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Seattle Condo Market Update January 2012

Ben Kakimoto — Thu, 09 Feb 2012 00:42:02 +0000

January’s market figures were a mixed bag with that big red line in the graph below looking rather ominous. Seattle’s median condo sales price plummeted 28.64% last month to $208,000 compared to last January. It also reflected a one-month dip of 11.1% from December. Granted, it’s just one month and could completely reverse in February. However, it is significant; it’s the lowest citywide median condo sale price since February 2003, a 9-year low.

What may be heartbreaking for sellers may offer a boon for buyers. Back in 2003, mortgage interest rates were hovering between 5.5% and 6% for a conventional 30-year loan. With current rates around 4%, buyers are shaving up to $200 off their monthly mortgage payment for a $200,000 loan compared to if they purchased in 2003. With prices down to 2003 levels combined low interest rates, condos are more affordable than they’ve been in years.

Pending sales improved 6.1% over December to 173 units, but did reflect a 1.1% slide from last January, or 2 fewer units under contract.

The number of closed sales declined 11.5% from December to 123 units, but increased 8.9% over January of last year.

Although inventory rose slightly from December, Seattle’s condominium inventory remains low. The 704 condo units available in January reflected 32.4% fewer units for sale compared to the same period last year. In the sub-$200,000 price point, inventory is becoming scarce and agents have reported encountering more multiple offer situations.

Lower prices and interest rates offer a compelling alternative to renting for many likely first-time homebuyers, but they’re not finding a whole lot out there. On the other hand, the luxury condo market has more than adequate inventory available and we’re seeing more pricing adjustments as high-end units sit on the market.

The inventory supply rate tightened slightly based on the rate of pending sales but increased when based on closed sales volume. Currently, Seattle continues to reflect a normal/neutral market condition. That’s probably not likely to change – seasonally, heading into spring we’ll see more listings along with increased sales that should keep the market in balance.

A few notes about the year-over-year figures below. Area 700, which includes Queen Anne and Magnolia, is skewed. The 2011 stats include 11 units at the 2200 Condominium complex, which should have been reflected in Area 701 (Downtown, Belltown, Denny Triangle). Excluding those units, the Area 700 median sales price would have been $294,605, resulting in year-over-year decrease of 42% instead of 77.2%.

Area 701 was the only area of the city to realize an increase in median sales price, up 10.5% over last January, mainly due to sales of higher valued properties.

While most areas of the city saw fewer closed sales, Capitol Hill and North Seattle realized increased closings compared to last year.

Source: NWMLS. Some figures were not compiled or published by the Northwest Multiple Listing Service.
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December 2011 Seattle Condo Market Update

Ben Kakimoto — Fri, 06 Jan 2012 00:39:31 +0000

Seattle’s condo market experienced more of the same in December…increased unit sales volume and lower selling prices. The median sold condo price in December 2011 slid 2.75% from November to $234,000, which also reflected a year-over-year dip of 6.77%, the slimmest in 7 months.

The number of pending transactions (properties going under contract) seasonally declined 11.4% from the prior month to 163 units; however, pendings sales reflected a 32.5% increase over last December. The number of closed condominium purchases improved 15.8% to 139 units compared to December of last year, which continued to reflect the robust sales activity we’ve experienced during the second half of 2011. Favorable condo prices and mortgage interest rates kept the market rolling along.

King County results didn’t fare as well as Seattle. The county’s median condo sales price was $185,000 in December reflecting a year-over-year median price drop of -17.78%. Seattle accounts for approximately 35% of the county’s condo sales volume.

Since peaking in June, the number of active listings for sale reduced significantly last month. Available Seattle condo units for sale were down 30.4% to 689 properties compared to last December. However, listings always drop at year-end and we’ll see it creep up shortly.

The low number of units available, combined with strong sales volume, helped Seattle’s condo inventory supply rate reduce to the lowest level in over 4 years. Based on pending sales volume, the supply rate dropped to 4.2 months while the closed sales volume method reduced to a 4.9 month supply.

