How do you get from “for sale” to “sold?” It’s the price! Even though the real estate market in Bellevue, Kirkland, Redmond and other eastside cities is red hot, the price is still critical to getting a “sold” sign posted on the “for sale’ sign in your front yard.
Almost half, 48%, of the homes for sale between September, 2011 and March, 2012 sold in 10 days or less! With these homes only on the market for fewer than 10 days, the homeowners and their Realtors did everything right. The homes had to be priced right, show well, have fabulous photos and great marketing or the homes would not have sold.
Seeing these incredible numbers should help blow several common misconceptions out of the water:
1. Should you leave negotiating room when you set the price for your home? NO. Some homeowners think they should leave bargaining room. This, however, will send that homeowner down a path toward a longer market time and a lower selling price. Look again at the top line of the first chart. Almost half the homes sold within 99% of asking price and in under 10 days. With sales prices coming in at 99% of the asking price, there was little bargaining in the final sales price.
2. What if you want to price your home high because you’re in no rush to sell? A homeowner who overprices a home will shoot themselves in the foot. Let’s say a buyer is out searching to buy a home and sees 5 homes. The buyer will compare each one’s price, location, and features. They don’t compare whether a seller is a rush to sell or has all the time in the world. The buyer won’t know that. The buyer will only know that when comparing the homes, the overpriced home will stand out. Most buyers don’t bother to make an offer because there are 4 other homes that are more attractive and priced right. There’s no need to waste time pursuing an overpriced home because, even though the supply is low, there are other homes on the market. If today’s market pricing doesn’t meet a homeowner’s needs, then don’t put the home on the market.
3. Were these homes underpriced, because they sold so quickly? No. In today’s real estate market, we’re dealing with very savvy buyers. They know the market and they know pricing. They know when they see a home that’s well priced and they’ll pay for it. The buyers don’t have time to waste. The good homes are going fast. Secondly, does anyone really think that half of the homes that sold in the last 6 months were underpriced? I don’t think so!
The other 52% of the homes took 149 days to sell and sold with an average of a 10% discount. If you look at the second chart, you can see for every 30 day period a home is on the market, the selling price drops. Homes that were on market for a long time were the homes in which sellers could bargain with the buyers, but it usually meant the price dropped. Buyers think a home is overpriced or there’s something wrong with it if the house is on the market for more than a month in this market.
If you decide to sell your home, you’ll need to decide in which half of the market you’d like to be. Do you want to be in the market in which your home could sell quickly and for a good price or do you want to test the waters, take your time, and more than likely sell for less? It’s your decision.
I thought we were finally past the negative headlines in Seattle real estate, but apparently not. Both The Seattle Times and the PI had articles about the decline in prices. The articles take a look at the latest Case-Shiller Index for January, 2012, which shows closings for December of 2011. The offers for the homes sold in December, 2011 were written a couple of months earlier than December, so the latest Case-Shiller report examines data that is 3-5 months old. The focus in these articles is the decline in real estate prices. There was a small decline in Seattle area real estate prices from January, 2011 to January, 2012.
Is this an accurate picture of today’s local real estate?
Besides the fact that the Case-Shiller report is examining older data, we have to remember to look at pricing over a 3-6 month period to see a real trend and in a very local real estate market. When you examine trends in a more localized area, you see true numbers. The numbers that affect you. Case-Shiller examines 20 metropolitan areas, including the Seattle area. However, this includes not only Seattle, but the surrounding counties: Snohomish, Pierce, and King. The counties are very different real estate animals. Aubrey Cohen said in the PI:
Pierce and Snohomish counties are weaker than King County, dragging down statistics for the metro area.
Within counties, real estate markets are different. In King County, the south is very different from the east. In East King County, in such cities such as Bellevue and Redmond or Sammamish, there are differences. Looking at the Seattle and the surrounding counties does not give the true picture of what is happening in Kirkland, Woodinville or Duvall. Case-Shiller does not tell the local story , the local real estate story that affects you and your home.
What’s really happening with real estate on Seattle’s eastside?
As March comes to a close, we’re in a “hot” market in Seattle and on the eastside in Bellevue, Redmond, Kirkland, and Issaquah. etc. This week in all of King County, there are 6,802 properties for sale. Last year at this time, 10,772 properties were for sale. The eastside is a reflection of these numbers. There is a small supply of available properties. Every day the NWMLS, Northwest Multiple Listing Service, tallies up the number of new listings and sales. On most days, pending sales outpace new listings by about one-third. Many homes are receiving multiple offers, which means their prices are, more often than, not remaining stable. There’s too much demand for housing and not enough houses for sale.
The reality is prices will not go up by much, but they also will not go down on the eastside in most areas with this lack of supply and high demand for homes. Let’s not go back to the past. Let’s focus on the present as much as we can. The Eastside real estate market is hot!
That should be the headline for today’s real estate news.
How Was The Real Estate Market In Bellevue, Kirkland, Redmond, and Other Eastside Cities At The Start of 2012?
