’s a 4% gain in six years.

Hat tip: ivan

Here’s a link to this month’s NWMLS press release: Northwest MLS brokers say housing market in Washington State indicates recovery

Northwest Multiple Listing Service members reported strong gains in home sales during February, with brokers pointing to several encouraging signs for a busy spring season. Improving consumer confidence and a looming deadline for homebuyer tax credits are helping to boost activity, according to NWMLS officials.

Okay, first talking point: stealing demand from the future = super awesome. Got it.

Jacobi reported “significant traffic” at open houses, which he attributes to the first-time homebuyer tax credit and rising consumer confidence.

Pending sales (offers made and accepted, but not yet closed) jumped nearly 45 percent last month compared to a year ago, marking the 11th straight month of month-over-month increases. Twelve of the 21 counties in the MLS market area reported double-digit gains in pending sales, led by San Juan County (up 85.7 percent), Snohomish County (up nearly 71 percent) and King County (up nearly 63 percent).

Second point: unmeasurable factors like “open house traffic” and data that has been proven to be worthless are the preferred tools to measure the market.

“We can see and hear the rumblings of pent-up demand from buyers,” Beeson commented, adding he expects spring and summer sales to outpace last year because there are such good price values in the market. He said they are reminding buyers of the possibility of rising mortgage interest rates due to the Federal Reserve’s plan to stop buying mortgages by the end of March.

Point three: Buy now or be priced out forever. You know it’s true because Dick Beeson said so, and he’s got the pent-up demand to prove it.

Now that you’ve heard about how great the market is directly from the NWMLS, let’s see how the local reporters decided to approach the subject.

Eric Pryne, Seattle Times: Home prices inch up on Eastside, in Seattle year-over-year

Sales volumes were up strongly throughout the county, 51 percent overall from February 2009. It was the ninth straight month of year-over-year gains, fueled by low interest rates, federal tax credits and mild winter weather.

But brokers say prices in South King County are continuing to fall because houses repossessed by banks and short sales — those for less than the seller owes on the home — make up a bigger share of that market.

Those sellers are more likely to settle for less. “It’s putting a lot of downward [price] pressure on sellers who are not in trouble,” said Tony Hettler, broker-owner of the John L. Scott office in Des Moines.

In Seattle and on the Eastside, in contrast, brokers say move-up buyers are returning to the market.

In Seattle’s Capitol Hill and Madison Park areas, 39 houses sold in February with a median price of $596,000, according to the listing service. That’s up from just 17 houses that sold in February 2009, with a median price of $409,000.

Same trend that Eric noticed last month. Now that the spectre of being priced out forever has been eliminated from the homebuyer psyche, people are starting to be more picky about where they buy.

Gerry Spratt, Seattle P-I: Seattle home prices up over last year, report says

Prices for Seattle single-family homes continue to stabilize and sales activity is picking up, according to a report from the Northwest Multiple Listing Service.

Seattle home prices were up 1.40 percent in February over the same period a year ago – the second straight year-over-year increase – but down 3.86 percent from January. The median price for a single-family home in Seattle was $399,000 in February, compared with $415,000 in January. In February 2009, the median home price was $393,500.

Sadly, the P-I’s article is mostly a straight-up rehash of the press release.

Mike Benbow, Everett Herald: Snohomish County home sales strong, prices drop

Home sales soared in the Puget Sound area last month despite steep drops this winter in most other areas of the country, the Northwest Multiple Listing Service reported Thursday.

In Snohomish County, home sales rose 53.5 percent in February and pending sales were up 71 percent.

The strong sales came as home prices in the county continued to drop. The combined median price for single-family homes and condominiums last month was $269,000, a drop of $32,750, or 10.85 percent from a year ago.

Crazy. So when prices are more reasonable, there are… more buyers?!? Who could have guessed?

Kelly Kearsley, Tacoma News Tribune: February hot for Pierce County home sales

Pending home sales spiked by 30 percent in Pierce County last month as homebuyers took advantage of low interest rates, tax credits and good deals to be had on area homes and condominiums.

The number of pending sales in the county grew to 1,132 in February from 866 the same month the previous year, according to a report released Thursday by the Northwest Multiple Listing Service.

The increase in closed sales was a bit more modest at 12 percent.

“A worthless, discredited measure of home sales that nobody should pay attention to was up by an impressive amount in February. The useful measure of actual sales was up too, but since the number isn’t as big we’re going to push it off to the third paragraph and downplay it.”

Rolf Boone, The Olympian: February home sales heat up

The increase in the number of monthly and overall new listings was attributed to home sellers finally realizing that the South Sound housing market is unlikely to change in the next year to 18 months, said Dennis Adams, broker and owner of Virgil Adams Real Estate in Olympia. For home sellers, it might mean selling their houses at a reduced price, but it also means the chance of buying a house at a reduced price, he said.

“They have resolved themselves to the fact that the market is slow, but they are still going about their normal lives,” Adams said.

Wow, that’s a refreshing change. A real estate salesperson who isn’t insistent on calling the bottom with every little sign of possible growth.

Here’s a bonus story from Publicola’s new “real estate nerd.”

Jane Hodges, Publicola: Seattle Home Prices Rising

Spring ushers in a period of optimism in the real estate industry. Generally, that’s when buyers and sellers get down to business after six months of market hibernation. It’s when agents bust out with that old cliche: There’s never been a better time to buy. It’s when sellers exhale, sensing that people are placing their faith in real estate.

Judging from February home sales data just out from the Northwest Multiple Listing Service, Seattle’s real estate market is improving. Rising prices, an increase in pending sales, and shrinking inventory make up the troika that economists watch for when they’re looking for signs of improvement.

Hmm, not the strongest start for Ms. Hodges at her new home. Quoting the “never been a better time to buy” without any real analysis of whether that’s the case and going to pending sales while totally ignoring closed sales. We’ll see if I can talk some sense into her in our meeting next week.

(Eric Pryne, Seattle Times, 03.04.2010)
(Gerry Spratt, Seattle P-I, 03.04.2010)
(Mike Benbow, Everett Herald, 03.05.2010)
(Kelly Kearsley, Tacoma News Tribune, 03.05.2010)
(Rolf Boone, The Olympian, 03.05.2010)
(Jane Hodges, Publicola, 03.04.2010)

“We are entering what is traditionally our busiest home selling season,” said NWMLS director OB Jacobi, general manager of Windermere Real Estate Company. “With the first job increase since 2008 and closed sales in King County up about 45 percent, there is every indication that our market is in recovery,” he added. Jacobi reported “significant traffic” at open houses, which he attributes to the first-time homebuyer tax credit and rising consumer confidence.

Ah yes, that old statistical standby, open house traffic.

