The Seattle Condo Blog

The sales and production figures for December came in about where we’d expect – an active market with less inventory and fewer sales. Historically, median price increases in December over November, but not this past year as December’s citywide median condo price stood at $260,000. That’s a one-month decline of 4.4% and a year-over-year drop of 19.13%, which was the largest YOY decline recorded over the past four years. However, I still believe that’s due to a combination of the soft market AND sales that were spurred by the first time buyers tax credit. For instance, 62.1% of all sales last month (87 units) were priced below $300,000 compared to only 38.9% (37 units) in December 2008. As a result, the median price point was weighted towards the lower end of the price spectrum. The median is the mid-point where half of the sales are above and half are below.

While the one-month sales volume fell from November to December, the year-over-year figures showed marked improvement. Compared to December of last year, pending transactions were up 21.1% and closed sale rose 43.3%, which can be attributed to the tax credit.

The number of active condo listings dropped to 1,008 units, the fewest number of units available since March 2007. While that may mean fewer choices for buyers today, the number of listings will increase as we head towards spring. This figure only contemplates those units listed in the NWMLS database and does not include available properties in newly constructed buildings such as Enso, Olive 8 and Escala.

With fewer listings available, the inventory supply rate dipped slightly in December to 6.8 months of supply – the cusp between a buyers market and a normal market. Citywide, the area inventory supply rates fared well compared to last December.

Looking forward, we’ll continue to see a challenging condo market place this year. Though, we experienced an uptick in activity (new listings and buyers entering the market) at the end of December so that may bode well for the start of this new year.

As expected, closed sales increased last month buoyed by the rush to meet the original first-time home buyers tax credit deadline as reflected by a one-month increase of 4.8% and year-over-year jump of 58.2%. New pending transactions (those going under contract but not closed) also increased over last year by 37.8%, yet dropped significantly from October by 43.7%.

The citywide median condo price slipped 10.2% to $272,000 last month, which I mostly contribute to the original November 30th expiration of the first time home buyers tax credit. The considerable increase in the number of lower-priced sales shifted the median price point downward. In November 2009, 62.2% of all sales (120 units) were priced below $300,000 compared to just 48.3% in November 2008 (57 units).

The number of available listed units continued to decrease, down 7.9% to 1,230 properties last month. However, with the decrease in pending transactions (seasonal fluctuation, tax credit extension, economy), the inventory supply rate rose sharply from 4.9 to 8 months. Still, though, that’s quite a bit less than last November’s 12 month supply rate.

If recent history holds true, we’ll see an bump in December’s median condo price. For the past four years, the median price in December increased over November even with few sales.

Source disclaimer: Most, though not all, information and statistics were complied and published by the NWMLS.

The Seattle condo market rebounded in October with increases in sales, number of closings and median price, likely fueled by the rush to qualify for the first time home buyers tax credit that was set to expire at the end of this month.

The median condo price rose to $300,000 last month, reflecting a 4.37% increase over last October and a one-month rise of 15.7% from September. That also reversed an 8-month slide in the year-over-year median price figures. In theory, the actual median price was higher than $300,000 as sales resulting from non-traditional means are not attributed in the NWMLS statistics. While I don’t have up-to-date closing numbers from the Brix and Gallery auctions (they were supposed to close by the end of October), only a handful of Brix sales were accounted for in the NWMLS figures, out of approximately 80 sales. The median sales price for the Brix and Gallery auctions was $330,000.

The number of Pending sales (under contract but not yet closed) increased dramatically in October to 272 units, an increase of 73.3% over the prior year and 8.4% more than September, presumably due to the tax credit deadline.

Closed sales increased 12.2% in October to 184 units compared to the same period last year. This is rather significant as it was the first year-over-year increase in closed unit sales since November 2007.

The number of active listings dropped to 1,337 units last month, a 5.2% decrease from October 2008 and a 1.1% dip from September.

The inventory supply rate decreased to 4.9 months, the lowest since August 2007, which would be indicative of normal market conditions. I base the supply rate on pending transactions rather than closed sales, which is the most common method. A case can be made that given the prevalence of short sale failures that using closed sales is a better option. In that case, the supply rate would be 7.3 months of inventory – a buyer’s market. However, supply is dependent on available properties and once a property goes pending it’s generally removed from active inventory and is no longer available to other buyers.

What does all this mean? Have we reached bottom and are now on the upward swing? For now, I’m going to say that October results were a little anomalous given that much of the activity was spurred by the pending deadline (at the time) of the first time home buyers tax credit. The same will hold true for November as well. Now with the credit extended through April 2010 and expanded to include existing homeowners, there’s no longer an urgency to incent buyers to act. On the other hand, the tax credit may provide just enough inertia to keep the condo wheels spinning through the end-of-the-year cyclical downturn.

Source disclaimer: Most, though not all, information and statistics were complied and published by the NWMLS.