Essentially, at the current rate of sales, it would take 4.2 months to sell the existing inventory (assuming there are no new listings). This is a common measurement to determine the present housing market evironment. A 4.2 month supply rate suggests Seattle’s condo market is exhibiting a neutral-to-slight seller’s market. King County also has a 4.2 month condo supply rate. As a comparison, single-family homes in Seattle have a tighter 2.7 month supply rate.

Low inventory with strong demand would indicate movement towards a seller’s market and rising prices. Unfortunately, for condo sellers, the latter part of the equation isn’t holding true…increased prices. The high number of distressed properties currently available along with the anticipation of more foreclosures in 2012-2013 is keeping pressure on condo prices. Fortunately, for Seattle condo buyers 2012 will continue to provide opportunities for homeownership.

Source: NWMLS. Some figures were not compiled or published by the Northwest Multiple Listing Service.
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© 2012 Seattle Condos And Lofts

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June 2011 Seattle Condo Market Report

Ben Kakimoto — Sat, 09 Jul 2011 22:16:11 +0000

Seattle’s soft condo prices contributed to strong condo sales activity in June.

The $246,000 citywide median condo sales price in June reflected a 13.68% year-over-year drop and a slight one-month decline of 1.5%. Prices slid in all Seattle MLS areas except for West Seattle, which improved 15.7%. The attractive, lower prices continued to stimulate sales of entry-level condominiums. In June, 50.8% of all condos sold in Seattle were priced below $250,000 compared to 37.9% last year. The higher number of lower price condos sales, along with depressed values, shifted the median sales price point downward compared to the same period last year.

Overall, June’s condo sales volume was healthy with a 31.1% year-over-year increase in the number of pending transactions (condos going under contract). Though, anything compared to the stalled sales following the expiration of the tax credit last year would look good. The number of pending transactions also reflected a one-month dip of 9.8%. Nevertheless, it was one of the better months for condo sales over the past 13-months.

The number of closed condo sales continued to trend upward with a one-month increase of 2.8%. Compared to a year ago, closings were down 14.2%. However, the closing deadline for the tax credit was last June, which resulted in a higher than normal closing volume. Thus, the 30 unit difference was remarkable given there were no incentives to propel sales this year…the market drove sales on its own.

The number of active condo listings continued to remain flat this year, and was down 27.9% compared to June of last year. For many condo owners, the hot rental market offers a compelling alternative to selling at depressed prices.

Seattle’s condo inventory supply rate was moderate in June, indicating a relatively normal market environment. While the lower supply tend to benefit sellers, the lower values definitely favor buyers in this market. Anecdotally, our first-time home buyers are starting to find the number of choices scarce, particularly in the lower price ranges, and lately, are experiencing competition from other buyers.

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May 2011 Seattle Condo Market Update

Ben Kakimoto — Thu, 09 Jun 2011 00:37:05 +0000

With the exception of the median Seattle condo sales price, the local market did well in May: Condo sales activity was stable, the number of closed properties was up and inventory remained low.

Condo prices continue to fluctuate; last month’s citywide median sales price of $249,975 reflected a decline of 12.29% compared to last May. Keep in mind, this is the median sales price of all condos sold and not market value. A significant number of lower priced condo sales in May weighted the median sales price mid-point downward.

Half of all condominium sales in Seattle (50.3%) in May were priced under $250,000 compared to 35.2% for the same period last year. However, the increased sales were due to declining values, which have made condos affordable for many buyers.

Condo sales volume has remained stable over the past three months. Statistically, pending transactions (units going under contract) were up 52% in May compared to last year. However, condo sales crashed last May following the tax credit deadline so the 52% figure is anomalous. Nevertheless, we’ve had three solid months of steady sales activity without any artificial inducements as noted below.

More impressive then pending transactions was the number of closed sales last month. The 176 closed condo sales in May reflected a 22.2% increase over April and just a 10.7% decrease (21 fewer sales) compared to last May. That’s noteworthy considering that closings last year were buoyed by the tax credit deadline. Sales activity is recovering.