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):

February 2010	Number	MOM	YOY	Buyers	Sellers
Active Listings	8,115	+7.9%	-14.8%
Closed Sales	997	+4.3%	+50.8%
SAAS (?)	2.49	+7.0%	-26.5%
Pending Sales	2,079	+17.8%	+64.5%
Months of Supply	5.3	+23.5%	-30.2%
Median Price*	$373,010	-0.5%	-0.5%

Closed sales came in pretty much spot on where I predicted on Tuesday that they would. The median price dipped slightly, and unless we see a fairly significant month-to-month drop in March, is likely to inch into positive YOY territory this month, since March 2009 was the low point for that measure at $363,850.

Feel free to download the updated Seattle Bubble Spreadsheet, and here’s a copy in Excel 2003 format.

Here’s your closed sales yearly comparison chart:

Same story as January. More sales than 2009, but less than every other year on record.

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

Between 2000 and 2009, the total number of listings on the market increased an average of 3.5% between January and February. This year, they jumped more than double that, rising 7.9% in a month. Perhaps more sellers are buying the recovery talk and have become convinced that it’s a good time to sell?

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

Still way up there in the positive territory, thanks to the absolutely dismal winter sales figures a year ago.

Here’s the median home price YOY change graph:

Almost back to zero there. I’m betting next month we’ll inch above zero, but who knows if we’ll stay there for long.

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

2005 was apparently a good year for home prices, so good that the market decided to revisit that level four years later and hang around for a year or so.

News blurbs to hold you over until tomorrow’s reporting roundup:

Seattle Times: King County home prices stabilize in February
Seattle P-I: Seattle home prices up over last year, report says

See, flat really is the new up.

Let’s check in again on the cheapest homes around Seattle proper. For methodology and a brief explanation of the reasoning behind this series, hit the April 2009 post.

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):

I believe this is the first time we’ve done this exercise and all of the top three have been short sales.

Stats snapshot for Seattle Single-Family Homes Under $200,000
Total on market: 54
Average number of beds: 2.3
Average number of baths: 1.1
Average square footage: 1,027
Average days on market: 78

Although the three cheapest homes are more expensive than our last update in December, the number of homes available under $200,000 shot up by 60% and the average square footage rose 11%.

Here are the three cheapest homes in terms of dollars per square foot:

This home didn’t quite make either of our lists this month, but I just had to mention it… Here’s an excerpt from the listing description for 736 S Southern St:

Nicely landscape and exterior is in great shape, tile and hardwood floring. Planty of parking

And here’s a good shot that demonstrates that last feature they mentioned:

That’s right, folks. For just $200,000, you could park four (count ‘em, four) cars in tandem next to your very own Seattle home.

Here’s the last bonus: The lowest dollars per square foot on a house priced above $500,000: 11310 3rd Ave NW at $157 $/sqft. $599,950, 5 beds, 4 baths, 3,828 square feet. “Dynamic custom built home.” Decent looking view on the listing photos.

Escala cutting condo prices by 50 percent

Downtown Seattle condominium tower Escala will lower prices by as much as 50 percent on unsold units, the luxury building’s new marketing firm said Tuesday.

Rennie Marketing Systems and the building’s listing agent, Bellevue-based Teambuilder, declined to release price cuts on each unit, but said savings will range from 20 percent to 50 percent.
…
“What the prices were has no bearing on what they should be for this market,” Mehr said. “We priced it as if we had a brand-new building today.”

This is quite the turnaround from April 2008:

Lexas principals John Midby and Eric Midby said prices are going up partly to send a message to prospective buyers: If they’re waiting to buy until prices drop, they’re reading the local market wrong.

That was some top quality denial, right there. Somebody was certainly reading the local market wrong, but it wasn’t the prospective buyers.

Back to Kirsten…

Escala cost $370 million to build and has sold just six units.

Just six units. Out of over two hundred and sixty. Considering the fact that they claimed in ‘08 that around seventy units had sold, I suppose it was only a matter of time before they finally faced reality.

You can only live in crazy fantasy land for so long.

(Kirsten Grind, Puget Sound Business Journal, 2010.03.02)
(Eric Pryne, Seattle Times, 2008.04.26)

Here’s your preview of February’s foreclosure and home sale stats:

First up, total home sales as measured by the number of “Warranty Deeds” filed with the county:

Warranty Deeds saw a 29% increase over 2009 in February. Unfortunately, for some odd reason, Warranty Deeds in the month of February specifically seem to be a less-useful-than-usual predictor of that month’s closed SFH sales. Observe:

Virtually every year February is the most extreme outlier when comparing the number of Warranty Deeds to the number of NWMLS-reported closed SFH sales. If anyone has any probable explanations for this odd phenomenon, I’d love to hear it.

Based on the rough pattern apparent in the above chart, I would venture a wild guess that February’s 1,584 Warranty Deeds will represent somewhere in the ballpark of 1,000 closed SFH sales, which would still represent a 51% increase over last year.

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

February continued the trend that began in January of year-over-year drops in Notices of Trustee Sale in King County. That said, the number of foreclosures is still in very high territory.

Here’s another measure of foreclosures, 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.”

Actual completed foreclosures posted a stronger YOY gain than in January, increasing 44% from 2009.

Lastly, here’s an approximate guess at where the month-end inventory was, based on our sidebar inventory tracker (powered by Estately):

Down 12% from last year, but still 34% above the 2000-2007 average for February.

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

photo by Flickr user Atle Brunvoll

• Buy a cheap starter home in your 20s. Maybe a little 2-bed house or a condo conversion.
• 4-5 years later, sell and upgrade to a nice mid-range home, probably 3-4 beds with a back yard for the kids.
• 5-10 years later, sell and upgrade again to some sort of McMansion, basically the house you wanted all along.
• 20 or so years later, sell your McMansion and downsize to a hip urban condo, cashing out piles of equity to fund your retirement.

I’d like to hear your thoughts on this subject. What do the well-educated and streetwise readers of Seattle Bubble think of the concept of the equity ladder? Does it make sense (both in the Seattle area specifically and in a more general sense)? Is it the best way to play the home ownership game?

What say you?

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And so it continues to go in close-in Seattle and Eastside neighborhoods, as scores of well-qualified buyers like the Maxwells outnumber properties for sale, particularly those priced under $500,000.

This is forcing buyers into lightning-fast decisions and bidding wars that reward sellers with thousands of dollars over their asking price, real-estate agents report.

It’s also keeping King County prices climbing, putting to rest any notion that ours is a “bubble market” where prices will stall or even fall.

Good thing Elizabeth Rhodes put that crazy bubble notion to rest. Prices definitely never stalled or even fell here.

