Chuck Reiling\’s Blog

Overall, our real estate market is continuing to look solid, with good statistics and even a little good press.   We had a late start this Spring while everyone was still justifiably nervous about what was going on with the economy, so maybe we can expect a little stronger Summer/Fall season to make up.   People™s confidence seems to be rising, and if the folks who brought us the crashes of ™07 and ™08 will just leave things alone for awhile, we might make a lot of progress.  So here™s the market statistics, and a little food for thought.

The links below provide a graphical summary of Real Estate Market Statistics for the Seattle/King County area over the past 3+ years, for single-family homes and for condominiums.   The volume of residential sales continues to be higher than a year ago, median prices seem to be holding in the $375,000 – $380,000 range, and the number of homes available in the mid to lower prices ranges is dropping significantly.   Months-Supply, a key measure of market health, has (good news) stayed below the magic balance point of 6 months, and the under-$700,000 sales are doing even better.   Total residential inventory is below both 2007 and 2008 levels.   Buyers today are seeing their smorgasbord of choices diminish rapidly, and are going to have to start honing their decision-making skills again.   Here™s the charts for the current stats: (Required disclaimer:  Statistics not compiled or published by the Northwest Multiple Listing Service)

Residential Sales Charts          Condominium Sales Charts

The number of sales transactions closed continues to run well above year-ago levels for single-family homes.   People are definitely getting off the fence and starting to buy again, and they are flattening the growth in inventory of houses for sale.   The Months-Supply measure of residential inventory, i.e. houses for sale, is down dramatically from 6 months ago, and staying down “ although that good news is mostly still in the under-$700,000 part of the price range.    The rise in condominium inventory seems to be blunted too, now holding at levels below those of a year ago, and condominium Months-Supply is down nicely as well.   Median condominium prices seem to be holding steady at about the $250,000 level.   This ˜prices holding steady™ is a good thing – it means sellers are not having to compete by lowering their price below market, and buyers are not having to compete by paying a premium to get the house they want “ it™s a good balanced market.  

If you have any questions or just want to swap ideas on any real estate-related topic, we are always available to help you.   And because our business depends on referrals, we appreciate your keeping an ear out for likely candidates to send our way – buyers, sellers, investors, friends “ particularly buyers who want to take advantage of the current low conventional mortgage rates  :-)  

Sincerely,      

        Chuck and Diane

If you know someone who is a first-time buyer and thinking abour buying a home now in order to capture that $8,000  tax credit, tell them to get moving!  

The credit, which is really a straight $8,000 rebate, only applies to purchases closed and recorded by November 30, which means they need to have a signed contract in escrow by about October 16 to expect to be closed by the end of November.  

Less than 30 days to arrange financing and find the right house is cutting it a little short already

Let us know if we can help.

Sincerely,      

For all that we have made a lot of progress in our housing market, most of that progress has been in the low to middle price range.   The high end still isn’t moving.   A couple of months ago we talked a bit about how Months Supply suddenly jumped from about 6 months in the low and middle price range to about 15 months or more on the higher end.   The break point seemed to be in the $600,000 “ 800,000 range.   Recently a friend of mine who lives in east Bellevue asked me to figure out if there really is a fairly sharp break point in that Months Supply curve that might be useful to Buyers and Sellers who are working in that price range.   So being a registered data junkie, I decided to give it a try.   The chart below suggests that there really is a fairly pronounced break in market, and it does seem consistent with my earlier analysis of the King County market overall. The conclusion: there really does seem to be a pretty sharp break at about the $750,000 area.   Why is that?   My only useful speculation is that is about the price point for maximum conventional mortgage (i.e. good interest rates) of $567,500 + 20% down = $709,000 purchase price.   A possible explanation is that buyers start choking when they have to come up with more than about $150,000 – $200,000 down, or they have to look at loans costing a full point more “ there™s a lot of difference between the payments on a 5.5% conventional loan and a 6.5% jumbo loan.   At that level of down payment, the market is probably mostly move-up buyers, not first time buyers, but there still seems to be a limit on how far they are willing (or are allowed) to stretch these days.   So the break point may strongly affected by the transition from good rates to significantly higher rates.   Seems to make sense.   Other ideas welcome J  The under-6 months supply at the lower end of the market might reflect the extra boost from that ˜First Time Homebuyer Tax Credit™   – if that program goes away as expected, that end of the market might slow up a bit.

Our real estate market is continuing to look a lot more solid, with good statistics and even a little good press.   We had a late start this Spring while everyone was still justifiably nervous about what was going on with the economy, so maybe we can expect a little stronger Summer/Fall season to make up.   People™s confidence seems to be rising, and if the folks who brought us the crashes of ™07 and ™08 will just leave things alone for awhile, we might make a lot of progressJ   So here™s the current  market overview.

