One of the biggest misconceptions about the Seattle area housing market is that it gets much busier during the summer. In reality, from a sales standpoint things typically heat up the most in the spring (usually starting earlier than even spring sellers expect), slow down starting in June, perk up again during the fall, and then drop off more dramatically as we approach Thanksgiving and Christmas.
The last few years have been anything but typical, but the graph below (2006 to 2010, with my notations in red) still shows what the typical pending sales and sold trends look like.
The year 2006 was pretty typical around Seattle, even though much of the rest of the country was beginning to take a hit in the housing market. The red line above shows pending sales peaking in May and dropping off throughout the summer, with a slight perk in August and October.
August of 2007 was the start of the big slide for local sales, and happened to coincide with the summer market. The year of 2008 was hardly typical but still shows pending sales dropping in July and August. During the late summer of 2009 sales were boosted by the home buyer tax credit that had a November 30 deadline, and in 2010 you can see that the extended tax credit had a positive effect on what would already have been a typical spring surge.
Bottom line? Since the home buyer tax credit spurred demand in the spring and ended just when we typically would be experiencing a summer slowdown in sales, expect housing numbers over the next few months to show a more dramatic decline than usual. What happens in the fall, when we usually experience an upsurge in home buyer activity, will be interesting to see and may say more about the true state of the housing market.
Note to summer sellers: There is the danger of pricing based on spring numbers (understandably) as you approach a summer market. Keep in mind what kind of housing demand shift you’re likely to experience.
Note to future spring sellers: I usually recommend starting about four weeks earlier than you probably plan to, since many home buyers who decide to make a home purchase get ready very early in the year. (A colleague of mine once sent out a great postcard to her clients with the tagline ‘Those Tulips Are Costing You Thousands!”, meaning that sellers who wait for spring flowers to make their home pretty are likely to miss pent up demand from potential home buyers who got pre-approved shortly after the New Year.)
The Seattle area real estate housing supply heat maps are out for February 2010 and show a significant shift from what was primarily a Buyer’s Market in 2009 (green, defined as over 6 months of housing supply) to a Balanced Market in 2010 (yellow, defined as 3 to 6 months of housing supply.) Red areas indicated a Seller’s Market, defined as 0 to 3 months of housing supply.
Feb. 2010 Months of Housing Supply (right) compared to 2009 (left). Red = Seller's Market, Yellow = Balanced Market, Green = Buyer's Market.
Click the image to see a larger version of the heat maps. “Months of Supply” means the number of months that it would take to deplete the current housing inventory if homes continued to go off market at the current rate and no new listings were added.
As we draw near the April 30, 2010 deadline for the $8,000 First-Time Home Buyer Credit and the $6,500 Move-Up Home Buyer Credit, expect Seattle area home listings that are not short sales to increase in value compared to short sales.
Based on what I’m seeing (and hearing from my own clients), many people who currently have offers on short sale listings and who are still waiting to get their offers approved by the underlying lienholders may abandon their short sale offers and look for homes that are not short sales in order to get a deal signed around and closed by the credit deadlines. (In order to qualify for either credit, transactions must be mutually accepted by April 30, and closed by June 30, 2010.)
Whenever you have an increase in demand that affects one category of the housing market more than another, those home values increase in comparison. I expect non-short sale listings to reach a premium in April due to the many prospective buyers who qualify for one of the credits and the typically extremely lengthy period of time it still takes most lienholders to approve offers on short sales.
That being said, short sales are still providing competition in the housing market and non-short sale listings need to be priced competitively – just expect them to get a boost shortly.
Here are the October 2009 housing inventory supply numbers going back five years for selected Seattle areas.* Months of Inventory (MOI) refers to the number of months it would take the current housing supply to be completely sold if no new listings were added.
The geographical area is marked at the top left of each chart. You can also click here to view stats for all Seattle and Eastside areas (opens as a pdf.)
*All reports published October 2009 based on data available at the end of September 2009. This representation is based in whole or in part on data supplied by the NWMLS. Neither the Board nor the MLS guarantees or is in any way responsible for its accuracy. Data supplied by the Board or the MLS may not reflect all real estate activity in the market. Report reflects all activity by brokers participating in the MLS.
Here are the October 2009 housing inventory supply numbers going back five years for selected Eastside areas.* Months of Inventory (MOI) refers to the number of months it would take the current housing supply to be completely sold if no new listings were added. (Lower numbers = more seller-friendly market.)
