The Seattle Condo Blog | Seattle Condos and Lofts

If there’s anything to be said about the Seattle condo market this year, is that it’s been rather consistent. The median price has been consistently below 2010 levels, inventory remains around the 1,100 mark and sales continue to improve over last year.

The citywide condo median sales price dropped by its largest margin this year, down 17.17% to $246,000 compared to the same period in 2010. That also reflected a one-month slide of 3.5%. Capitol Hill saw the greatest decline (-25%), while West Seattle was the only area where the median sales price increased (+2.5).

Even though there’s been considerable fluctuation from 2010 levels, median Seattle condo prices have actually been fairly stable this year. Over the past four months, the median sales price has settled around the $250,000 mark.

Sales have been steady this year, although at a slower velocity than we saw in the spring. The number of pending transactions under contract last month increased 11.2% over last year, the 4th consecutive month of year-over-year improvement. The increased sales in August were primarily in Queen Anne / Magnolia and NE Seattle. If the trend holds, the market should outpace 2010 sales for the remainder of the year.

The number of closed sales in August rose 21.1% over last August and rebounded 26.5% over the prior month. Year-to-date, the number of closed condo sales is off by 116 units compared to the same period in 2010. That’s not bad considering 2011 sales have been market driven rather than incentivized by tax credits.

The number of active condo listings has been consistent thoughout the year, approximately within 50 units either side of 1,100 and well below 2010 levels. There were 32.9% fewer condominiums listed for sale in August compared to last year. We’re heading back down to pre-boom levels and are not likely to see the excess inventory that we experienced between 2007 and 2010 anytime soon given the market and new construction environment.

The reduced number of listings, combined with a steady rate of sales, has kept the Seattle condo inventory supply rate, or absorption rate, within balanced market parameters. Citywide, the absorption rate has dipped to 5 and 6.1 months of supply based on pending and closed sales, respectively.

The areas with the lowest condo supply rates are SE Seattle with 3.6 months of supply and downtown / Belltown with 4.6 months.

Currently, distressed condos comprise 24.1% of the inventory and 26% of the sales last month. What’s interesting, however, is the difference in sales between bank-owned (REO) properties and short sales. Short sales make up 16% of the inventory but only 0.9% of closed sales, where REO make up 8.1% of the inventory yet account for 16.8% of sales.

That’s not completely surprising, though, considering most short sales have a low success rate while buying an REO property isn’t very different from regular sales. Eventually, the market will absorb those units as short sales foreclose and end up as REOs. That’ll continue to put downward pressure on prices and will likely keep the market in a balanced/buyer’s market.

________________________
© Seattle Condos and Lofts

The Absorption Rate (inventory supply) is a metric indicating the number of months that the current inventory will take to sell based on demand (sales) if no new listings come on the market. This is the barometer used to determine market condition – buyers market, sellers market, or a balanced market.

It’s calculated by dividing inventory by the monthly sales volume. For the figures below I used the average monthly sales (closings) for the year and am expressing the absorption rate in months of supply.

Absorption Rate by Price Tier

With the exception of high-end properties, the Seattle condo absorption rates have been fairly consistent across the price spectrum, within a 6-8 month supply based on closed sales.

The citywide rate was 7.5…no surprise, it’s still a buyer’s market. In comparison, Seattle’s single family market reflects a balanced to slight seller’s market with a 3.6 month absorption rate.

Surprisingly, the lower price tiers had high absorption rates, which is a somewhat counterintuitive considering that the majority of condo sales were priced under $300,000. Though, short sale and bank-owned properties account for nearly 38% of the inventory under $300,000, and short sales have a high non-closure rate.

Sales of $1 million-plus condos are up significantly compared to 2010, but there is still considerable inventory available. However, we’d expect they would take longer to sell so it’s not unreasonable for $1 million-plus properties to have a higher absorption rate.

Absorption Rate by Area

As with the pricing tiers, the Seattle condo absorption rate also varies by neighborhood areas.

The Seattle core neighborhoods (downtown, Belltown, Capitol Hill and Queen Anne) have the most inventory, approximately 59% of the city’s available condos. They also currently have the lowest absorption rates, reflecting a balanced to slight buyer’s market environment. Convenient access to work, entertainment and recreational amenities, and neighborhood businesses contribute to their desirability.

Moving out from the city core, the condo supply increases with the South and West Seattle areas exhibiting a strong buyer’s market climate.

Source: Data is from the NWMLS but calculated independently by SeattleCondosAndLofts.com. Note, the absorption rate was calculated using the number of NWMLS listed condos on August 25th, 2011 and is subject to change over time.

July was a challenging month for Seattle’s condo market with a downward pressure on prices despite improved sales.

The median citywide sales price of $255,000 reflected a 12.07% decline compared to last July, but increased 3.7% over June. While most neighborhoods saw double-digit decreases, the downtown / Belltown area fared the best with only a 0.7% dip, less than a percent. Median sale prices over the past few months have been in line with 2005 price levels.

Sales velocity improved from a year ago with the number of pending transactions up 23.1%. The downtown / Belltown area realized a significant increase in condo sales in July, nearly doubling the number of properties going under contract from last year (+48.7%). The results were diverse with sales coming from across a variety of price levels and condominium buildings.

Closed sales, on the other hand, fell 6.2% compared to last July. The month-over-month result was more significant with closings dipping 24.9%. The decrease may be attributable to the drop in pending transactions in June (the lag between pendings and closings) as well as short sale failures.

The number of active listings continued to hover around the 1,100 mark. That’s approximately 30% fewer available listings for sale compared to the same period last year. At this rate and contemplating seasonal factors, we may hit pre-construction boom inventory levels by Fall.

The Seattle condo inventory supply rate dipped slightly to 5.2 months based on pending transactions but rose to 7.9 months based on the closed sales method. Overall, the Seattle condo market reflects a neutral to buyer’s market environment, though some neighborhoods like Belltown exhibit neutral to seller’s market conditions.

__________________________
© Seattle Condos And Lofts

I frequently get asked how much less than the list price can buyers offer and realistically purchase a condo for.

In looking at the sales price to list price ratios, on average, Seattle condos sell for 90% of the original list price (10% less) and 95% of the last list price (5% less).

Now, this doesn’t necessarily mean that the condo you purchase will sell for 10% below the list price. The amount buyers can negotiate off of the price will depend on a number of factors such as the market environment, the motivation of the seller, inventory level, competition from other buyers and time on market. Nevertheless, the ratios show there is ample pricing flexibility in the market today.

If buyers expect to realize a 20-30% reduction off the price, that’s not very likely. But, not impossible. There are opportunities to realize great values on bank-owned and short sale properties but they only represent 25% of all Seattle condo sales.

The figures above are 12-month averages of the selling price to list price ratios of Seattle condo resales. It includes regular market and distressed sales, but I excluded new construction since the sales data rarely include the actual original list price of new construction units.

>> Search Seattle Condos for Sale

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.

© Seattle Condos and Loft

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.

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.

© Seattle Condos and Lofts

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.

© The Seattle Condo Blog

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.

© The Seattle Condo Blog

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.

© The Seattle Condo Blog