Seattle’s condo market kept churning through September even though the citywide median price fell to $259,250, a one month and year-over-year decline of 7.5% and 16.4%, respectively. The number of properties going under contract and closed increased over August, while available inventory and the condo supply rate dropped.

The $259,250 median condo price last month marked the lowest value point since February 2006 when the median price was $251,725. Historically, median prices tend to plateau or decline between August and September, then drop considerably in October. However, in addition to the down market and seasonal fluctuation, the first-time home buyers tax credit also contributed to the price slide. The median price is the middle point of homes sold, that is, half above and half below. In September 2007 and 2008, condos under $350,000 made up 61.9% and 64.2% of the total number of units sold. In September 2009, condos priced under $350,000 accounted for 80% of the total units sold, a significant increase in the number of lower-priced properties that shifted the median point downward. The pricing trend will continue for the next two months with the rush to buy before the tax credit expires at the end November and the seasonal Fall downturn.

The condo inventory supply rate decreased to 5.4 months in September due to a drop in active listings and a rise in the number of properties going under contract (Pendings), which would move Seattle back towards normal market conditions. However, pendings generally decline between August and September so last month’s bump may be attributed to the tax credit. Additionally, mortgage rates on 30-year fixed recently dipped below 5%, increasing affordability and buying power, which may have spurred sales as well.

The data used in this report comes directly from the Northwest Multiple Listing Service (NWMLS) database and are either compiled and published by the NWMLS or compiled by myself. The database, however, does not include all properties for sale or that have sold, and is missing a good chunk of sales last month. The 80 or so units sold (pending) at auction last month – Brix and Gallery – are not reflected in the NWMLS database, therefore, understating the number of pending transactions. Officially, there were 251 pendings last month, though it’s probably closer to 330. It will have a greater effect next month as it’ll not only under count the number of closed sales for October, but their exclusion will deflate the median price. The median price of the Brix and Gallery auctions was $330,000.

Some say the tax credit artificially boosts sales volume, others say it provides the needed inertia for the market to rebound. In any case, the tax credit is slated to expire on November 30th. Given the current escrow time frame (about 45 days), the long Thanksgiving weekend and the rush to get sales closed in time, properties should be under contract by the end of this week at the latest to ensure eligibility for the credit.

The National Association of Realtors has been lobbying Congress to extend and/or expand the credit beyond November 30th, but at this time, opinion is mixed on the outcome. Given more pressing issues like health care, Congress is unlikely to vote on the tax credit any time soon, which according to Lennox Scott, CEO of John L. Scott, means that the credit will cease on November 30th. Scott, who is involved with NAR’s legislative arm, stated it takes about 45 days from passing a bill until its implementation; therefore, October 15th is basically the last day to pass the extension bill in order continue the credit uninterrupted. It is hoped that the credit will be continued in 2010.

The inventory supply rate shows months of supply. For September 2009, the supply rate was 5.4 months.

Source disclaimer: Most, though not all, information and statistics were complied and published by the NWMLS.

The Seattle median condo price rose modestly to $280,274 last month, up 3.8% over July. Compared to last August, it reflected a 9.6% dip. Throughout most of 2009, the year-over-year median price has been under 2008 levels, however, the gap has been steadily narrowing. Fortunately, median prices have essentially plateaued this year (see graph below) and we haven’t seen the wide swings as we did last year.

Two areas realized increases in median price last month. The downtown/Belltown area median price increased 8% over July and 11.5% over August of last year, mostly due to to closings at newer developments. West Seattle exhibited a 10.4% one month increase and an 11.7% year-over-year increase. On the other hand, Queen Anne and NW Seattle showed the largest year-over-year decreases in median price, down 10.6% and 9.6%, respectively.

The condo inventory supply dipped slightly in August, down 1.1% from July and 6.4% compared to last August according the the NWMLS. In actuality, the decrease in supply was a bit more substantial with Equinox’s conversion to apartments last month, which effectively removed 200+ units from inventory (most were not listed).

Northeast Seattle and downtown/Belltown reflected increased inventory last month, up 7.4% and 34.4%, respectively. Most of downtown’s increase was attributed to newly listed units at several new developments, while NE Seattle were predominately re-sales. Although the stats show downtown’s inventory increased 7.4%, it actually changed very little as many of those newly listed units were always available. The NWMLS stats are based on properties entered into the NWMLS database and few of the hundreds of new construction units are reflected in the NWMLS database. The NWMLS is expected to change this practice.

The supply rate, now at 7 months, has been trending upwards indicating fewer sales relative to inventory. This is evidenced by the drop in the number of units going under contract last month by 6.1% from July (13 properties), though it did exceed the number of pendings in August 2008 by 1.5% (3 properties). At 7 months, Seattle remains in a marginal buyer’s market.