Historically the best leading indicator for the economy (and employment) has been housing.
…
So here is a review of the three monthly leading indicators:

• Housing Starts: Housing starts are moving sideways…
• Builder Confidence: More moving sideways…
• New Home Sales: …it would be generous to even call this “moving sideways”.

So these leading indicators suggest any growth will be sluggish and choppy.

So what are your expectations for near-term economic growth, both nationally and here in the Seattle area? I think most people would agree that the currently-available economic indicators are not pointing to another dramatic leg down, but does it necessarily follow that we are headed for a convincing recovery? I for one don’t really think so, especially when it comes to home prices.

So is flat the new up?

• The Big Picture: What Happens When Consumer Confidence Falls 10-Points?
• Zero Hedge: Spinning The Consumer Confidence Number
• Mish’s Global Economic Trend Analysis: Consumer Confidence Plunges To 46
• Mish’s Global Economic Trend Analysis: Is Consumer Confidence a Contrarian Indicator?

Click through below for an updated look at the Tableau viz I created of the Consumer Confidence Index data from the Conference Board.

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: < $266,240
• Mid Tier: $266,240 – $398,051
• Hi Tier: > $398,051

The breakpoints for the tiers fell again in December, declining over 1%.

First up is the straight graph of the index from January 2000 through December 2009.

The low and middle tiers fell 0.4% month-to-month and the high tier dropped 0.9%. The middle and high tiers both hit a new post-peak low, while the low tier sits slightly higher than its March 2009 low.

Here’s a chart of the year-over-year change in the index from January 2003 through December 2009.

The year-over-year situation improved slightly again in all three tiers. Here’s where the tiers sit YOY as of October – Low: -7.6%, Med: -7.4%, Hi: -8.3%.

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

After jumping out ahead, the low tier still seems to be flatlining, but the high and middle tiers are taking clear downward turns the last two months to catch up.

(Home Price Indices, Standard & Poor’s, 02.23.2010)

Down 0.7% November to December.
Up 0.2% November to December (seasonally adjusted).
Down 7.9% YOY.
Down 23.3% from the July 2007 peak

Last year prices fell 3.6% from November to December (not seasonally adjusted) and year-over-year prices were down 13.4%.

Here’s our offset graph, with L.A. & San Diego time-shifted from Seattle & Portland by 17 months. San Diego was above zero again, while LA was right at zero. Portland came in at -5.4%, Los Angeles at 0.0%, and San Diego at +2.7%, all better than Seattle.

Note: This graph is not intended to be predictive. It is for entertainment purposes only.

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

Also in positive YOY territory: San Francisco, Denver, DC, Boston, and Dallas.

In December, fourteen of the twenty Case-Shiller-tracked cities experienced smaller year-over-year drops (or saw year-over-year increases) than Seattle (same as August through November). San Fancisco at +4.8, Dallas at +2.9%, Denver at +0.5%, San Diego at +2.7%, Washington, DC at +1.9%, Boston at +0.5%, Los Angeles at 0.0%, Cleveland at -1.2%, Minneapolis at -2.3%, Charlotte at -3.8%, Atlanta at -4.0%, Portland at -5.4%, New York at -6.3%, and Chicago at -7.2%.

The only other cities still experiencing larger year-over-year declines than Seattle are Phoenix, Miami, Detroit, Tampa, and Las Vegas.

Because I can, here’s an interactive chart of the raw HPI for all twenty cities through December.

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 twenty-eight months since the price peak in Seattle prices have declined 23.3%, another new post-peak low.

Here’s a complementary chart to that last one. This one shows the total change in the index since March for the same twelve markets as the peak decline chart.

Not all markets are bouncing equally.

The following chart takes the post-bubble years of 2007, 2008, and 2009 and indexes each January’s Case-Shiller HPI to 100 so we can get a picture of how this year’s declines compare to last year:

Almost the entire difference in this year’s performance came in the last four months of the year.

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

(Home Price Indices, Standard & Poor’s, 02.23.2010)

A soured development project to build a multi-million dollar home on 10th Ave E took an even worse turn when a real estate agent discovered earlier this month that the three-story residence had been stripped of “numerous items” including all appliances and fixtures — even the garage door was missing.

According to a Seattle Police Department report, the property was foreclosed on “after the builder could not sell it.” The home is now for sale from Columbia State Bank, the lender that foreclosed on the property, for $1.5 million. It was listed for between $2.2 and $3.3 million while it was on the market.

An agent of the Columbia State Bank inspected the property on January 21 and found the building to be intact, according to the SPD report. The real estate agent discovered the property had been stripped on February 9. According to the report, the bank employee believes the items removed from the 10th Ave E home may be worth more than $20,000.

The gutting of and/or theft from foreclosed homes has been a growing problem in other parts of the country for some time now. From what I have seen and heard, this issue has not been very common to date here in the Seattle area.

However, with still-elevated unemployment, especially in the construction industry (i.e. – those who would know what to take and how to take it efficiently), is the problem of theft from vacant bank-owned homes going to get worse here? It seems likely.

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As usual, courtesy Tableau Software (available free to use online), the neighborhoods SAAS update is rocking sweet interactive data visualizations. Click a region or a neighborhood to filter the charts below or get details on a specific point.

In the charts below I have taken the calculated value for SAAS and subtracted 2, in order to better visualize the difference between a buyer’s market and a seller’s market. Using this method, negative SAAS values indicate a seller’s market, while positive values indicate a buyer’s market.

Summary

King County’s overall SAAS moved further above the “balanced” level, moving up to 2.35 in January (December was 2.10). Only 3 of 30 areas came in below 1.75 as seller’s markets, 23 of 30 came in above 2.25 as a buyer’s market, and the remaining 4 were more or less balanced between 1.75 and 2.25.

Hit the jump for the rest of this month’s interactive charts and commentary.

Here’s a year-over-year comparison for each NWMLS neighborhood.

Year-Over-Year Comparison

Only four areas came in as stronger buyers’ markets than January 2009: Downtown Seattle condos (701), Renton / Benson Hill (340), Jovita / West Hill Auburn (100), and Burien / Normandy Park (130).

Regional History

Most neighborhoods continued to rise from December to January, after bottoming out (likely thanks to the tax credit) in November.

The three toughest markets for sellers were Renton / Benson Hill (340) at 5.1, Kirkland / Bridle Trails (560) at 4.3, and Mercer Island (510) at 3.6.

The three best markets for sellers as of last month were Queen Anne / Magnolia (700) at 1.2, North Seattle (710) at 1.5, and Eastside south of I-90 (500) at 1.7.

Excerpting from the online story text:

Realtor Sandra VanderVen shows us a condo off Alki beach that has been on the market for a year and a half.

“It almost seems like you could put a free sign out!” VanderVen jokes about the situation, but she’s nervous.