The links below provide a graphical summary of Real Estate Market Statistics for the Seattle/King County area over the past 3+ years, for single-family homes and for condominiums.   The volume of residential sales continues to rise, median prices seem to be starting to rise, and the number of homes available in the lower prices ranges is dropping significantly.   Months-Supply, a key measure of market health, has (good news) stayed below the magic balance point of 6 months, and the lower price ranges are doing even better.   Buyers today are seeing their smorgasbord of choices diminish rapidly, and are going to have to start honing their decision-making skills again.   There is quite a bit of good news in terms of number of new purchase transactions completed, and the large Pending backlog discussed a couple of months ago is coming down significantly.   Here™s the charts for the current stats: (Required disclaimer:  Statistics not compiled or published by the Northwest Multiple Listing Service)

Residential Sales Charts                  Condominium Sales Charts

The number of sales transactions closed was up again in July, now five months running and feeling pretty solid, and continuing above year-ago levels for single-family homes.   People are definitely getting off the fence and starting to buy again, and they are flattening the growth in inventory of houses for sale.   The Months-Supply measure of residential inventory, i.e. houses for sale, is down dramatically from 6 months ago, and staying down “ although that good news is mostly still in the lower part of the price range.    The rise in condominium inventory seems to be blunted too, now holding at levels below those of a year ago, and condominium Months-Supply is down nicely as well.

If you have any questions or just want to swap ideas on any real estate-related topic, we are always available to help you.   And because our business depends on referrals, we appreciate your keeping an ear out for likely candidates to send our way – buyers, sellers, investors, friends “ particularly buyers who want to take advantage of the current low conventional mortgage rates J

Sincerely,

      Chuck and Diane

The statistics and charts  below from our July Market Update  look to me like our housing market may be in the early stages of a recovery.  

Residential Sales Charts            Condominium Sales Charts

Given all the doom and gloom we hear about the housing market, it is fair to ask œHow could that be?   So here™s my take on it: What it looks like to me is that we may be in the early stages of a local housing shortage for single family homes.  

While Seattle and the west side have been built out for decades, Bellevue and the east side communities have been absorbing most of the region™s growth for the past 50 years or so.   But we passed the Growth Management Act in 1990, and then we added the Critical Areas Ordinances.   As a result, it has become harder and harder to get permits for housing developments of any significant size.   In fact it appears that over the last 10 years or so it has become far easier to get a permit for a 100-unit condominium high-rise than for a 100-home residential development.   And the rate of application for new building permits œfell off a cliff last Fall, to use a phrase I heard recently, and new permits this year are running at less than half the level of this same time last year, and construction employment is continuing to drop.

So now we seem to have more condominiums than we have people who want to live in them.   And we seem to be developing a shortage of single-family homes compared to the number of people who want that suburban neighborhood lifestyle.   We still have a strong economy and a growing population, and if the people who want single family homes have to start competing for them, prices will start to rise again “ and it looks like they are.  

It is a somewhat lopsided recovery, but it may be a real one.

There™s something interesting going on in our housing market.   It™s hidden inside the statistics and charts, so let™s dive in.  

The links below provide a graphical summary of Real Estate Market Statistics for the Seattle/King County area over the past 3+ years, for single-family homes and for condominiums.   The volume of sales continues to rise, median prices seem to starting to rise, and the number of homes available in the lower prices ranges is dropping significantly.   Months-Supply, a key measure of market health, is (good news) dropping rapidly.   Buyers today are seeing their smorgasbord of choices diminish rapidly, and are going to have to start honing their decision-making skills again.   There is quite a bit of good news in terms of number of new purchase transactions completed, in spite of a continued large Pending backlog as discussed last month.   Here™s the charts for the current stats: (Required disclaimer:  Statistics not compiled or published by the Northwest Multiple Listing Service)

Residential Sales Charts          Condominium Sales Charts      

The number of sales transactions closed was up sharply again in June, now four months running and feeling pretty solid, and also now actually above year-ago levels for single-family homes.   People are definitely getting off the fence and starting to buy again, and they are flattening the growth in inventory of houses for sale.   The Months-Supply measure of residential inventory, i.e. houses for sale, is down dramatically from 6 months ago “ although that good news is mostly still in the lower part of the price range.    The rise in condominium inventory seems to be blunted too, and condominium Months-Supply is down as well.   This is beginning to look suspiciously like a recovery.    

If you have any questions or just want to swap ideas on any real estate-related topic, we are always available to help you.   And because our business depends on referrals, we appreciate your keeping an ear out for likely candidates to send our way – buyers, sellers, investors or friends who may be in financial trouble and need to consider a short sale “ we™ve got a lot of info, and maybe we can help.  

Sincerely,      

            Chuck and Diane  

The links below provide a graphical summary of Real Estate Market Statistics for the Seattle/King County area over the past 3+ years, for single-family homes and for condominiums.   The volume of sales is picking up, median prices seem to have stabilized, and the number of homes available in the lower prices ranges is dropping significantly.   Buyers today are seeing their smorgasbord of choices diminish rapidly, and are going to have to start honing their decision-making skills again.   There is quite a bit of good news in terms of number of new purchase transactions, but perhaps not quite as good as some news reports represent; Pending is not the same as Closed as noted in the previous Fallout post.  