The geographical area is marked at the top left of each chart. You can also click here to view stats for all Seattle and Eastside areas (opens as a pdf.)
*All reports published October 2009 based on data available at the end of September 2009. This representation is based in whole or in part on data supplied by the NWMLS. Neither the Board nor the MLS guarantees or is in any way responsible for its accuracy. Data supplied by the Board or the MLS may not reflect all real estate activity in the market. Report reflects all activity by brokers participating in the MLS.
The Seattle and Puget Sound housing inventory numbers for July 2009 show that the real estate market is continuing to become more balanced. In the heat maps below red indicates a seller’s market, green indicates a buyer’s market, and yellow indicates a balanced market.
(Click on the map to see a larger image.)
A seller’s market is generally defined as 0 to 3 months worth of remaining inventory, meaning the time it would take to sell everything on the market if no new homes were listed, while a buyer’s market is generally seen as 6 months or more.
(Because of the traditionally high real estate activity level and shorter market times in the Puget Sound area, some people feel that a buyer’s market for Seattle area real estate starts at under 6 months of remaining inventory.)
There were some trade-offs, notably the Redmond and Sammamish plateau markets moving from a buyer’s to a balanced market, while the south Bellevue and Issaquah regions made the opposite shift.
Residential and condominium housing market numbers for June 2009 show a 22% and 9% decrease in the number of listings, respectively, from June 2008. Median closed sales prices dropped by 15% for houses and 9% for condos over the same time period.
Note: Remember that homes closing in June probably went off market in April or May, and therefore reflect conditions during those months.
Green = Buyer's market, Yellow = Balanced, Red = Seller's market
These residential inventory heat maps for King and Snohomish counties from 2008 to June 2009 show the housing market moving from a buyer’s market to a more balanced market, with some areas of Seattle transitioning into a seller’s market.
Here’s the full-size 2-page King and Snohomish County Residential Inventory Map Report for 2008 to 2009 (pdf).
At this morning’s office meeting it was more of the same – Seattle area homes are flying off the market in the first time buyer range, especially in the low 300Ks. For the third successive week we had the busiest week of the year as far as deals turned in to the office.
The high end home market is a different story, especially over $1 million – many of those homes are sitting.
I have a number of clients who are thinking of selling in the mid-first time buyer range and buying into a higher end market. Even though prices have dropped around 19% overall since summer of 2007, selling in a strong market and buying into a weaker market at least sways the advantage in their favor. (As opposed to having to sell in a weak market and buy into a strong market.)
On a personal note, I just hung up with an agent after hearing, for the second time in 24 hours, that a home my clients were interested in had just received two offers. One home was in the mid $500Ks, not a short sale, and the other was a short sale in the mid $300Ks. Another agent in my office had three listings that all sold last week.
Considering how few people are in town this week (virtually no morning traffic on the freeways) this is especially surprising.
The bottom line? Finding the right house (aka, a good deal) all boils down to market value. What are you getting for your money? The cheapest home is not always the best deal. The more expensive home is not always the more valuable one.
Just yesterday I talked with some home buyer clients about how important it is to find a “Wow house:” one that when people walk up to it, or open the front door, their first reaction is a pleasantly surprised, “Oh! That’s nice.”
It’s an intangible feature, but one that translates into ‘ka-ching’ upon resale, and you can find it in homes of all price ranges. But it helps to know what you’re looking for.
That’s why it’s so irksome to hear people question the value of a buyer’s agent. Of course any dummy can find a home on the Internet, or let buyers into a listing.
Explaining to people what’s truly valuable or not valuable about the house they’re seeing (based on walking out of hundreds and hundreds of homes with buyers who are explaining exactly why they will or why they won’t buy the home), and helping them invest their hundreds of thousands of dollars into something that a) they will love to live in and that b) will appeal strongly to other buyers when it’s their turn to sell, is where the true value of a buyer’s agent lies.
(Please don’t get me started on agents who don’t even bother to show the home to their clients in the first place. 
)
Home prices in Seattle
The New York Times has a neat interactive graphic today showing home prices in selected U.S. cities since 2000 (based on the Case-Shiller numbers.)
The two graph lines compare prices in the selected city to the 20-city average. It’s interesting to click through and see how the graph lines change depending on how each city fared during the home price escalations and subsequent decreases.
For example, compare the graph showing Seattle home prices to the graph below, showing home prices in Las Vegas.
Home prices in Las Vegas