There is no doubt that condo sales this year were boosted by the first-time home buyers tax credit. In reviewing closed sales data for the past three months (June – August), condos under $350,000 accounted for 74.8% of all condo sales while those over $500,000 accounted for 10.6%. Compared to the same three-month period last year, only 64.4% of sales were under $350,000 and 14.9% were priced over $500,000. Comparing year-over-year, the number of sales under $350,000 increased 16.1% while those priced over $500,000 dropped 28.8%. Currently, the tax credit will expire on November 30th and unless it is extended or the economy improves, we may see a decline in sales.

Source: NWMLS, not all statistics were compiled or published by the NWMLS.

Seattle’s median condo price in July fell for the second consecutive month to $270,000, down 3.6% from June and a 10% dip from the same period last year. The number of active listings rose slightly to 1,411 properties, yet that’s still 8.3% fewer than the previous July.

The number of condo units going under contract in July declined 7.8% from the prior month, though it did reflect a modest 5% increase compared to a year ago. Though pending transactions are now trending downward, recent activity is still higher most of 2008.

The citywide condo inventory supply rate increased to 6.7 months pushing the market further towards a buyers market. Interestingly, looking at the supply rate by neighborhood (MLS area), the supply rate in July were, for the most part, on par or were lower than 2008 levels.

If we’re looking for signs of recovery, we’ve not quite seen it reflected in Seattle’s condo market yet, which has a way to go before bottoming out. The downward pricing trend remains good news for buyers. While in the short term new buyers may see values slide, they’re able to buy at 2005 / 2006 pricing levels. The $8,500 first-time home buyer tax credit may also sweeten the deal. Conversely, the market remains a challenge for sellers. Though, properly (realistically) priced, cleaned and staged units do have an advantage in this market.

Source: Northwest Multiple Listing Service

The median Seattle citywide condo price dipped last month to $280,000, which reflected a year-over-year and one-month drop of 12.5% and 7.9%, respectively.

The number of active listings remained unchanged with 1,377 units available. Compared to last June, there were 12.6% fewer units on the market which helped to stabilize the absorption rate at 6 months of supply.

As a result of the number of transactions going under contract last month, June saw a sharp increase in closed condo sales at 190 units, which incidentally was the highest number of closings going back to last September. On the other hand, the number of pending transactions fell 11.5% from May, which will translate to fewer closings next month.

With few exceptions, most Seattle neighborhoods reflected year-over-year declines in median price, pending transactions and closed sales compared to last June. Poor closing rates at newer condo projects have kept the downtown market struggling.

Source: Information and statistics compiled and reported by the NWMLS.

Seattle’s median condo price came in at $304,000 in May, a one month increase of 13.4% assisted by increased sales volume. Compared to last May, however, the citywide median price slipped 5.0%, though the margin has narrowed considerably.

There were 260 units that went under contract last month, up 17.6% over April but down 0.8% compared to May 2008. Much has been mentioned lately that the year-over-year stats are skewed due to a classification change that increased the number of listings under the “pending” status category, therefore, making year-over-year comparisons inaccurate. And, that’s true.

Last June, the NWMLS eliminated the “subject-to-inspection” classification and merged it into a new “pending inspection” category. Prior to July 2008, properties under contract were classed as “subject-to-inspection” first, then after the inspection was completed, changed to “pending”. Since then, properties going under contract are classed as “pending inspection”, thus, increasing the number of properties categorized as “pending” in the NWMLS statistics. That said, though, there’s technically no difference. Whether a property is classified today as “pending inspection” or last year as “subject-to-inspection” the fact remains that an offer was placed and a contract was mutually accepted on the property. In any case, in another month, the issue will resolve itself.

The 141 closed sales in May reflected a one-month increase of 35.6% and a year-over-year drop of 35.3%. The number of closed sales relative to the number of pending properties in the prior month have been widening. Typically, properties close about 30 days after going under contract, therefore, we expect that the number of closings in the current month to closely match the number of pendings in the prior month. In May, the number of closings was approximately 64% of the number of pendings in April. Two factors may be contributing to this gap. First, lenders have been swamped with refi’s, which have resulted in longer approval time frames for purchase loans. We’ve seen lenders take up to 40-45 days to approve a run-of-the-mill purchase loan. Second, the number of short sale transactions have risen considerably and they can take anywhere from 2 to 4 months to close. Plus, quite a few are never approved and fail to close.

There were 1,378 active listings in May, up just 1.1% over April and down 17.1% compared to May of last year. With the number of listings plateauing combined with increasing sales volume, the citywide condo inventory supply rate, also known as absorption rate, improved in May to 5.3 months, the lowest level since November 2007. What this means is that if there are no new listings it will take 5.3 months to exhaust the current supply. We use this rate to classify market conditions; at 5.3 months of supply, Seattle is reflecting a normal-to-buyer’s market conditions. As mentioned last month, market conditions vary by price points and locale. Under $300,000 we’re moving towards a seller’s market while for those priced over $500,000, predominately in the downtown area, we’re entrenched in a buyer’s market.