The number of active Seattle condo listings essentially remained unchanged over the past 4-5 months. The 1,111 condo listings in May represented a significant 28% drop in inventory compared to last year. We just haven’t seen the rise in inventory this year as we normal do from late winter through summer. Part of that is likely due to absorption of the remaining new construction units, sellers waiting for values to improve and reforms/programs encouraging mitigation over foreclosure.

The improved sales activity combined with fewer units for sale has resulted in a drop to the inventory supply rate. With the pending-based rate at 4.7 months and the closed-based rate at 6.3 months, we are for time being, back to a balanced market environment.

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April 2011 Seattle Condo Market Report

Ben Kakimoto — Sun, 08 May 2011 20:14:57 +0000

Despite negative reports from the news media Seattle’s condo market did all right in April. The median sales price improved, inventory levels held steady and unit sales volume activity was brisk.

In April, Seattle’s median condo sales price rose 4.5% over the prior month and 1.82% year-over-year to $280,000, a slight reprieve from the lows of the past six months.

Much is being made in the media about the sizable 37% year-over-year decrease in the number of pending sales that has reporters surmising the market is slowing and buyers are hesitating. I disagree. The sales volume recorded in April 2010 was anomalous, spiked by the tax credit deadline as noted in the chart below.

Excluding the deadlines in 2009 and 2010, the sales volume in April was robust for the second consecutive month, especially without having the benefit of a tax credit to buoy purchases. In fact, it was the second best month for Seattle condo sales since the tax credit expired. In some respect, it’s more of a market normalization compared to the tax credit euphoria last year.

As expected, the number of closed sales declined 20.9% in April compared to the same period last year due the tax credit, yet remained on par with March. Although closings have lagged relative to the number of pendings, April’s closed sales volume was the third highest recorded over the past 10 months.

Seattle’s condo inventory has been holding steady. Normally, we would see a considerable increase in in the number of available condo units for sale from late winter/early spring into summer, but not this year. Inventory levels over past 5 months have been reflective of the first half of 2007, just as the glut of new construction and conversion units started to hit the market.

The low inventory level, combined with a healthy sales volume, is keeping the inventory supply rate down. At 4.8 months of inventory based on pending sales Seattle’s condo market exhibited normal conditions for the second month in a row. Based on closed sales, we have 7.7 months of inventory, which would indicate a normal-to-buyer market conditions.

With mortgage interest rates remaining low, inventory levels plateauing and a better economic outlook, we should continue to see stable unit sales activity through summer. Anecdotally, we are experiencing a more active market, predominately among first-time homebuyers and those looking for an in-city second home. Our buyers have encountered more instances of competing offers than we’ve seen in quite a while. So from our experience, in terms of activity level (not values), the market appears to be rebounding.

Condo values, on the other hand, probably won’t recover for some time with foreclosures and short sales keeping prices down. But, that’s not necessarily a bad thing, particularly if you’re a buyer.

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Seattle Condo Market Update – March 2011

Ben Kakimoto — Sun, 10 Apr 2011 21:15:17 +0000

At first look, the Seattle condo market results for March 2011 don’t look all that promising, especially when viewing the charts below. The market, though, performed quite well overall.

The most notable figure was the median Seattle condo sales price, which decreased 7.9% from a year ago to $268,000. That’s also a 14.3% drop from February. The median sales price is the mid-point price of the condos that sold and not necessarily indicative of value trends. In March, a higher number of lower priced condo sales weighted the mid-point downward. Nevertheless, values continued to decline.

Falling condo values, though, have been having a positive impact on the market place. We’re seeing a greater number of buyers across the spectrum from first-time buyers to investors to the luxury home buyer. Compared to March 2010, unit sales of condos priced under $250,000 were up 19.3% while sales of condos over $1 million increased a staggering 233%.