In her entire career she’s never had a property sit on the market for this long and she’s not alone.
…
Agent Randie Stone on the other hand has been selling along Alki for 25 years. The last thing she’s willing to do is cut down on price.

“My saying is, we still sell properties here, we don’t give them away,” she said.

She believes condos are a luxury item, they may take longer to sell, but in the end she says they will.

“Everything will even out, it will get better. It just will,” she said.

Below are Zillow’s and Redfin’s stats widgets for Alki Beach condos. The situation actually doesn’t look nearly as dreary as they make it sound on the news report. Although I suppose when you’re living in a fantasy world where you truly believed 2005 and 2006 sales levels would continue forever and ever, even “normal” is pretty frightening.

Zillow Home Value Index

More Alki Home Values

In the Tableau viz below, you’re looking at all the NWMLS data on the number of closed single-family sales in Western Washington for every January since 2000. The “heat” number is simply the number of closed SFH sales divided by the OFM population estimate for the previous year, then multiplied by 100,000 so it will display as a number above 1. Drag the year slider below the map left and right to view the data for different years.

2005 was the hottest year for January sales in most counties, with Island County topping the charts that January with 116 closed sales for a population of just 74,800.

Update 2: I have updated the data to include the RMLS sales stats for Clark County. With this change, Clark actually has one of the “warmest” sales rates for 2009 and 2010.

What I find especially interesting is how depressed sales are down in Clark County. It’s the fourth-most populous county in Western Washington, and yet in January it had the third-fewest closed sales. Just 34 sales vs. a population in excess of 431,000. Ouch. Not a good time to be selling a home in Clark County.

Update: Jim from Redfin drops by with an explanation for the apparent ultra-depressed state of sales in Clark County: Market fragmentation across multiple MLSes.

The large majority of listings in Clark county are actually on Portland’s MLS system (RMLS.com) and not the NWMLS. That probably explains the low reported sales figure for that county.

Thanks, Jim!

For the purposes of this post, let’s say you’ve found a home on Redfin, and as you’re looking at the listing photos, the obviously-vacant state of the home tips you off that this home just might be a bank-owned foreclosure. As an example, we’ll use 11715 7th Ave NE, listed last week at an asking price of $332,000.

First, let’s head over to the King County Parcel Search, click “Search by Address,” and put in the address in the required format (i.e. – 11715 in the “House Number” box and 7th in the “Street Name” box). That will pull up a map on the right side with the parcel outlined in purple, as well as a list of details and a series of links on the lower-left.

If you’re interested in how much the property last sold for (in a non-foreclosure), click the “Get Property Report” link to pull up the assessor parcel information page. Look through the list of “Sales/Quit Claims/Transfers” for sales with an instrument type of “Statutory Warranty Deed,” which usually indicates a standard sale. In this case, we see that the property sold for $210k in July 2001, and then sold for $400k in March 2006.

Grab the “Parcel Number” from the lower-left. In this case, our parcel number is 6413100232. Now, head over to King County Records and click the big “Records Search” box. Accept the disclaimer, then click the big “Search” link next to the text “Official Public Records.”

In order to find all the relevant documents, we’ll put in some recent date range (like 01/01/2008 to 02/15/2010) and down in the “Tax Parcel” box put the parcel number in the from and to boxes. Leave document type and everything else blank.

Here are a few of the possible document types that will be returned:

• “Warranty Deed” is usually filed with a normal sale transaction.
• “Deed of Trust” is the document usually filed that describes a mortgage or refinance. These are not available to be viewed online in King County but if you take the document # down to the records office in Seattle you can view it in person.
• “Notice of Trustee Sale” is the document filed by the bank giving the mortgage-holder a 90-day notice that their home will be foreclosed.
• “Trustee Deed” gets filed when a bank forecloses on a home at the public auction at the courthouse.
• “Deed” can be a variety of types of deeds, including a “Deed in Lieu of Foreclosure,” which means the owner “handed the keys” to the bank without going through the full foreclosure process.

For this particular property we get two results: a Notice of Trustee Sale on 07/23/2009, followed by a Trustee Deed on 11/03/2009. Sure enough, this home was foreclosed by the bank in November.

If you click the icon in the “Image” column on the right for either entry, you can view a pdf file of the public records. The Notice of Trustee Sale indicates that the borrower was $16k behind on their payments on a mortgage of $453k. The Trustee Deed indicates that the bank (Aurora Loan Services) paid $392,476 at the public courthouse auction on 10/23/2009.

We definitely learned some interesting information about this particular home from the public records. At their current asking price of $332,000, the bank here is already accepting a 15% loss on what they paid at the foreclosure auction, and a 27% loss on the total mortgage amount. We also learned that the asking price represents roughly a 5% annual rate of appreciation from the 2001 sale, and a 17% discount from the early 2006 price.

Armed with the information that you dig out of the public records, you will hopefully be able to make better decisions about how to approach the possible purchase of a bank-owned home.

Quoting in part:

These are challenging times and many people feel they are running out of options. Whachovia Mortgage is pleased to let you know about an alternative you may not have considered — a Short Sale.
…
Call us to learn more about the benefits of a Short Sale and how you may qualify for a $5,000 seller incentive!

Considering all the stories about banks taking forever to respond or simply not responding at all to short sale offers made by potential buyers, this seems like an odd tactic.

Has anyone else seen this with any other banks? Are the banks beginning to approach short sales differently than they have been over the past year?

Hat Tip: Ray Pepper, 500 Realty

Feel free to download the old charts in Excel 2007 and Excel 2003 format. To get specific info about a certain point on any graph in the post below, float your mouse pointer over the data.

Before we get to the cool stuff, here’s the usual table of YOY stats for each of our eight covered counties as of January 2009.

January 2010	King	Snohomish	Pierce	Kitsap	Thurston	Island	Skagit	Whatcom
Median Price	2.0%	10.5%	11.8%	4.5%	6.7%	9.7%	16.8%	3.2%
Listings	16.5%	13.1%	11.0%	20.5%	3.7%	0.8%	6.5%	1.8%
Closed Sales	41.8%	34.8%	36.4%	38.7%	20.1%	76.5%	9.4%	5.5%
SAAS	2.35	2.82	2.55	1.96	2.51	2.53	3.03	2.84

Wow, the sales boost sure didn’t last long in Thurston.

Summary

Hit the jump for the rest of this month’s visualizations.

The visualization below looks at closed sales in each county in January 2008 and January 2009:

Closed Sales

While the tax credit boost is carrying on around most of the sound, it has already worn off in Skagit and Thurston, which both saw year-over-year declines in sales.

Here’s our comparison of median prices in each county at their respective peaks and in January 2009:

Change from Peak

Still holding fairly steady. Skagit is definitely taking the biggest hit, down a full third from the peak.

