Greater Seattle Real Estate Trends for September, 2016
Fair warning, this update is a little long, but there are reasons for that!
Part of the reason this post is a bit long, is that I’m a little overdue with my ‘monthly’ Greater Seattle real estate trends update… I’ve been kept quite busy with my primary work functions and commitments to the MLS and NWIBA Board of Directors.
And truth be told, after my primary work functions and commitments, I frankly just want to spend time away from work with my wife and nearly two year old daughter. But, I still make sure to spend time each month researching and logging my monthly, local real estate stats!
And another time suck… Carmen and I have also been in the middle of our own purchase of what will be our new primary residence. Side bar: I think it has helped to again put myself in the shoes of the people I work with, and the thought process and purchase process have helped reinforce the route and approach I try to take when working with clients and real estate in general. It’s reinforcing to know that I actually take my own advice!
So a little overdue, but here’s some catch-up on what’s been going on with the local, Greater Seattle real estate market…
Since my last trends update in June, which featured stats data through the end of May, much of the same market conditions have persisted. A strong tell for what’s going on with the market is the “supply” of homes, and we get to the months of supply by dividing the total active inventory of homes for sale by the most recent month’s closed sales volume.
Analysts say 4-6 months represents a neutral market favoring neither buyer nor seller, so a supply of less than 1 month would be a very strong seller’s market… which is where we’ve been since my last update. In fact, we’ve been below 1 month supply for the last 6 months, 9 of the last 11 months, and 15 of the last 18 months in Seattle.
This sort of supply suggests that strong competition amongst buyers would drive prices higher, which has certainly been the case over the last 18 months; the median selling price of single family homes in Seattle (excludes condos) has risen from $515,000 in March of 2015 to as high as $650,000 this June.
However, I personally find it quite interesting to note that prices have somewhat stagnated since February, when the median selling price of single family homes was $625,000… counting February, the median has gone like this: 625k – 620k – 624k – 625k – 650k – 634k – 615k.
The ratio of closed sales activity to active inventory has been nearly identical during that period, and interest rates are still extremely and attractively low, so one theory I’ve been chewing on is that we may potentially be reaching a point of affordability... at least in Seattle. Even people with good paying jobs can only afford so much (or have to find housing outside of the city).
There are admittedly a boat load of factors out there to consider, but this is how things have started to feel for me… for whatever that’s worth to those of you reading this. There are variety of factors that give me the sentiment of some flattening taking place. One, for example, is that the median selling prices of Seattle condos have continued to rise over that same time period since February previously discussed… the average Seattle condo sales price has increased from $480,395 in February to $606,659 in August.
If things are indeed starting to flatten out, does that mean everyone should panic? I don’t personally think so, especially if you take a long term approach to your real estate choices. Those of us my age and older know well enough what happened when things fell apart during the financial crisis, but the factors are different this time.
Illustrated a different way: when I bought my first house, I was a junior in college with nominal income from a painting business I was running during the summers, and some bank thought it was a good idea to give me a zero down, stated income loan for $365,000 on an investment property (though I’m happy to say I was able to sell and pay that loan off in full).
Loans like that just simply don’t happen these days. In general, the people buying homes these days are people with good credit scores and decent chunks of down payment, and there’s a backlog of those buyers who have been stymied by all the buyer competition… it’s not everybody and his brother’s former roommate buying a home (because that’s what everyone thought they should do in the early 2000s).
And as referenced earlier, a slowing down of the rapid price gains we’ve experienced during the recovery didn’t stop me from buying a new home and keeping our existing home as a rental. When mulling a move, I listened to my own advice and considered the purchase as a long term approach, thought through my back-up plans (i.e. renting it out if necessary), and made the decision based on all the factors (financial, intrinsic, etc) regardless of trying to ‘time the market.’
Have you been thinking about buying or selling? I’d be happy to sit down with you for coffee, talk through the same conversations I have with myself as it relates to my own real estate purchases and sales, and see if we can come up with a preferred approach/strategy to meeting your goals… just contact me to get that ball rolling.