Last month there were 147 closed sales and 233 properties that went under contract. Compared to the same period last year, those figures were down 17% and 12.7%, respectively. It is important to note, the tax credit inflated sales last year so we fully expected year-over-year figures to be lower. If we just left it there it would seem Seattle condo sales did poorly last month. But, it didn’t…in fact, it was rather exceptional considering. Closed unit sales reflected a one-month increase of 33.6% while pending transactions rose 41.2%. In March 2011, we had the most monthly closed sales since June 2010 and the highest number of pending transactions in 11 months. Condo unit sales are rebounding without governmental incentives.

Seattle’s condo inventory has been holding relatively steady over the past four months. Normally, we would see a rise in inventory this time of year, but the 1,084 condos for sale in March reflected a decline of 1.4% from February and 24.8% from last March. Though, I expect inventory to rise going forward.

The higher unit sales volume and stable inventory have reduced the inventory supply rate considerably. Based on pending transactions the supply rate was 4.7 months and based on closed sales it was 7.4 months. Both figures indicate a shift towards normal market conditions. The supply rate is prone to fluctuations, however, so I wouldn’t say we’re back to a normalized market environment just yet.

In short, the median condo sales priced dropped last month, a combination of falling values and more sales of lower-priced condos that migrated the mid-point downwards. Buyers reacted positively to those falling prices, and along with low interest rates, returned to the market place seeing value in condos. Excluding the three artificial bumps (tax credits in 2008/2009/2010), March’s unit sales volume was among the better performing months over the past three years.

Without any new deliverable units (new construction) for at least 24-36 months, Seattle’s once endless glut of inventory will continue to reduce, which over time will allow values to stabilize and appreciate. However, we’re not there yet, and if you’re a buyer, that can be a good thing.

First Quarter Results
During the first quarter of 2011, 378 condos in Seattle sold with a total dollar volume of $148,751,000 and a median sales price of $285,000. In the first quarter of 2010, 419 condos sold with a total dollar volume of $152,200,000 and a median sales price of $295,000. Compared to last year, unit sales decreased 9.7% and median price declined 3.4%, however, the average sales price rose 8.3%.

Seattle condo market charts:

Distressed condo properties, short sales and bank-owned, accounted for 25.5% of the closed unit sales volume in March 2010. Currently, distressed condo properties represent 23% of the available condo inventory.

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February 2011 Seattle Condo Market Update

Ben Kakimoto — Sat, 05 Mar 2011 23:07:49 +0000

February took an unexpected turn as the median Seattle condo selling price rose 7.66% for the month to $312,750…a 14-month high.

That’s an increased median selling price, not necessarily an increase in value. Overall, I believe condo values remain depressed and will continue to trend downwards. What we’re seeing is a shifting of the median point resulting from a turnaround of the high-end market and fewer lower-valued condo sales.

Through parts of 2009 and the first half of 2010, the first-time home buyer’s tax credit weighted Seattle condo unit sales towards the lower pricing points. At the same time, many high-end buyers shied away from investing in the gluttonous luxury condominium market. Now we’re seeing a reversal. Last month, the number of unit sales priced under $300,000 dropped 15.4% while the number of unit sales priced over $500,000 jumped 92.9% and $1 million-plus sales tripled compared to the same period last year. Granted, that’s just one month’s figures, but the trend has been holding for some time now.

As expected, the number of pending transactions and closed sales lagged behind last year’s volume, down 21.4% and 5.2% respectively compared to February 2010. Without sounding like a broken record, the April 2010 deadline for the tax credit drove higher than normal sales volume last spring. Compared to January, the number of pending and closed transactions also dipped.

There were 1,100 active listings in the MLS last month, which is increasing every month. However, that was well under the 1,306 condo listings last February. The decrease may be attributable to potential sellers holding out for the market to rebound or that are so exasperated they are waiting for the property to foreclosure rather than try to sell short. Nonetheless, the inventory supply rate remains high at 10-months of supply based on closed sales. The pending-based method suggests a more reasonable 6.7-month rate. However, given that most pending short sale transactions fail to close, it’s a less reliable measurement.