Seasonally Adjusted Active Supply

Somewhat of a mixed bag on the SAAS front. Most counties saw lower SAAS than a year ago, but only one (Kitsap) was in “seller’s market” territory, and only just barely.

Still looks like Skagit is holding on as the best place for buyer’s to find deals and negotiate from a strong position, but things seem to be rapidly slowing in Thurston, as well.

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Christine Gregoire, January 2008:

“The only thing we have to fear is fear itself,” Gregoire said, quoting former President Franklin Roosevelt and referring to national recession fears. “It is a very frustrating time, I know, for you, and it is for me. … I’m struggling to get the message out to Washingtonians. The economy is strong. Buy your home.” (The Olympian, 01.25.2008)

“There is no good reason for a slowing of home purchasing in the state of Washington today” (Associated Press, 01.25.2008)

In the twenty-two months between the Governor’s declaration that “there is no good reason for a slowing of home purchasing” and the latest data on Seattle’s Case-Shiller home price index (November 2009), home prices have fallen 18%. Some “strong economy,” huh?

Just eight months later… Christine Gregoire, September 2008:

“This is the worst economic situation we’ve faced since the Depression.”
…
“When you’ve got tough economic times, it’s not the time to raise taxes,” she said. “Nobody is talking about taxes but [Dino Rossi].” (Seattle Times, 09.19.2008)

Gregoire was quickly proven dead wrong about how strong the economy was and how we should all go out and buy overpriced houses. In January 2008 she was obviously either lying or oblivious to the growing problem. Neither option seems like a quality we would want in a Governor.

But hey, at least she promised not to raise taxes in these suddenly “tough economic times.” Note that at the time of the above quote, Washington’s state-wide unemployment rate was 5.5% (seasonally-adjusted).

Wait now, what’s this?

Democrats in Olympia are getting ready to play right into their stereotype as lovers of taxes.

They are preparing for a final vote to overturn initiative 960, the initiative which requires a 2/3rds vote of both houses to raise taxes or in fact ANY additional revenue.

And which ALSO requires the legislature to send out an e-mail anytime a bill is proposed that even MIGHT raise revenue.

Those of us who subscribe to that list have received a steady stream of e-mails in the past month warning us of bills that will raise revenue, most of them sponsored exclusively by democrats.

By voting to suspend the 2/3rds requirement and to stop those e-mails, it looks like they’re not only are they hell-bent on raising taxes in a recession, but hell bent on keeping it secret. (Dave Ross, 02.10.2010)

So now, with the state unemployment rate at 9.5% (as of December), not only are Gregoire’s comrades in the state legislature planning “a steady stream” of bills to raise taxes, but they’re also taking measures to make sure that it is more difficult for the public to keep track of such actions. Again, Mrs. Gregoire was either lying or completely oblivious.

The important thing to note in this most recent development is that as Dave Ross (a former Democrat candidate for the US House) points out, the legislature could have suspended only the 2/3rds requirement portion of I-960. In fact that was what the state Senate originally did on Tuesday. However, that was not enough for them. They have instead decided to go the extra mile to spite the people of Washington and eliminate the legislative transparency portions as well.

I-960 has other provisions the people want. One is that Office of Financial Management must calculate the 10-year cost of every revenue-raising bill introduced. For every such bill, OFM must send out an e-mail to interested members of the public and the press of the costs, hearing dates, legislative votes and contact information for lawmakers. (Seattle Times, 01.13.2010)

Not only that, but the state Senate and House are pushing these votes through the Legislature in late-night and weekend votes, seemingly to keep things as under-the-radar as possible. The House takes up the bill tomorrow morning (Saturday), during the weekend break in the news cycle.

I will grant that this is only tangentially related to real estate—some of the tax proposals floating around Olympia include expanding the sales tax to include services, such as those provided by a real estate agent. However, the Governor has been so two-faced, and the state legislature so underhanded on this matter that this deserves to be mentioned.

If those in charge down in Olympia want to raise taxes on real estate services, soda, chocolate, or whatever—fine, let’s have that discussion. But why all the sneaking around and lying? Why not be forthright about your intentions and hold an open dialogue on the issue?

January 2009
King: 842 NTS, down 8.0% YOY
Snohomish: 450 NTS, down 2.8% YOY
Pierce: 550 NTS, down 19.2% YOY

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

Special Note: Tableau Software, the special sauce that powers the fancy interactive charts I have been featuring here on Seattle Bubble just launched their free online service: Tableau Public. If you dig data, or know someone that does, point them Tableau’s way. They’re a great local company (based in Fremont) and Tableau Public is a great product.

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 961 households, Snohomish County had 1 NTS per 596 households, and Pierce had 1 NTS for every 574 households (higher is better).

According to foreclosure tracking company RealtyTrac, Washington’s statewide foreclosure rate for 2009 of one foreclosure for every 799 housing units was 28th worst 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.

Here’s a larger version of the chart that shows the percentage of households in each county receiving a foreclosure notice each month:

Although foreclosures are definitely at lower levels than they were last spring and early summer, there does seem to still be an upward trend that has persisted since the post SB 5810 drop-off.

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, refer to the final chart in this post. 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.

Here’s a look at the NWMLS King County SFH median, Radar Logic’s price per square foot, the FHFA purchase-only index, and Case Shiller’s home price index. Each measure has been indexed to Q1 2000 = 100 for easier comparison:

As of the latest data (Q4 2009 for all but the FHFA index), the four indices are off between -16.5% and -25.2% from their Q2 2007 peaks. The price per square foot, FHFA, and Case-Shiller index all hit their lowest post-peak values in their latest data, while the raw median is up 4% from the Q1 2009 low.

Here’s a look at the year-over-year change in the four indices over the same time period:

I’m pretty sure that the recent divergence of the FHFA data from the other indices is due to the fact that it is based only on Fannie & Freddie-insured mortgages, which excludes jumbo loans (a relatively large percentage of the Seattle market, at least until the bubble burst).

Another fun dataset to play around with is Zillow’s “Local Info” pages, which lets you break the data down by city and compare multiple cities on the same chart, plus you can view other interesting data, like the percentage of homes sold for a loss.

Homes Sold For Loss

More King Home Values

I was wondering if you could write a post sometime on the relationship between interest rates and home prices (or direct me to a previous post if you’ve already done this). My husband is feeling pressured to buy a home within the next couple of months b/c he thinks interest rates will go up soon and we will have to spend more money for a house. I feel that an increase in interest rates will cause home prices to drop further. What is the historical relationship between interest rates and home prices? Have home prices ever declined before when interest rates go up? What data exist to inform your opinions on this? Also, does an increase in interest rates usually lead to an increase in inflation?

