Throughout the year I have been tracking the market in this manner to see the changes in inventory and the "propensity of the market to sell". Since one would expect the market to sell unevenly from month to month, and more in spring and Summer than in Fall and Winter, I am using this "fan of sales" method to add more value to Absorption Rate statistics.

It sounds good in July to say "there are 3 months of inventory", but not accurate. Using the three months prior to determine absorption rates gives a false picture, as you can see from the below graph. Absorption Rate statistics is an area where hindsight does NOT have 20/20 vision.

Inventory today in this price range of $400,000 to $600,000 in King County is 3,997 on market vs. 3,386 on July 6, 2007. Properties currently in escrow of 1,030 compared to 1,657 on July 6, 2007 tells us that Inventory is up 18%, while pending sales are down 60%. Closed sales are down 45% comparing July to October.

In my next post I will compare July to October sales in this same price range for King County for 2005 to 2006 to 2007. One of the best things about "Stream of Consciousness Blogging" is that I don't know how these numbers will compare, and we all find out together.

Why do we run stats?  Because it is important to check "Perception vs. Reality" from time to time.  Even people like me who work in the real estate industry day in and day out, can miss a market segment's performance level, unless we study the real facts from time to time.

What I have found so far, is that lumping any of the separate market segments together, even Bellevue, Redmond and Kirkland, cities you would expect to follow the same basic market trend, gives unclear results.  You have to separate everything down to total relevancy levels.  Before I switch to doing Online CMA's for each Zip Code and market segment of each Zip Code, here are some stats I felt were important to me.  For what it's worth, I will post them here for others, but they are likely more important to a real estate professional than a consumer.

Two market segments stand out for all three cities.  The condo market from $200,000 to $400,000 and the Single Family Home market from $400,000 to $600,000.

Using Closed sales YTD, the highest number of sales was in Bellevue, 491 single family residences priced between $400,000 and $600,000.

Second at 466 sales was Kirkland Condos priced between $200,000 and $400,000.

Right behind would be Bellevue Condos in the same price range at 448 sales.

Then back to the single family residences from $400,000 to $600,000 with Kirkland at 403 and Redmond at 409.

Last in the range would be Redmond condos between $200,000 and $400,000 at 389 sales.

Yesterday someone asked that I update the stats from THIS POST. 

Since we are past the year half mark, I will call OVERSUPPLY, any category with

 more FOR SALE than STI + PENDING + SOLD YTD.

OVER FIVE MILLION - 42 FOR SALE - 0 STI - 3 PENDING - 8 SOLD YTD (OVERSUPPLY)

$4M TO $5M - 23 FOR SALE - 2 STI - 5 PENDING - **8 SOLD YTD (OVERSUPPLY)

$3M TO $4M - 67 FOR SALE - 2 STI - 10 PENDING - 22 SOLD (OVERSUPPLY)

$2M TO $3M - 183 FOR SALE - 17 STI - 22 PENDING - 87 SOLD (OVERSUPPLY)

$1.75M  to $2M - 115 FOR SALE - 11 STI - 34 PENDING - 86 SOLD YTD

$1.5m TO $1.75m - *176 FOR SALE - 15 STI - 37 PENDING - 106 SOLD YTD (OVERSUPPLY)

$1.25M TO $1.5M - 247 FOR SALE - 20 STI - 68 PENDING - 216 SOLD YTD

$1.1M TO $1.25M - 189 FOR SALE - 11 STI - 54 PENDING - 187 SOLD YTD

$1M TO $1.1M - 101 FOR SALE - 9 STI - 33 PENDING - 100 SOLD YTD

Based on my observations of actual homes on market, I think the OVERSUPPLY in the $1.5 million to $1.75 million is being created simply because some people who should be in the category below $1.25M to $1.50M) are overpriced, which is throwing off the stats.  If you add these two categories together there is *No "real" OVERSUPPLY under $2 Million. 

That is the true purpose of running stats in this manner.  We can see from these stats, that some owners priced at $1.5 or slightly higher need to reduce their prices below $1.5 for the market to be entirely in balance under $2 million.

At the very high end you will always have more sellers than buyers, because over a certain price people will prefer to buy tear downs and build their own homes, before buying someone else's $Five Million Dollar home.  Same as new car vs. used car.

*Note that I have used the same method so that duplications are standardized, though not eradicated.  An agent will sometimes show a property as being in two different areas even though a property technically cannot exist in two places at the same time.  For instance, a property in Juanita might show as both Juanita (area 600) and Kirkland (area 560) since Juanita is "in" Kirkland.  Also, since I compile the stats using $3 mil to $4 mil and then $2 mil to $3 mil, a property at exactly $3mil would show in both categories.  Since we are looking for the up and down trends, these built in duplications should not affect the assumptions made generally from the stats.