The recent bump in mortgage rates may affect sales since an increase in rate will decrease buying power. That can persuade some buyers from buying. However, while we may not see interest rates fall below 4%, it’s still quite low comparatively.

For first-time buyers, if you’re considering taking advantage of the $8,000 tax credit, the November 30th deadline is approaching. One item to keep in mind, though, is that with the Thanksgiving holiday weekend and King County’s furlough day on the November 25th, home buyers will essentially need to close on their purchase by Tuesday, November 24th. That leaves about 4.5 months to get under contract.

Source: NWMLS

The median Seattle condo price rose to $335,000 last month, a record high and a 9.84% increase over January of last year. Unfortunately, that was due to high-end unit closings in downtown (MLS area 701) rather than an overall market improvement. Besides downtown, NW Seattle (MLS area 705) also realized an increase in median price, up 4.2%. Combined, those two areas comprised 44.4% of all condos sold (closed) last month.

Capitol Hill fared reasonable well. Though the median price dipped slightly compared to a year ago, down 1.7%, more units moved resulting in increases in both pending and closed transactions. The market in other in-city neighborhoods continued to struggle with under performing sales volume and declining values.

The number of active condo listings last month increased slightly over December, up 38 listings or 3.3%. Though, compared to January of last year, active listings were down 9.4%. The economy and further softening of Seattle’s real estate market are likely keeping sellers on the sidelines, either holding out as long as they can or renting their units instead.

The citywide condo inventory supply rate (absorption rate) decreased to 7.8 months in last month based on pending transactions. Although Seattle remains a buyers market, the rate has been trending back towards balanced market conditions. North of the ship canal, the condo supply is commensurate with last year’s rate; Capitol Hill’s rate is lower than it was a year ago.

While pending transactions (condo units going under contract) remained below last year’s level (-20.2%), there was a 22% increase in the number of pending transactions last month compared to December. Historically, January sales volume outpaces December, so we’d expect these results. Yet, it is a positive signal that even with the current economy crisis people are buying real estate… the number of pending condo transactions increased for the second consecutive month.

By all accounts 2009 looks rather bleak. The seemingly endless reports of layoffs, mortgage defaults and tightening mortgage guidelines will impact the region’s housing market. Foreclosures and outbound migration could result in higher inventory levels. Yet, there are opportunities that could spur market activity.

• One of three things will probably come out of the stimulus bill – a repeal of the payback component of the existing $7,500 first-time buyers tax credit (House version), a $15,000 tax credit which isn’t limited to first-time buyers (Senate version), or something in between.
• Fannie Mae just reversed its 4-property limit investor restriction and are now allowing loans for up to 10 financed properties.
• Mortgage rates remain historically low even when factoring in the .75% condo fee and more properties are receiving HUD/FHA approval.
• Continued value depreciation in most neighborhoods makes condo ownership more attractive.

Bucking conventional wisdom December results turned out better than had been prognosticated.  The citywide condo median price rose 6.1% over November to $321,500, the second best (highest) monthly median price amount recorded for 2008.  Additionally, December reversed a 5-month decline in the year-over-year median price figure ever so slightly, increasing 0.47% over December 2007.

Interestingly, sales in West Seattle and Queen Anne contributed to the bump in value last month.  With new construction projects closing in downtown I would have expected better results but downtown’s median price actually fell below both November 2008 and last December’s levels.

The number of active MLS listings continued to decline, down to 1,128 properties in December, which incidentally was the fewest per month experienced thoughout last year. Unfortunately, the number of closed sales also declined.  Citywide, there were only 97 condo sales that closed in December.  On the other hand, the number of pending transactions improved as more properties went under contract in December than in November even with the holidays and a faltering economy.  Compared to December 2007 the number of pending transactions was down 29.3%.  That’s an improvement as November and October pending transactions were below as much as 60% compared to 2007.

The inventory supply rate, or absorption rate, declined last month to 9.3 months based on pending transactions.  While that still keeps Seattle in a strong buyers market some areas such as NE Seattle reflect normal market conditions given its 6.4 month supply rate.

Though our supply/absorption rate remains high, Seattle does not actually have a glut of properties…the available inventory supply has been declining since May 2008 and is now at its lowest level since April 2007.  Additionally, aside from Escala, there will be no new major condo developments delivered in the greater downtown area until 2012 at the earliest.

Going forward, there are certainly a number of challenges facing Seattle’s housing market.  Yet, from what we’ve experienced so far, the new year has generated a surprising level of activity from both buyers and sellers.  Better pricing and continued low interest rates are providing buyers with more value.  Plus, the $7,500 first-time home buyer’s credit is still available.