The Seattle Condo Blog

The condo market results for January confirmed what many of us experienced last month – more buyers and sellers entered the market and sales activity picked-up. Pending transactions (properties going under contract) rose significantly in January, up 26.2% over December and 25.3% over last January. Closed sales increased 6.8% above the same period last year, but slowed compared to December, declining 10.1%, which is to be expected as fewer units went under contract during the holidays.

The citywide median condo price of $314,000 reflected a one-month improvement of 20.8% but declined 6.3% compared to last January. However, it was also the highest monthly median price since last January. The downtown/Belltown area noted the largest year-over-year decrease in median price, down 35.4%, which was mostly attributed to fewer high-end sales compared to January of last year (11 of 28 sales in January 2008 were over $1 million vs. only 4 of 35 last month, sliding the mid-point downward).

As expected, the number listings increased in January, up 19.2% above December and 2.2% more than last January. On the other hand, the improved sales volume reduced the inventory supply rate to 6.4 months. Overall, that’s still a buyer’s market, however, in the sub-$300,000 price range the supply rate has dipped below 3 months, closer to a seller’s market with constricted inventory.

With interest rates dropping below 5% again and the home buyer tax credit extension, the current momentum should continue through the next few months spurred by first-time condo buyers.

Source: NWMLS. Though some figures were compiled independently and were not published by the NWMLS.

In 2009, the annualized citywide Seattle median condo price fell 10% from 2008 to $279,000. That’s a hefty decrease considering the citywide median value only dropped 0.9% between 2007 and 2008. Besides the overall economic conditions, other related factors contributing to declining values include the first-time home buyers tax credit, condo auctions and the proliferation of short sales and bank owned property sales.

Does this mean the average Seattle condo was worth 10% less in 2009 than in 2008? The simply answer is “no”. First, values vary widely by location. Each neighborhood has its own distinct market condition, and several neighborhoods realized increased values last year. Second, the median price can be affected by non-market factors.

Median is the mid-point of a set of numbers, in this case, the point where half of the properties sold were priced above and half below. During the second half of 2009 upwards of 65% of condo sales were priced under $300,000 as a result of the first time home buyers tax credit incentive. That’s a flip from 2008 sales figures. The increased number of entry-level sales last year also contributed in shifting the mid-point downward.

Most areas of the city experienced declining values, though six neighborhoods saw condo values increase – Admiral/Junction, Belltown, Greenwood/Phinney, Leschi, Magnolia and U-District. Of those, the Admiral/Junction and Leschi areas realized consecutive annual value appreciation.

There are some numbers that stand out in the table below, particularly Alki and Fauntleroy. In respects to Alki, I would attribute sales at Lighthouse Point to be a factor in the drop in median price. Approximately half of the 59 sales in 2009 were at Lighthouse Point where prices were predominately below $200,000, shifting the median point downwards. A primary factor I noticed with Fauntleroy was the different type/quality of condos sold in 2008 vs. 2009, besides having a small sample size.

Other Notes:
I adjusted the median price for Downtown by excluding sales at Marselle Condominium. The Marselle listings/sales were categorized in downtown when, technically, it’s located in lower Queen Anne (a different MLS area, also).

In light of the above, it should be noted the NWMLS database is not 100% accurate. It does not include properties sold at auction, private sales (by owner) or many pre-sale units. Additionally, listing agents may misclassify their listings, which can corrupt the data considerably. Without the Marselle correction, Downtown’s median price would have been $459,950 instead of $537,500.

Astute readers will note that the 2008 figures above may differ slightly from those I posted last year. This year I calculated median price utilizing the NWMLS method that resulted in adjustments for some of the neighborhood figures.

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.

Second Quarter 2009:

The second quarter 2009 market stats exhibited the sluggishness of Seattle’s condo marketplace. The median citywide condo price declined 12.5% from the same period last year to $280,000 while the number of units sold decreased 27.7%. Compared to first quarter 2009, the median price slipped 2.6% though the number of units sold increased 47.1%, partly due to seasonal changes as well as first-time buyer incentives. The best performing market area was Downtown / Belltown which realized the smallest median price decline of 3.3%. West Seattle saw the largest decline of 24%.

First Half 2009:

The first half 2009 results were not terrible different from the second quarter results with year-over-year citywide median price declining 11.5% to $283,000. Though, the number of units sold decreased 36% compared to the first half of 2008. Similar to second quarter 2009, Downtown / Belltown had the best median price performance, declining just 1.8%, while West Seattle had the largest decline of 19.7% compared to the same period last year.

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 Seattle condo market continues to exhibit its buoyancy. The NWMLS market figures for April showed signs the market is beginning to improve. While values remain suppressed (plus for buyers) sales activity increased, which in turn, reduced the inventory supply rate (plus for sellers).

Last month, the citywide median condo price slipped to $268,000, a 2.6% decline from March and a 14.24% drop compared to April 2008. In fact, all areas of the city reflected declining median prices last month, so we still have a way to go before prices bottom. However, the graph below suggests that condo prices are plateauing.

April reflected a considerable improvement in condo sales volume. Pending sales transactions (units going under contract) jumped 54.5% last month over March and remained on par with last April, + 0.9%, a good sign that the market is picking up. Though, sales were weighted towards lower price points (perhaps due to the tax credit), while sales for the higher price points, especially over $750,000, continued to lag.

In fact, demand is outpacing supply for the lower price points. Seventy-two percent of the units sold last month were priced below $350,000, though only 63.5% of the inventory today are priced below $350,000. Conversely, higher end units are in abundant supply. Eight percent of sales last month were priced above $500,000, though nearly 25% of the inventory today are priced over $500,000. The elimination of 205 units from Rollin Street should help to ease the excess supply at the upper range.

The available condo inventory remained unchanged from March at 1,362 units, though that’s 13.4% fewer listings compared to last April. As a result of steady inventory levels and rising sales volume the citywide inventory supply rate (absorption rate) fell to 6.2 months, which would indicate a normal condo market. Though, I’m not ready to declare that we’re back to a normal market since the monthly inventory supply rate has shown to be quite volatile. I also anticipate the supply rate will rise in the coming months – with an improving market sellers who’ve been on the fence will bring their units to market in addition to more short sales properties becoming available.

I haven’t broken the supply rate by price points, though I suspect it’ll follow that for lower price points the rate would reflect a normal-to-buyers market while for higher price points, it’s definitely a buyers market.

As we progress from Spring to Summer the most robust segment of the market will continue to be at the lower price range fueled by first-time condo buyers. Falling prices, low mortgage rates and the $8,000 tax credit are providing the needed incentive to maintain this segment. Higher valued properties and sellers who purchased in the past 2-3 year (therefore, may not realize positive net proceeds) may continue to face challenges.

Data source: NWMLS, information deemed accurate but not guaranteed.