I decided to go with YTD on the solds rather than 6 mos so when we are finished at year end, we have true 2006 figures.  In the original post I went a true 6 mos back into December of 2005.  As of today YTD would be a tad over 6 mos.

These are for all of King County compiled via NWMLS by hand.  Not by using the mls stat feature.  I do a preview count of every single sub-segment noted, which involves 32 separate and distinct searches. The mls will only go up to 250, so as the number grows in the sold between $1 mil and $1.25 mil, I need to break out into two categories of less than 250 homes.

**Of special note, the solds in the original post for 4 to 5 mil were obviously out of whack, so I edited the original post to change 22 sold to ? sold.  Since only 8 have sold YTD, that number must have included all statuses for that category or else there were a lot of them at year end of 2005.  Let's track it forward from 8 and disregard the original 22.

As with all stats, there are many ways to compile them.  As long as we stay with apples to apples, we are safe as long as we are tracking the trend and not being anal about the actual houses involved.  To remove the duplications for purity sake, would not be worth the time spent viewing each and every property to remove them.

Last month I started a tracking of homes for sale at present and sold since the first of the year, that are priced over a million dollars.  At that time I promised to update the figures at the beginning of each month.

As of today, the number Actively For Sale has dropped by only 2, down to 121 from 123.  But 31 more have closed with the total at 91 vs. 60 and an additional 45 in escrow. 

So, as expected, the last 30 to 40 days have had 50% as many sales over a $million as the first five months, but more have come on market to replace the ones sold.

Let's add a component to make it more interesting.  Of those 121 for sale, 88 are over $1.3 million and 67 are over $1.5 million.  49 of the 91 sold are over $1.3 million and only 29 are over $1.5 million.  A whopping 42 of the 45 in escrow are over $1.3 million, with 27 of those over 1.5 million.

In the post below, we see that there are many options in the marketplace in Kirkland's Zip Code 98034, if you are looking to spend less than $250,000 for a condo.  But if you are only looking in Kirkland's 98033 Zip Code, then the above graph will show you that, yes, you are looking for a needle in a haystack. 

Does that mean that you should not still want a condo in 98033 for less than $250,000?  No, but when you find one, you can't necessarily be as picky about condition and location as you can in 98034.  Also, you likely won't have much time to think about it, as none are for sale, so many will likely want it pretty quickly and it could be awhile before another comes around.

Knowing the stats can help you know how to proceed in getting what you want, based on the stats and the odds. 

If you are looking to spend under $250,000 for a condo in Kirkland, the above graph I made based on hand calculated dats might help.  While there are not many for sale/ACTIVE, there are plenty in escrow (STI plus PENDING), and tons sold in the last six months.

 So if you don't like what is currently for sale, it is worth waiting as many are generally readily available in 98034, which includes Juanita, Kingsgate, Totem Lake and other areas.  Kirkland has two zip codes, 98033 and 98034.  See next graph for 98033 stats.

So that we can all track the high end homes in Kirkland, I will post the stats on or near the first of each month through "high season".

Yesterday there were 123 homes priced over a million dollars for sale in Kirkland.  60 closed since 1/1/06.  That makes current inventory almost a full year supply.  More like a 9 month supply in keeping with my previous stats including properties in escrow.

I would expect the rate at which these sell to go up over the next 4 months.  As I see more and more homes being built that will all have price tages over a million dollars, I wonder if the inventory will exceed the number of buyers able and willing to pay these high numbers.  If the properties on market have to reduce their prices to sell, it may put downward pressure on the homes just under a million in order to compete.

It's a figure worth tracking for many reasons.  Not only to predict the market pricings to come, but also to see if tear downs and new construction will continue to be as strong.  There should be hearings soon regarding the FAR values, and these stats may influence that topic as well.

A simple explanation using the above photo would be that the three arrows that made it through to the bottom of the red disk are the homes that have SOLD.  At the top of the red disc you see six trying to get through, they represent the homes on market.  If 3 of 6 sell, that is a 50% rate of absorption.  If three sold in a month, then the six on market would reperesent a two month supply.  3 remaining on market would be a one month supply.

Rate of absorption is a tool sellers and their agents use to determine price based on SUPPLY AND DEMAND.

It is best used on much larger quantities than the rudimentary example, as those three homes not sold may have had their own specific reasons why they did not sell.

If you apply the basic example on a broader scale, it is useful.  Let's say you are putting a condo on the market priced at $215,000 in 98034 today.  25 properties sold in the last six months in that price range in that zip code and 47 sold in 12 months.  I used $10,000 over and $10,000 under for price "range".  The figures pretty much prove out at 50 per year selling in that price range in that zip code.

There are ten in escrow today at that price range and only two for sale.  If 50 sell in a year, than 4 or so sell each month, and it being high season, 4 on average can be 8 in this month, as is proven by the number currently in escrow with 80% being 30 day escrows.