There’s a lot of “red” on the above Seattle area real estate map! There’s more “red” than we’ve seen in years, and I mean years. What does the “red” mean? It means it’s a seller’s market. The homes that are in the “red” areas sell in less than 3 months on average. In January, most of the eastside was a seller’s market. Mercer Island, West Bellevue, and Kirkland did not quite reach the threshold of a seller’s market, but Kirkland was almost there. The real estate markets in these areas were more evenly balanced between the buyers and sellers as homes sold on average within 3-6 months.
This real estate market is pretty exciting to see after the tough markets of the last few years. But what this really means is that we have a more normal market on Seattle’s eastside. The good homes that are priced right and show well are the homes that are selling quickly and bringing the average market time down. There are and still will be homes that aren’t priced well or don’t show well which will sit on the market and take longer to sell.
The chance of a home selling in the different eastside cities ranged from 15-30%. West Bellevue had the fewest sales when compared to the number of available homes, while the plateau cities of Sammamish, North Bend, and Fall City saw almost a third of the homes sell in one month!
But King County is a big place, and the real-estate market isn’t the same in SeaTac as it is in Sammamish.
A closer look at the statistics reveals significant variations from neighborhood to neighborhood.
It’s good to see the Times recognizing the neighborhood differences, since too many times the media publishes data, which covers too broad an area. This does not give an accurate picture of the real estate data.
How was real estate market in your Seattle-Eastside city in January, 2012?
1. The plateau: Sammamish, Issaquah, North Bend, and Fall City
The odds of selling a home were 30%
Median sales price decreased from $496,000 to $465,000 (y-o-y)**
There were 469 homes for sale
A total of 86 homes sold
Days on the market: 123
2. South Bellevue/Issaquah
The odds of selling a home were 28%
Median price decreased from $575,000 to $484,000
226 homes were for sale
A total of 35 homes sold
Days on market: 90
The odds of selling a home were 27%
Median sales price decreased from $534,000 to $522,000
155 homes were for sale
A total of 34 homes sold
Days on Market: 62
4. Redmond/East Bellevue
The odds of selling a home were 26%
Median sales price increased from $380,000 to $460,000
125 homes were for sale
A total of 32 homes sold
Days on the market: 94
5. Woodinville/Bothell/Kenmore/Duvall/North Kirkland
The odds of selling a home were 25%
Median sales price decreased from $390,000 to $344,000
387 homes were for sale
A total of 64 homes sold
Days on Market: 115
6. Redmond/Education Hill/ Carnation
The odds of selling a home were 21%
Median sales price decreased from $522,000 to $483,000
193 homes were for sale
A total of 30 homes sold
Days on Market: 112
5. West Bellevue
The odds of selling a home were 15%.
Median sales price increased from $650,000 to $1,230,000
118 homes were for sale
A total of 18 homes sold
Days on Market: 86
If you’d like more specific information about your neighborhood or home, feel free to contact either Brooks or me.
*(The odds of selling a home in each area is a result of the number of homes for sale divided by the actual number of home sales, so if 10 out of 100 homes sold, the odds of selling would be 10/100 or 10%)
** (y-o-y) median pricing is comparing year over year numbers.
We have to go back before the bubble burst to February 2007 to find so few homes for sale on Seattle’s eastside! There’s a healthy number of homes for sale on the eastside, 1897 at the close of December, so there are good choices for buyers. With fewer homes on the market, it spurs the competition among buyers for the best homes and should help stabilize prices. In some neighborhoods, there aren’t any homes for sale right now.
Pricing is becoming more affordable for a new set of buyers who are coming to the market for the first time. A mortgage payment that would have bought a home for $500,000 in 2008, would now cover the purchase of a home in the mid-$600,000s!
Here’s a snapshot of Seattle-Eastside real estate in December, 2011 compared to 2010:
- 24% fewer homes were on the market.
- The time it took to sell a home went from 129 days to 111 days this past December.
- Sales prices were 8% below the seller’s original asking price, while in 2010 they averaged 10% below the asking price.
- Eighteen percent of the homes for sale this December received offers and sold, while only 14% received offers in 2010.
- 338 homes sold in 2011, while in December 2010, 351 homes received offers.
The actual number of homes sold did not change much, which, surprisingly, is almost always the case. The difference was not in the number of sales, but in the number of homes for sale. There were 597 fewer homes for sale at the end of 2011 than 2010. When there are fewer homes for sale, there are fewer “for sale” signs out in neighborhoods. The “sold” signs also pop up a lot faster.
When the supply increases, there’s increased competition and homes take longer to sell. Most people think homes are not selling because there are more real estate signs and they stay posted in yards for a longer time. This is not the case. Homes are selling, but there’s just more competition which makes it feel as if the market is slower.
The real difference then is the supply, the number of homes for sale. If there’s a smaller supply the market will seem faster because these homes will sell faster. If there is a larger supply, there is more competition and the market will seem slower because it takes longer to sell a home. In both markets, though, the number of homes that sell does not vary all that much. It is the Supply that varies and changes what we think is happening in the real estate market. The above chart confirms this as you can see the supply changes far more dramatically than the number of sales, which are shown at the bottom of each month.