Here™s the graphs for the current stats: (Required disclaimer:  Statistics not compiled or published by the Northwest Multiple Listing Service)

Residential Sales & Stats           Condominium Sales & Stats      

     The number of sales transactions closed was up sharply again in May, now three months running and feeling pretty solid, although still 25+% below year-ago levels.   People are definitely getting off the fence and starting to buy again, and they are almost flattening the growth in inventory of houses for sale.   The Months-Supply measure of residential inventory, i.e. houses for sale, is down dramatically from 6 months ago “ although that good news is mostly still in the lower part of the price range.    The rise in condominium inventory seems to be blunted too, and condominium Months Supply is down as well.  If you have any questions or just want to swap ideas on any real estate-related topic, we are always available to help you.   And because our business depends on referrals, we appreciate your keeping an ear out for likely candidates to send our way – buyers, sellers, investors or friends who may be in financial trouble and need to consider a short sale “ we™ve got a lot of info, and maybe we can help.  

Sincerely,      

Chuck and Diane  

The  rate of fall-out of signed transactions that don™t actually close is rising rapidly; i.e. a Buyer made an offer on a property and the Seller accepted the offer (and the transaction was marked Pending in the MLS), but the transaction never gets closed, the Seller never gets his or her money, and the Buyer never gets possession of the property.   Take a look at the Fall-Out Ratio chart below for the Seattle/Bellevue/King County area:.    

Historically the fall-out rate has been well under 10%, but then in early 2008 the fall-out rate started climbing like a rocket.   Recall that we had the mortgage market meltdown in late 2007, and lenders started dramatically tightening their lending practices.   Then we had the larger financial and business crash in late 2008, and more people started losing their jobs – and the other 90% got nervous.   It was also in late 2008 that we started seeing a lot more short sales in our Seattle/Bellevue area.   In a short sale, the insolvent seller is trying to avoid foreclosure by selling the property and getting the lender to accept less than is owed on it.   That lender approval process is often slow and uncertain, and it certainly is contributing to this rise in the Fall-Out Ratio. (more on Short Sales)  Short sales may be 20% or more of our current sales activity, and those delays may also be a major contributor to why the average Days-on-Market measure isn™t dropping in concert with Months Supply.   Other contributors to the fall-out rate would include failure to reach agreement on inspection, and failure  to complete financing.   I wouldn’t expect the inspection issue to have changed much, but the financing process has certainly gotten tougher.

With all the good news, bad news and puzzling news coming out lately on the real estate and mortgage markets, including lots of stuff on short sales, Rick Robertson and I decided to go ahead and do an updated version of our ˜What™s Really Going On In The Real Estate and Mortgage Markets™ seminar “ and do it now before the summer vacation season gets rolling.    

The seminar will be on Tuesday, June 16 from 6:30 to 8:00 pm in Kirkland, WA.   Details are in the flyer.

Over 600 people attended this seminar last year.   Please let me know if you™d like to attend this one: chuck@reilingteam.com.

Chuck Reiling  

www.reilingteam.com

I had occasion  a couple of weeks ago  to do some digging for Short Sale listings in West Bellevue – the  area west of I-405 and north of I-90 including Beaux Arts, Enatai, Medina, Clyde Hill, plus Hunts Point and Yarrow Point  on the north side of Hwy 520.   As a refresher, in a Short Sale an insolvent seller is trying to avoid foreclosure by selling the property and getting the lender to accept less than is owed on it.   So now there are three parties to the deal, and at least one is not happy – that lender approval process is often slow and uncertain.  (more on Short Sales)  I have heard that Short Sales may now be 20% or more of our current sales activity, but we don™t have an easy way to track them separate from regular sales.   While 20% short sales is way better than the 50% we hear about in some of our more unfortunate sister cities, it still is more than enough to effect prices “ after all, the Seller has to push the price down enough to get a deal before the foreclosure clock runs out.   The Seattle Times had a pretty substantial article on short sales this past weekend.

In that west Bellevue area there were 313 active listings for single family homes.   I scanned through the  agent summaries for each looking for œsubject to lienholder approval or some similar phrase.     I found 32 listings that were short sale, about 10%  of the total, and 5 that were bank owned, less than 2% of the total.   So,  as we sensed, there are quite a few short sales going on, and they have been affecting prices.   As a side note, the number of condo short sales in this area is very low, and I did not track it further.   That happy state may not reflect the travails of the builders of all the new condo towers in Bellevue “ they may be unable to use the short sale process on unsold units in the way that individual condo owners can.    

Some other interesting observations out of this little study – this is a relatively high-priced area: 68% of the listings are over  $1 million.   But 67% of the short sales are under $1 million.   Short sales are part of what is pushing the lower price range inventory down, just as in other parts of the country.

And last of all, in the past two and a half weeks 14 of those shorts have gone under contract (MLS status = Pending) and 1 more has closed (MLS status = Sold) – sounds like a pretty hot absorption rate to me

Chuck Reiling

www.ReilingTeam.com