First, here’s a post I wrote back in June on the subject of interest rates and home prices: The Consequences of a Market Full of Monthly Payment Buyers. [Update: Here's another relevant one that I had forgotten: Interest Rates vs. Home Prices] I’d also like to point out another more recent post that argues that It’s a Great Time to Rent.

Also, please be aware that feeling “pressure” is never a good reason to buy a home. Never.

Okay, let’s tackle the specific questions quoted above. In order to attempt to explore this issue, we’ll look at King County home prices (inflation-adjusted using the CPI) and mortgage interest rates over the last 60 years.

Prior to 2007, there were two extended periods of time during which inflation-adjusted King County home prices fell: 1969-1975 and 1979-1985 (each highlighted above in yellow). Interestingly, mortgage interest rates were indeed rising going into both of those periods.

From 1965 to 1974, interest rates rose over five points. Meanwhile, home prices dropped over 20% from their peak. During a period of relatively stable (though definitely still high) interest rates between 1975 and 1979, home prices shot up. Then, as interest rates began their steepest climb, shooting up nine points in four years, home prices fell again, dropping 20% off the peak.

It is interesting to note that the dramatic price declines that we are currently seeing is the first time that home prices have fallen for an extended period of time without a corresponding period of rising interest rates.

The national picture looks similar, although the 1969-1975 decline is much less pronounced, and there is an additional period of declining prices between 1990 and 1996, during which interest rates were declining.

(Note that the interest rate on the above chart does not exactly match the first chart, as the above chart is taken directly from the data provided by Robert Shiller on his Irrational Exuberance website.)

It was also asked “does an increase in interest rates usually lead to an increase in inflation?” I believe that high interest rates and high inflation usually happen around the same time, but I don’t think it’s necessarily accurate to say that the increased interest rates lead to increased inflation. More likely they’re both symptoms of larger economic forces at play.

All that being said, it is important to be aware of a couple of things. One, people have been expecting interest rates to rise for about a year, and yet they continue to hover around 5%. Buying based on where you think interest rates are going to go is probably not a good plan.

Two, if you do end up buying in a high interest rate situation, keep in mind that you can always refinance if rates go down later. However, if you end up buying in a high purchase price situation, then home prices go down later, you won’t have the luxury of refinancing into a lower principal balance.

Lastly, I’ll take this opportunity to repeat the advice I have given since launching this site about when it is best to buy a home. If you find a house that you believe is priced fairly, that you can afford using a conventional fixed-rate mortgage, that you will be happy living in for at least ten years, and you won’t be distraught if the value goes down, then go for it.

Frankly, who cares about interest rate or home price trends if it is important to you to buy a home and you can afford to buy a home you love? Just don’t allow yourself to be fooled into believing that buying a home is a great investment, or that you have to buy now or risk being priced out forever.

Granted, we’re not talking about a lot of money here (relative to the cost of most Seattle-area homes), but fifteen refinances in less than five years?!? Followed (not surprisingly) by a foreclosure last year. That has to be some kind of a record.

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Here’s a link to this month’s NWMLS press release: Northwest MLS members report 28 percent increase in pending sales from year ago

“More certainty” and “more stability” in the market contributed to a boost in activity during January, according to officials from Northwest Multiple Listing Service. Brokers reported an increase of nearly 27 percent in pending sales (purchase offers made and accepted, but not yet closed) from December and a 28 percent jump from twelve months ago.

Two other indicators of activity fell — inventory and sales prices. There were 3,915 fewer active listings of single family homes and condominiums in the MLS system compared to a year ago, a drop of about 10.3 percent. Sales prices area-wide for January’s closed sales declined about 4.8 percent from year-ago figures. (The NWMLS service area covers 21 counties.)

“We anticipated there would be improved sales in the first-time buyer market and are encouraged to see activity gaining ground in the higher price ranges as well,” observed NWMLS director Joe Spencer, the president and COO of John L. Scott Real Estate. He cites historically low interest rates, great affordability, and the home buyer tax credits as factors for “helping push us into a more stable market,” and noted he expects to see this momentum continue in the coming months.

At least they dropped the lie from last month that “affordability has never been better.” Now it’s just “great affordability.”

[NWMLS director Dick] Beeson said the fast-approaching tax credit deadline is expected to boost activity in the next few months. “This year will be better than last because of more certainty in the market,” he remarked.

Certainty that the government is going to end their 2009 programs to prop up prices? I can see February through April being better, but if the Fed’s MBS purchases really end and no new tax credit is enacted, I think there is a distinct possibility that sales will drop to frigid levels again, pushing prices even further down.

Click below for this month’s roundup of real estate reporting, or the lack thereof.

Eric Pryne, Seattle Times: Median price of homes rises in Seattle, keeps dropping in suburbs

Home prices in the city of Seattle rose in January for the first time in nearly two years while they continued to fall in the rest of King County, according to one closely watched measure.

The median price of a house that sold in Seattle last month was $415,000, up from $400,000 in January 2009, the Northwest Multiple Listing Service said Thursday.
…
“Now that profit is no longer a given in people’s minds when buying a home, buyers are realigning their priorities,” Tim Ellis, editor of the Seattlebubble real-estate blog, said in an e-mail.

“They are less likely to ‘drive till you qualify’ when they realize that they probably won’t be able to sell that far-flung home in a few years for tens or hundreds of thousands more than they paid and then move to the neighborhood they really wanted to live in in the first place,” Ellis said.

I shared my take on the divergence in price patterns between the close-in neighborhoods and the outer suburbs with Eric via email.

Gerry Spratt, Seattle P-I: Seattle home prices up for first time since March 2008

Home prices in Seattle were up 2.63 percent in January compared with a year ago – the first such rise since March 2008 – according to the latest numbers from the Northwest Multiple Listing Service.
…
The uptick in prices and activity, along with a drop in inventory, indicates a stabilizing market.

“For several months now we’ve been seeing stabilization in all of the home price measures as inventory is pulled down,” said Lawrence Yun, chief economist for the National Association of Realtors, in a Tuesday news release. Yun was talking about the national market, and the Seattle market recently has lagged behind the national trend by several months.

In King County, pending sales – a good indicator of market health – continued their upward trend in January but prices didn’t follow.

Wow, quoting Lawrence Yun and calling pending sales a “good indicator.” Double-fail.

Mike Benbow, Everett Herald: Prices drive spike in home sales

People bought more homes in Snohomish County in January as prices continued to fall.

Pending sales, deals made in January that didn’t close, climbed 42 percent last month and closed sales weren’t far behind, climbing 37.9 percent, the Northwest Multiple Listing Service reported Thursday. There were 949 pending sales last month and 495 completed sales, the listing service reported.

