The Current Seattle Real Estate Market
Everyone is talking about what is or isn't happening in the Seattle Real Estate Market these days. Is the market slowing down, is the market still "hot" or is it somewhere in-between? The real estate market nationally has slowed down and the figures for August showed the first monthly decrease in several years. This is nationally however, and doesn't actually apply to the Seattle market. In a recent real estate industry article Seattle is listed as one of the 10 Best Cities for Real Estate in 2006. The article sites a good economy and low inventories that will keep the Seattle Market strong throughout the year. The nine other cities listed in this article are: Atlanta, Austin, Boise, Dallas, Houston, Las Vegas, Phoenix, San Antonio and Milwaukee.
In a recent Seattle Times article a Princeton economist writing for the New York Times, said: "The long-feared housing bust has arrived." "Nationally speaking, anyway." But again if you look at the housing history of Seattle over the past 20 years we have seen homes prices go up then leveling off, then going up again and then leveling off through recessions, interest-rate hikes, wars, and employment downturns. Seattle has been fairly immune to a downturn in home prices. This article goes on to talk about a "market-risk index" compiled by PMI Mortgage Insurance that calculates that San Diego faces nearly a 60% chance that homes prices will fall in the next two years, the highest of any city in the country. "Boston, Sacramento, Los Angeles and San Jose all have a 50% or greater chance of price dips" PMI says. Then there is Seattle with about a 11% chance of home prices falling.
As we have said in our other blogs, Seattle's job growth is among the strongest in the country and our unemployment rate is below our long-term average. But our housing prices are high here in Seattle but are still more affordable than prices in other west coast cities. The median price of a home in San Diego is $613,000 according the National Association of Realtors. That is more than $200,000 above King County's median price. However when prices get seriously out of range, prices will stall or fall until wages catch up. We are approaching or have reached that level in the Seattle area now according a recent story on a local TV news broadcast. They said that "home prices have now outpaced wages in the greater Seattle area." So are Seattle homes prices on the verge of falling now?
Here's our answer...some will fall, some will level off, and some will keep going up. We are in a very interesting time for Seattle real estate we believe. We are just coming out of a period now that for the past 24 months where we have had very low inventory of homes in Seattle. Inventories started increasing in July and August of this year and now at the end of September we are seeing more homes on the market in all price ranges than we have seen in a long time. Price reductions have also increased substantially and so have the average days on market. But there are still homes selling with "Multiple Offers" and some bidding wars still happening on some homes. Here is what we are seeing at this time: good homes in good locations that are priced correctly are selling quickly. Good homes in lesser locations are not selling quickly and may require a price reduction. Then just OK homes in just OK locations aren't selling quickly at all and may require several price reductions to finally sell.
When we look at the price of a home or what we think it will sell for we usually come up with a price range. For example; this house should sell for between $500,000 and $525,000 in our opinion. If it a normal average house in good condition in a good location, six months ago we would have priced it at $524,950. Today, six months later we would most likely price the house at $500,000. So it's not so much a price reduction as it is "we just can't push the price today." Now, lets say the house is a very special house in a great location and we think it will sell between $800,000 and $835,000 we would most likely price it at $835,000 and it might well above asking price with several offers.
For the most part we think we have reached the top of the market except for very special properties or great locations with huge view potential or waterfront property. We should still see an increase in the under $450,000 price range as that is about the bottom price now for a home in Seattle. We should see marketing times go up and inventories continue to build. But we agree with most people that we shouldn't see any significant downturn in home prices either.
In a recent Seattle Times article a Princeton economist writing for the New York Times, said: "The long-feared housing bust has arrived." "Nationally speaking, anyway." But again if you look at the housing history of Seattle over the past 20 years we have seen homes prices go up then leveling off, then going up again and then leveling off through recessions, interest-rate hikes, wars, and employment downturns. Seattle has been fairly immune to a downturn in home prices. This article goes on to talk about a "market-risk index" compiled by PMI Mortgage Insurance that calculates that San Diego faces nearly a 60% chance that homes prices will fall in the next two years, the highest of any city in the country. "Boston, Sacramento, Los Angeles and San Jose all have a 50% or greater chance of price dips" PMI says. Then there is Seattle with about a 11% chance of home prices falling.
As we have said in our other blogs, Seattle's job growth is among the strongest in the country and our unemployment rate is below our long-term average. But our housing prices are high here in Seattle but are still more affordable than prices in other west coast cities. The median price of a home in San Diego is $613,000 according the National Association of Realtors. That is more than $200,000 above King County's median price. However when prices get seriously out of range, prices will stall or fall until wages catch up. We are approaching or have reached that level in the Seattle area now according a recent story on a local TV news broadcast. They said that "home prices have now outpaced wages in the greater Seattle area." So are Seattle homes prices on the verge of falling now?
Here's our answer...some will fall, some will level off, and some will keep going up. We are in a very interesting time for Seattle real estate we believe. We are just coming out of a period now that for the past 24 months where we have had very low inventory of homes in Seattle. Inventories started increasing in July and August of this year and now at the end of September we are seeing more homes on the market in all price ranges than we have seen in a long time. Price reductions have also increased substantially and so have the average days on market. But there are still homes selling with "Multiple Offers" and some bidding wars still happening on some homes. Here is what we are seeing at this time: good homes in good locations that are priced correctly are selling quickly. Good homes in lesser locations are not selling quickly and may require a price reduction. Then just OK homes in just OK locations aren't selling quickly at all and may require several price reductions to finally sell.
When we look at the price of a home or what we think it will sell for we usually come up with a price range. For example; this house should sell for between $500,000 and $525,000 in our opinion. If it a normal average house in good condition in a good location, six months ago we would have priced it at $524,950. Today, six months later we would most likely price the house at $500,000. So it's not so much a price reduction as it is "we just can't push the price today." Now, lets say the house is a very special house in a great location and we think it will sell between $800,000 and $835,000 we would most likely price it at $835,000 and it might well above asking price with several offers.
For the most part we think we have reached the top of the market except for very special properties or great locations with huge view potential or waterfront property. We should still see an increase in the under $450,000 price range as that is about the bottom price now for a home in Seattle. We should see marketing times go up and inventories continue to build. But we agree with most people that we shouldn't see any significant downturn in home prices either.
posted by David & Karen Bell at 11:12 AM
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