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.

Here are some interesting statistics gleaned from the NWMLS’ 2009 Statistical Review and Highlights. The NWMLS region covers 21 counties, mostly in western Washington.

• More than 52,000 closed residential sales in 2009 accounting for more than $17 billions in total sales volume, of which 6,800 were condos valued at $1.9 billion in sales.
• King County realized just over 20,200 residential sales valued at $8.6 billion, of which 4,191 were condos (down 18.8% from 2008) with a value of $1.3 billion.
• Only 43% of King County condo sales were located in Seattle.
• There were 1,793 condo sales in Seattle (down 15.5% from 2008) valued at $645 million. Condos accounted for 25% of all residential sales in Seattle.
• There were 802 sales of single family homes and 66 sales of condos priced $1 million or greater in 2009. Bellevue had the highest number of $1+ million sales overall, though Seattle accounted for 67% of all $1+ million condo sales (44 units).
• In Seattle, 56% of condo sales were priced under $300,000, 11% were priced above $500,000 and only 2.5% were $1 million or greater. For comparison, in 2008 46% of condo sales were priced under $300,000, 15% were priced above $500,000 and 3.2% were $1 million or greater.
• The median condo price in King County was $255,000; Seattle’s median condo price was $279,000.

Note: The NWMLS database and statistics do not include many new construction pre-sale units, private sales or auction sales.

Source: Data was obtained from the NWMLS’ 2009 Statistical Review and Highlights report, though the Seattle figures were compiled independently. Some figures were rounded.

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.

With Spring now upon us, the real estate market is experiencing an uptick in activity as noted with increases in the number of new listings, pending transactions and closed sales last month. The median citywide condo price remained essentially unchanged at $275,000 compared to February, while compared to last March, it reflects the largest year-over-year percentage decline we’ve seen in years, down 16.7%. Though, the March 2008 median Seattle condo price of $329,975 was the second highest on record.

The number of active listings rose last month to 1,363 properties, up 6.3% from February though it’s 5.7% fewer compared to last March. Fortunately, pending transactions (properties going under contract) and closed sales increased over February by 2.9% and 19.4%, respectively. However, compared to last year’s activity, the market continues to underperform with sales only about 56% of the level we experienced last March.

The citywide inventory supply rate (absorption rate) inched up slightly from 9.2 to 9.5 months, not bad considering that the rate of new listings outpaced pending transactions. The downtown area and West Seattle reflected the largest increase in supply rate, both now around 15 months. Two areas did experience a one month drop in the supply rate, Queen Anne / Magnolia and North Seattle. With few new construction or conversion projects adding to inventory, those areas are likely to be the first to stabilize.

The overall citywide median price is the lowest since mid-2006 for the second consecutive month, so buyers can find good condo values. While it’s a little too early to tell how much impact the revised first-time home buyers tax credit will have locally, moderate priced units, where most first-time buyers fall, are moving. Condos under $350,000 remain the most active segment of the market.

At the other end of the spectrum there’s a large surplus of high-end inventory particularly with Olive 8, Enso, Escala, Alex, 200 West Highland and Rollin Street completing this year. With so much competition, and a smaller pool of qualified buyers, we can expect more price fluctuations and incentives as new developments do what they can to generate sales.

The Seattle condo market’s February results were underwhelming. From a record high $335,000 citywide median price in January, February came in at $274,000, the lowest level since June 2006. The median price last month reflected a one month decline of 18.2% and a 12.9% drop compared to the prior February. Most neighborhoods also realized declining values with two exceptions — Queen Anne / Magnolia (MLS Area 700) and Downtown / Belltown (MLS Area 701) saw year-over-year median price increases of 13% and 10.4%, respectively.

As the market ramps up we’d normally see increased listings come on the market as we approach Spring and February was no exception with a 9% bump in listings compared to January to 1,282 properties. On the other hand, that’s 6.4% fewer listings compared to February of last year.

The number of pending transactions dropped slightly from January and is down 38.8% from February 2008. There were only 98 properties that closed in February out of 150 pending transactions in January. As closings typically occur about a month after a listing goes pending, we’d like to see the number of closings for the current month to be on par with the prior month’s pendings. The stats reflect that about 65% of the number of pendings in January closed in February, the lowest percentage we’ve seen for some time. A few possible reasons for this – (1) the pendings were weighted towards the end of January and will close in March given the fewer days in February, (2) buyers were unable to secure financing, (3) developers added pre-sales into the MLS as pendings or (4) doubts about the economy and job security may have put buyers back on the fence. We’ll have to see March numbers to get a better idea on why so few of January’s pending transactions closed in February.

The inventory supply rate (absorption rate) rose to 9.2 months in February reversing a recent decline. This is good news for buyers as the market remains solidly in their favor. We’ll probably see prices continue to soften. Sellers, on the other hand, have a tough decision to make particularly if they purchased their unit in the past several years. Do they sell now and potentially take a loss, hold out until the market rebounds, or do they lease the unit at a time when we’re seeing an considerable increase in new rental inventory. Not an easy decision.

Last month Congress passed the American Recovery and Reinvestment Act of 2009 with a provision revising the first-time homebuyers tax credit, increasing it by $500 to $8,000 and eliminating the repayment requirement. The jury is still out on whether this will incentivize first-time buyers into the market, but it’s certainly a nice bonus.

Third quarter results showed no Earth shattering revelations about the market – prices and sales are down.

Seattle’s condo median price for Q3 2008 was $305,000, down 5.3% from the same period last year. The number of closed sales fell 51.1% while total dollar sales volume dropped 53.3% to $193,339,000.

Year-to-date, the citywide median price remains unchanged at $315,000, though the number of closed sales are off 40.1% compared to the same period last year. So far, prices during the first part of the year were high enough to offset the price declines we’re now seeing. Though, by the end of year I anticipate a decrease in the annual median price figure.

The Seattle condo market saw a modest 2.7% increase in the median price in December, rising to $320,000, compared to the prior year.

As expected during the close of the year, the number of active listings, pending sales and closed transactions fell last month. There were only 174 pending transactions in December, the fewest over the past 24 months, no doubt arising from buyer concerns over the economy, a softening housing market and the mortgage situation.

The total number of active listings decreased 19.1% in December compared to November, though the 1,128 listings reflect an 83.1% increase over December 2006. The surprising figure last month was the jump in the Inventory Supply rate to 6.5 months. The condo supply rate hasn’t been above 6 months since early 2003. Good news for buyers, not such much for sellers.

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