“The market has definitely picked up, with more interest and action by buyers,” said Dick Beeson, a Windermere owner/broker in Tacoma. “Sellers are expecting better results this year than last year, but not necessarily higher prices.”

Why shouldn’t they expect higher prices? Beeson has been calling the bottom since sometime in 2008, after all…

Kelly Kearsley, Tacoma News Tribune: Pierce County home prices down 13%

People might be buying homes, but it’s not pushing Pierce County home prices up.

The number of pending and closed home sales increased by 16 percent and 31 percent respectively in January, according to figures released Thursday by the Northwest Multiple Listing Service.

But the area’s median home price still dropped by 13 percent over the year to $205,000.

Short sales and foreclosures continue to drive down the area’s home prices, local realtors said.

It doesn’t look like the situation for underwater home sellers in Pierce County is likely to improve very soon. Sell now or be priced in forever.

I couldn’t find a piece from the Olympian this month. Perhaps Rolf Boone is on vacation.

Update: The Olympian story posted a day late. Here it is.

Rolf Boone, The Olympian: More homes go on market

The number of Thurston County homes newly listed for sale last month rose above 500 units, likely the result of sellers wanting to take advantage of tax incentive programs and lower prices or those needing to sell their houses or condos because of falling property values, new data show.

The 505 homes newly listed in January marked a 4 percent increase from the 484 newly listed in January 2009, according to Northwest Multiple Listing Service data released this week. The data are combined figures for single-family residences and condominiums.
…
Real estate broker Ken Anderson, the owner of Coldwell Banker Evergreen Olympic Realty, said he was encouraged by the county’s pending sales, which rose nearly 4 percent last month to 302 units from 291 units last year, he said.

Although fewer homes sold last month, an increased number of pending sales likely will result in more closed sales in February or March, Anderson said.

…or not, because pendings have very little correlation with actual closed sales lately.

(Eric Pryne, Seattle Times, 02.04.2010)
(Gerry Spratt, Seattle P-I, 02.04.2010)
(Mike Benbow, Everett Herald, 02.05.2010)
(Kelly Kearsley, Tacoma News Tribune, 02.05.2010)
(Rolf Boone, The Olympian, 02.06.2010)

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):

January 2010	Number	MOM	YOY	Buyers	Sellers
Active Listings	7,523	+8.7%	-16.5%
Closed Sales	956	-34.6%	+41.8%
SAAS (?)	2.33	+17.1%	-30.9%
Pending Sales	1,765	+24.9%	+52.3%
Months of Supply	4.3	-12.9%	-45.1%
Median Price*	$375,000	-1.3%	-2.0%

Closed sales usually tumble from December to January, but last month’s -34.6% drop was quite a bit higher than the -19.9% average December to January fall from 2001 through 2009. Only in January 2005 did closed sales fall more month-to-month, dropping from 2,813 in December ‘04 to 1,677 in January ‘05 (-40.4%).

Feel free to download the updated Seattle Bubble Spreadsheet, and here’s a copy in Excel 2003 format.

Here’s your closed sales yearly comparison chart:

More closed sales in January 2010 than 2009, but less than every other year on record.

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

Lower than 2008, 2009, and 2003. Higher than any other year.

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

The sales spike is falling off almost as fast as it spiked up.

Here’s the chart of supply and demand raw numbers:

Starting off 2010 slightly better than 2009, but lower than every other year…

Here’s the median home price YOY change graph:

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

Still bobbing along somewhat of a floor there.

Here’s a few news blurbs to hold you over until tomorrow’s reporting roundup.

Seattle Times: Median price of homes in King County drops 2 percent from a year ago January
Seattle P-I: Seattle home prices up for first time since March 2008

Developer Lexas Cos. said this week that on June 5 it will raise the asking prices 3 to 7 percent for about 70 unsold units that have been on the market since last spring.

Another 22 units that will be released for sale May 1 also will have higher price tags.

Lexas principals John Midby and Eric Midby said prices are going up partly to send a message to prospective buyers: If they’re waiting to buy until prices drop, they’re reading the local market wrong.

July 2009: Some Luxury Condo Developers Finally Dropping Prices (not Escala!)

At Escala, another luxury downtown Seattle condo tower near completion, Eric Midby, of Lexas Companies, said the developer has no intention of reducing prices.

January 2010: Escala prices are scaled back (third story, scroll down)

Escala was completed last fall. Now it’s … dropping its prices.
…
“We’ve all been waiting for yesterday to come back,” said Bob Rennie, whose firm took over marketing of the 269-unit tower at Fourth Avenue and Virginia Street in November. “It’s time to make business decisions.”

Just five units have closed at Escala, according to county records. Rennie says 67 more buyers are under contract — but he knows that in this market, that doesn’t guarantee much.

They’ll all be contacted over the next few weeks and offered reduced prices as an inducement to stay, Rennie says without giving specifics.

Who could have possibly foreseen that raising prices on luxury condos as the housing market experienced the largest collapse in history would not succeed in enticing buyers? That’s just crazy.

Here’s your preview of January’s foreclosure and home sale stats:

First up, total home sales as measured by the number of “Warranty Deeds” filed with the county:

This year’s drop in warranty deeds from December to January was nearly the same as last year’s: -37%. If single-family home sales follow a similar pattern (dropping roughly the same as a year ago), that would put January’s closed SFH at around 1,060, up 58% YOY. Since last January and February saw the lowest 1-month volume of sales since 2000 (as far back as our data goes), a 60% YOY gain certainly isn’t out of the question.

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

January saw the first year-over-year drop in Notices of Trustee Sale in King County in nearly three years. That’s certainly notable. Unfortunately, foreclosures are still very elevated.

Here’s another measure of foreclosures, 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.”

Actual completed foreclosures were up from last year, though the 36.5% year-over-year increase was smaller than any month in 2009.

Lastly, here’s an approximate guess at where the month-end inventory was, based on our sidebar inventory tracker (powered by Estately):

Down 15% from last year, but still 26% above the 2000-2007 average for January. Is the pent-up supply contining to grow, or are inventory levels still elevated, keeping down prices?

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 following charts are based on data from the FDIC, the NCUA, and Calculated Risk’s latest Unofficial Problem Bank List (updated 01/29).

First up, here’s a map of all of Washington State’s banks and credit unions. For the banks, troubled banks are in red, non-troubled are in green. The size of each circle represents the total assets of each institution:

Next, here’s a visual of where our state’s troubled banks are located. Washington’s twenty-five troubled banks are only spread through eight counties, with the bulk of the problem centered in King, Snohomish, and Spokane counties.

