2011 Looks to have gone down as a year of progress and transition for the Seattle and Bellevue real estate market; many positive developments have occurred, yet there will still be some lingering issues to work through (primarily in the form of distressed sales).

On the positive side of things is that buyer demand has stayed consistently strong relative to supply, which has lent a hand in stabilizing home values. In Bellevue, for example, single family home sales grew again in 2011 and outpaced 2010 by 5.5%. Though the overall median selling prices for single family homes have fallen at times throughout the year, it is reassuring to see that the median selling prices of non-distressed, traditional sales trended very flat throughout 2011. This highlights how bank owned sales and short sales drag down the median selling prices consumers see reported in the news.

Though distressed sales seem likely to impact the market throughout the first half of 2012, the impact is in ways beginning to be offset by a more competitive market where buyers have fewer homes to choose from. A 5-6 month supply of homes is considered to be a neutral market and one that favors neither buyer nor seller ("supply" is the amount of months it would take to sell the existing inventory of homes on the market at the current pace of sales). In Seattle, the monthly supply has dropped to as low as 2.91 months in 2011, while generally hovering around 4 months for the year.

Should the economy continue to improve, then more buyers will likely return to the market which will continue to build upon the progress that has already been made in clearing out the distressed inventory. As buyers become more active in the market, many sellers who have been waiting to sell will more seriously consider putting their homes on the market. Thankfully, the supply of homes is rather low which should help balance the future supply when sellers start putting their homes on the market.

There are such a wide variety of factors that affect the temperament of the local market, making it difficult to predict real estate. However, if the economy, job market, and consumer confidence continue to improve, then there is a significant chance that real estate can really start to turn things up a notch getting into the summer of 2012. Time will tell!

- Robert E. Wasser - Seattle and Bellevue real estate analyst