So the supply is low and the demand is high.  You may be able to push your price 5% above the last sale price, given these supply and demand calculations.  I say 5%, because in this price range you will likely have to deal with appraisal considerations.

If you are looking at buying or selling a house in 98033 for $1.1 million, the supply and demand considerations would be dramatically different.  Let's use "range" at $one million to $1.2 million if you are planning to go on market at $1.5 million.  Only TWO sold in the last six months, in fact only FIVE sold in the last year and Two are for sale.  So that is a six month supply! 

The data is less reliable in this price range, as many properties in this price level are built and sold without passing through the mls.  Some people move out of their old house temporarily, build a new house themselves on the lot, and then move back in to the new house that is now worth over a million dollars.  So more homes EXIST in this price range, than are SOLD in this price range.  Also, some people buy a house for $600,000 and have it torn down and a new house put on the lot before they move in.  That is why you see so many homes in this price range around town, more than appear to have sold using either the mls or the tax records.  But then, that's another subject altogether!

Suffice it to say that Rate of Absorption is a more useful too when applying prices UNDER a million than it is for property priced OVER a million.

Stats Hand Made by ARDELL using NWMLS - Thurs. Night 5/11/06

98034 single family homes - 72  in escrow - 52 for sale

98034 condos - 76 in escrow - 29 for sale

98033 single family homes under a million dollars - 79 in escrow - 69 for sale

98033 condos under a million dollars - 73 in escrow -36 for sale

98033 single family homes over a million dollars - 30 in escrow - 98 for sale

98033 condos over a million dollars - 4 in escrow - 13 for sale

The over a million dollar market continues to be trailing behind.  With so many on market vs. in escrow, the average Joe sees more ads for properties over a million dollars and continues to think everything in Kirkland 98033 costs a million dollars.  NOT SO!  Just the majority of the properties NOT SOLD are in that price range.  That is why you see so many of them in the ads.

As to the under a million condo market with 73 in escrow vs. 36 for sale, you will soon see the resale market coming back into favor, once all of the new construction units are sold. 

Here we are at the end of the first quarter of 2006, and things are looking pretty good, especially before you get to $1,100,000.  As I stated earlier this year, the $1.2 to 1.4 million dollar price range presents the most difficulties.  Seems too many houses want to all be right there.  Even the higher price ranges have less difficulties selling than that one group that has a consistent oversupply.  But they are doing better than they were back in January when I last looked.

I am comparing property for sale with "sold" in the first quarter.  For this purpose, I count closed and in-escrow transactions as sold in the first quarter, as I am calculating the absorption rate of the current housing supply. 

No* means less than a 3 mo. supply on market.  * means 3-6 mos supply.  ** means a 6-9 mo supply *** is a 9 month to a year supply

At the end, I added a little 98033 vs. 98034 comparison for the locals, that I found pretty interesting.

Here's how to read this.  If there are 10 properties for sale and 30 sold that means there is a 1 month supply on market.  It should take one month to sell all ten at the rate of 30 per 3 months.  It is called the rate of absorption, as it takes one month to absorb current inventory based on the quarter's # of sales.

      PRICE             FOR SALE            SOLD              SUPPLY   

 (in thousands)        

     < $300                    27                    203              1.5  week

    300-400                   21                    115                2   week

    400-500                   29                    103              3.5  week

    500-600                   25                      60               5    week

    600-700                   19                      66              3.5  week

    700-800                   30                      36              10   week

    800-900                   18                      25                9   week

    900-1,000                  8                      17              5.5  week

 1,000-1,100                10                      12               10  week

 1,100-1,200                17                      11            * 4.63 mo.*

 1,200-1,300                16                        5        ***   9.5 mo.***

 1,300-1,400                16                        8           **   6   mo.**

 1,400-1,500                11                      14               10 wks

 1,500-1,600                  8                        7            * 3.4 mo. *

 1,600-1,700                  9                        7            * 3.9 mo. *

 1,700-1,800                  3                        1           ***  9 mo.***

 1,800-1,900                  2                        5                 5 week

 1,900-2,000                  5                        3              * 5 mo. *

 2,000-3,000                13                      11              * 3.5 mo *

 3,000-4,000                  6                        3             **6 mos **

 4,000-5,000                  2                        0                    ?

 5,000-6,000                  1                        2                  6 wk.

 6,000-7,000                  0                        0                     -

 7,000-8,000                  2                        0               good luck!

AND HERE'S THE 98033 VS. 98034 COMPARISON FOR THE LOCALS

         < $500,000 -  98033 has a 3 week supply

                                98034 has a 1.7 week supply

$500,000 to $750,000 -   98033 has a 5 week supply

                                        98034 has a 3.5 week supply.

$750,000 to $1,000,000 -   98033 has a 8.5 week supply

                                            98034 has an 11 week supply

Over 1 million -   98033 has a 5.4 MONTH supply

                           98034 has a 5.5 WEEK supply