Seattle, Bellevue, and King County Real Estate Blog

By now you’ve likely begun hearing news that the real estate market is showing signs of improvement. You’ve probably also heard that prices are still dropping. As I’ve discussed in an earlier blog, making sense of the different statistics and news headlines takes some interpretation. Let’s use the following two headlines as examples and interpret exactly what’s going on:

“Pending home sales rise 6.7 percent in April”

“U.S. Home Price Declines Slowed in First Quarter”

So, pending sales are up but prices are still dropping. Why is this? From my vantage point it’s simple… first time home buyers and investors are starting to take advantage of the abundance of good deals. Short sales and bank owned listings are excellent examples of homes that are selling undervalued which are dragging the overall numbers down. Side note: instead of getting into a lengthy discussion about depreciation statistics, please refer to my previous blog talking about interpreting the actual depreciation statistics.

I have personally been seeing increased activity from first time buyers and new investors in my day to day activities running Prospera and working with my agents and clients. It seemed clear to me that first timers and investors buying undervalued and low priced properties were leading to these results, but I grabbed some information from the Northwest Multiple Listing Service’s statistics to illustrate the point.

- The median price of actively listed homes in April, 2009 for King County was $499,950.

- The median price of pending homes (homes in which a buyer has agreed to purchase the home from the seller) in April, 2009 for King County was $365,000.

The pricing disparity in the homes selling and the homes sitting is astonishing, but goes to show that lower priced properties are the ones selling. Another interesting tidbit is that the total volume of active listings (homes listed on the MLS not under contract to sell) in King County has dropped 16% to 9,608 in April, 2009 from 11,424 in April, 2008. Not many people are talking about the drop in inventory of listed homes, but it is a positive sign that things are on their way back to a more normal, healthy market. However, I do believe there will continue to be plenty of short sales and foreclosures affecting the overall pricing for the next year as we feel the repercussions of all the layoffs. Meaning, sellers will likely continue to have difficulty as a whole if similar homes up the street are listed for less as a short sale.