In light of frequent news reports about the depressed housing market and economy, condo sales activity have not fluctuated that significantly over the past six months. The seasonal change is also beginning to bring buyers out. Are you one? If not, what factors are influencing your decision?

On a side note, I did want to mention the Mortgage Credit Certificate tax credit. Not many first-time home buyers are aware of it as there are some limitations and qualification requirements, but it is potentially worth a few thousand dollars annually.

Belltown experienced a one-month bounce with a 31.3% jump in median price and more sales and closings compared to last a year ago. Prices in Northeast and West Seattle areas also reflected higher median selling prices, while the condo sales and prices in the Capitol Hill area lagged.

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January 2011 Seattle Condo Market Update

Ben Kakimoto — Sat, 05 Feb 2011 21:41:52 +0000

Seattle’s January citywide $291,500 median condo price reflected a decrease of 7.17% compared to the same period last year, but improved 16.1% over December. However, last January’s median price of $314,000 was the peak over a 24-month period…for the most part median prices hovered between $275,000 and $300,000.

As expected, sales activity picked up with pendings increasing 42.2% to 175 transactions over the prior month (and a 5-month high). Though, that was still 6.9% fewer than last January. And, for the next few months we will not match 2010′s unit sales volume; the April 30th tax credit deadline generated a huge surge last year. Without the external boost this year, we’ll see steep declines in pendings throughout Spring, compared to 2010.

The 113 closed condo sales in January reflected a year-over-year decline of 9.6% and a 5.8% dip from December. Like pendings, the next 4-5 months will exhibit fewer closed sales compared to last year.

The number of condos listed for sale last month increased 5.1% above December to 1,041 units, which was expected, though it was far less than last Janary. Active condo listings will continue to rise from this point on and will peak during Summer.

The Seattle condo inventory supply rate dipped to 5.9 months based on pendings and rose to 9.2 months based on closed sales. Either method continues to suggest a buyers market environment.

Going forward, Seattle’s condo market faces challenges, especially through the first half of the year. The lack of artificial stimulus and an increasing foreclosure rate will place greater pressure on sellers to adjust to the ever changing market place. On the other hand, lower prices, perceived value and sustained mortgage interest rates may open the door for more future homeowners. I do think we’ll see plateauing of both median prices and unit sales activity, though at a lower threshold than last year.

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Seattle Condo 2010 Appreciation Rates

Ben Kakimoto — Mon, 24 Jan 2011 04:43:24 +0000

Contrary to conventional wisdom Seattle’s annualized citywide median condo value rose in 2010 to $285,000. That’s up a respectable 2.2% over 2009. The average condo price also increased 1.2% above 2009 to $364,035.

The number of units sold in 2010 was 1,783, just 10 fewer than in 2009. Given the nominal difference in units sold and the increase in citywide value, I don’t think I’m going out on a limb stating that the Seattle condo market reflected stability in 2010. With that said, results varied widely depending on location, condition, age and price points. A number of areas saw declining values and reduced sales.

Neighborhoods that realized the greatest increases were Alki, Fauntleroy, Leschi and Wallingford. Leschi was the only neighborhood that experienced increased median prices over the past three years. On the flip side, more neighborhoods saw median condo values drop rather than increase. The biggest declines were reflected in downtown Seattle, Maple Leaf, North Beacon Hill and Madison Park. Also turning in noticeable drops were Belltown, Magnolia, the University District and the Admiral/Junction area of West Seattle.

While hindsight and statistics suggest the Seattle condo market stabilized this past year, the outlook may be a bit more challenging going forward. Notably, unlike 2009 and 2010 there aren’t any tax credits to spur sales activity this year. The lingering effects of the 2007 market crash, the struggling economy and liens/lawsuits have affected numerous condominiums, making them essentially unavailable to most buyers as a result of stricter mortgage guidelines and weary lenders. For instance, many lenders have backed off financing mortgages on buildings with high HOA default rates, underfunded reserves or with too many rental units, an effect of loan defaults and foreclosures.