Spokane County has only two troubled banks, but with the biggest in the state based there (Sterling), the size of the problem is somewhat overwhelming. 37% of Washington’s banks (by size) are currently on the unofficial problem bank list. 40% of that total is Spokane-based Sterling. The next-largest troubled bank in Washington is Everett-based Frontier (who recently posted a $34 million Q4 loss), representing just 13% of the assets in troubled banks.

Also, if you’d like to play with a full-screen version of the map that allows the selection of multiple counties, you can do that here.

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This time I was able to locate sold price info for Texas and Indiana, so the list below is the complete set of price, rent, and income data for the 25 largest cities in the US by population. Data is current as of November 2009. For a historical comparison, hit this 2007 Fortune table (the “The P/R Ratios” tab has 15-year averages).

Also, if you’re just interested in how things look around the Seattle area, hit this October post that breaks down seven neighborhoods in the area (note that the method used in that post is different than the one used to compile the table below).

Note that the “P/R” column is the median price divided by the median rent over the course of a full year, which is the “Rent” column times twelve.

Click on any column header to sort by that column.

Also, I pointed this out in our mid-week open thread, but thought it was worth mentioning here as well. I find it fascinating what a telling indicator it is of just how much the general mindset about home ownership has changed when you compare the comments on my 2007 post over at Get Rich Slowly and J.D.’s follow-up from Wednesday.

A selection of comments from each post…

2007:

• This is one of the worst pieces of financial advice I have ever seen. Yes, if you want to get poor slowly, by all means rent instead of buy.
• House values also increase over time. A renter gets no benefit from this.
• I hate it when PF Blogs let someone post about how renting isn’t such a bad deal. Renting sucks. How much do the renters benefit when property values rise? They don’t.
• All else being equal, when you rent you’re paying the mortgage, utilities, repairs, etc… AND the landlord is making a profit.
• Debt is not always bad – it can work as a multiplier for your financial leverage, and at least when buying a house, you’ll probably get a return.

2010:

• A lot of the time I wish we were still renting.
• I’ve done both, and am currently stuck with a house I am renting because it won’t sell. I probably won’t buy again.
• I appreciate this. I rent, I plan to keep renting for a long time, and I get very tired of friends and coworkers giving the whole “throwing your money away” crap.
• I came pretty close to buying a few times before I figured this out, and I’m really glad that I didn’t. I don’t envy any of my friends who are upside down on their mortgages and stuck wherever they are, but even ignoring the bubble/burst effect, ownership isn’t always that great of a deal over the long haul.
• I really appreciate how much money I save by renting in just time usage alone.
• This is a great article. Thank you for the insight. I’ve read several articles on this topic but this is the best one I’ve seen.

What a difference two and a half years makes.

With this latest release we have made a few notable changes. First and probably most interesting to the readers here is a new lower price. Now you can subscribe for a full year for just $60, or purchase a single issue for $20. Second, beginning with this issue we are now also covering Whatcom County. The real estate statistics covered in Sound Housing Quarterly now include 65% of Washington State by population.

Here are a couple of highlights from the fourth quarter issue.

The Real Estate Heat Index (a proprietary index I created that uses supply, demand, and home prices to calculate the general “heat” of the housing market) rose in six of the eight Puget Sound Counties I track in the fourth quarter, declined in Thurston and was flat in Skagit. Here’s a look at King, Snohomish, Pierce, and Kitsap:

Meanwhile, affordability actually increased in all eight counties, thanks to median home prices continuing to decline from Q3. That said, after updating the affordability index with the OFM’s October 2009 income estimates, the recent trend line for affordability was adjusted lower. As a result, the latest reading still came in below pre-bubble levels in all eight counties.

The full version of Sound Housing Quarterly includes detailed data and analysis for King, Snohomish, Pierce, Kitsap, Thurston, Island, Skagit, and Whatcom counties.

Head over to HousingQuarterly.com to subscribe to Sound Housing Quarterly. You can also download a free single-page summary of this quarter’s report, or head over to the free archive to check out last year’s Q3 and Q4 reports in full at no charge.

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: < $270,312
• Mid Tier: $270,312 – $402,072
• Hi Tier: > $402,072

The breakpoints for the tiers fell again in November, declining 0.6 to 1.1%.

First up is the straight graph of the index from January 2000 through November 2009.

The low tier fell 0.1% month-to-month, the middle tier fell 0.3%, and the high tier dropped 0.6%. The high tier hit a new post-peak low, while the low and middle tiers both sit slightly higher than where they were earlier in the year.

Here’s a chart of the year-over-year change in the index from January 2003 through November 2009.

The year-over-year situation improved slightly again in all three tiers. Here’s where the tiers sit YOY as of October – Low: -11.1%, Med: -9.5%, Hi: -11.2%.

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

Bouncing along the government-sponsored floor, but for how long…

(Home Price Indices, Standard & Poor’s, 01.26.2010)

Down 0.5% October to November.
Up 0.3% October to November (seasonally adjusted)
Down 10.6% YOY.
Down 22.7% from the July 2007 peak

Last year prices fell 2.5% from October to November (not seasonally adjusted) and year-over-year prices were down 11.2%.

Here’s our offset graph, with L.A. & San Diego time-shifted from Seattle & Portland by 17 months. San Diego’s year-over-year jumped above zero for the first time in over three years. Portland came in at -7.5%, Los Angeles at -3.5%, and San Diego at +0.4%, all better than Seattle.

Note: This graph is not intended to be predictive. It is for entertainment purposes only.

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

Also in positive YOY territory: San Francisco, Denver, and Dallas.

In November, fourteen of the twenty Case-Shiller-tracked cities experienced smaller year-over-year drops (or saw year-over-year increases) than Seattle (same as August through October). Dallas at +1.4%, San Fancisco at +1.0, Denver at +0.5%, San Diego at +0.4%, Washington, DC at -0.6%, Boston at -0.7%, Cleveland at -2.5%, Los Angeles at -3.5%, Charlotte at -5.5%, Atlanta at -6.2%, New York at -7.1%, Minneapolis at -6.8%, Portland at -7.5%, and Chicago at -8.5%.

The only other cities still experiencing double-digit year-over-year declines are Miami, Detroit, Tampa, Phoenix, and Las Vegas. Some company.

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 twenty-eight months since the price peak in Seattle prices have declined 22.7%, a new post-peak low.

Here’s a complementary chart to that last one. This one shows the total change in the index since March for the same twelve markets as the peak decline chart.

Seattle is actually down since March, as are Las Vegas, Tampa, and New York.

The following chart takes the post-bubble years of 2007, 2008, and 2009 and indexes each January’s Case-Shiller HPI to 100 so we can get a picture of how this year’s declines compare to last year:

Ever since August 2009 has been out-performing 2008.

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

(Home Price Indices, Standard & Poor’s, 01.25.2010)