But, not all is gloom. In 2010 more condos at higher price points sold compared to 2009. For example, sales of units priced under $300,000 shrank 3.9% while sales of condos priced $500,000 and above increased 17.8% last year. The $1 million plus level was even more striking with sales up 29.5% compared to 2009. So, there are well-qualified buyers who are eager to purchase and/or see value in a Seattle condo. We’re also likely to see more purchases by foreign investors. Mortgage interest rates continue to linger at historic low levels making borrowing relatively inexpensive. However, rates are expected to rise, which may either deter or incent buyers to act as their buying power diminishes.

See notes below chart for more information on these figures.

Notes:

Alki’s 157.6% increase in median price was more of a return to normal in 2010 rather than a massive surge in value. In 2009, 50% of the condo sales in Alki were at Lighthouse Point where most units were priced under $200,000, drastically reducing the median value. In 2010, only 7% of the sales in Alki were at Lighthouse Point. Likewise, in Fauntleroy, Leschi and Wallingford, better quality, higher-priced condos sold in 2010 vs 2009. The opposite occurred in Maple Leaf, with more lower valued condo sales in 2010 than 2009.

For Downtown Seattle, I included the auction sales at 5th & Madison and Olive 8 to determine the 2010 median condo price. That, plus the 141% increase in unit sales downtown, mostly lower priced condos, contributed to shifting the median point downward. Therefore, it’s important to note that downtown condos did not lose 40.7% of their value, but rather a greater number of value-priced condo sales lowered the mid-point.

Last year, I had grouped the Downtown Seattle, Pioneer Square, the International District and Denny Triangle neighborhoods together. Because those areas are fairly distinct with vastly different styles of condos, for 2010 I’ve separated them out.

I placed sales at The 2200 and Enso into the new South Lake Union neighborhood category along with Marselle and Veer Lofts.

Adjusted 2009 median prices for Belltown, Capitol Hill and Queen Anne to contemplate sales from condo auctions.

In calculating the median price figures I manually scrubbed through the NWMLS database as many condo neighborhoods were misclassified and added auction sales, therefore my calculations may differ from the NWMLS. It should also be noted the NWMLS database is not inclusive. Properties sold at auction, through private sales (by owner) or unlisted new construction units were not included in the NWMLS database.

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December 2010 Seattle Condo Market Update

Ben Kakimoto — Fri, 07 Jan 2011 05:03:18 +0000

December is the slowest month of the year in the real estate cycle, so we’d expect figures to be depressed and last month’s Seattle condo market stats didn’t disappoint.

The citywide Seattle median condo price dipped 3.46% to $251,000 compared to December of last year. West Seattle was the only market area that showed an improvement, though only slightly with just a 0.5% increase in median value. Northwest Seattle (north of ship canal, west of I-5) showed the largest one-year decline, down 16.4%.

Pending transactions (properties under contract) dropped 17.5% while closings dipped 13.7%, compared to the same period last year. Yet all was not gloomy…the number of closings increased 22.4% between November and December.

The number of active listings fell 1.8% to 990 units, the fewest number of available condo units for sale since February 2007. Seasonal fluctuation, increase in rentals, sellers holding out for a turnaround and the rise in foreclosures likely account for the drop in listings.

The Seattle condo inventory supply rate remained unchanged based on the number of pending transactions, but reduced 4 months to 8.3 months of supply based on closed units. Both methods reach the same conclusion, however, that Seattle remains a buyer’s market overall. Though, conditions will vary by neighborhood and price level.

While Seattle’s condo market will continue to struggle for some time to come, 2011 portends to be a more active market than this past year. Mortgage interest rates remain at historically low levels, but are expected to rise, which will may persuade buyers off the fence. New construction inventory will constrict as existing developments continue to sell off their remaining units along with the possibility of more condo auctions.

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