In my next piece, I’ll talk about how Seattle-eastside real estate should play out for the coming year. Have a great 2012 and hope you are able to make it through this week’s snow.
Since real estate is neighborhood specific, if you’d like more information about your home, contact us, we’re here to help.
*The numbers are a result of the real estate sales activity that happened that particular month only. In order to see a trend, it is important to look at a number of months together. One month is only indicative of that particular month’s sales.
- 2011: 10,008 homes for sale
- 2010: 9726 homes for sale
- 2009: 11,363 homes for sale
The old law of supply and demand is at work here and is starting to favor sellers more than it has for years. There’s a 3.6 months supply of homes for sale in King County. This means there’s a balanced market between buyers and sellers with the market tipping towards the sellers. (Less than 3 months of inventory indicates a sellers market.)
On Seattle’s Eastside, the market is looking really strong, particularly around the Microsoft area of East Bellevue and Redmond. The number of homes for sale has dropped dramatically.
What should buyers and sellers expect in the first quarter of 2012 on Seattle’s eastside?
Fabulous interest rates.
A more positive real estate market.
The market will continue to be affected by short sales and foreclosures.
Home prices are not up nor will they go up. There is no indication on the immediate horizon that indicates anything about price increases. On the flip side, the lack of supply of homes for sale helps to stabilize the market and prices. Fewer homes means more competition, which helps pricing. The real estate market will vary neighborhood by neighborhood. One size does not fit all.
Location matters. Homes close to economic centers that offer a good commute, good schools, and good amenities will be more in demand.
Condition matters. Homes should go on the market in the best possible condition to command the best price.
Some home sales will be good deals depending on the available competition, the condition of the home, and the seller’s motivation.
Some homes will sell for full price, in a matter of days, and with multiple offers This, too, will depend on the same factors mentioned in my previous statement.
It is important to know your area. Buyers and sellers should both be aware of the competition, pricing, and condition of nearby homes to determine the value of a specific home.
Homes need to be priced right or they will not sell. I heard a seller say the other day, “I’m not going to give away the farm.” If you, as a home seller, have far more money into your home than it’s worth and you have no interest or are financially unable to price your home to meet the market, then this is not be the time to sell your home.
Gee, it sounds like a normal real estate market to me! What do you see happening in your market place?
- Seattle-eastside condo sales
The number of condos to receive offers on Seattle’s eastside skyrocketed by 62% over last August. This good news was coupled with 31% fewer condos on the market. In August, there were 1032 condos for sale. Two hundred thirteen received offers and sold, representing an absorption rate of 21%.
Even though the odds of selling a condo are far stronger now, there were a number of the sales that didn’t stay together. Last month I reported 250 condo sales in July. Now it looks like only 224 of these sales actually “stuck.”Twenty-six sales or 11% failed to close.
Sales fail for many reasons. A condo may not pass inspection or an appraisal. The buyer may not get financing or the condo complex itself may not fit financing guidelines. This could be because there could be too many renters occupying units or there could be a pending lawsuit against the association. Situations such as this could affect the buyer’s ability to obtain a loan, even if the buyer is well qualified to buy. When obtaining financing for a condo, the condo and the association must also “qualify” in order for the loan to be approved.
Fortunately, the stock market volatility of last month did not slow the condo market down on the eastside. How did it affect your area?
The Seattle-eastside real estate market is only getting better and better! August home sales beat July and were way ahead of last August. This August was one of the best real estate markets in years!
Real estate sales were hopping. Thirty-three percent more homes received accepted offers this August than August of 2010. Almost 20% fewer homes were on the market, so less supply + more demand equaled more sales. In August, 22% of the homes for sale on Seattle’s eastside got offers. This means out of the 2811 homes for sale, 609 homes sold. On average, most homes sold within 85 days.
In King County, the number of homes for sale dropped below 10,000 for the first time since last May. Here on the eastside, we’re also seeing the lowest number of homes for sale. More than likely, the peak number of homes for sale was 2879 back in June.
Last month I questioned whether the surge in real estate sales would continue because of the volatility in the stock market. With August sales numbers, we’re seeing the most robust market we’ve seen in a long time. The stock market didn’t put a damper on eastside home sales.
Was your market affected by the stock market “roller coaster?”
How many homes sold in June, 2011 in your neighborhood?
It’s uncanny to see how similar July real estate sales on Seattle’s eastside were to June’s sales results. On most of the eastside, the numbers varied only slightly from June. Twenty-three percent of the homes for sale on the eastside sold, with the Redmond and Bellevue area around Microsoft leading the way with 38% of the homes selling. In the majority of eastside neighborhoods, the chance of selling a home ranged between 20-23%.
The odds of selling a home in each area is a result of the number of homes for sale divided by the actual number of home sales, so if 10 out of 100 homes sold, the odds of selling would be 10/100 or 10%)
The plateau: Sammamish, Issaquah, North Bend, and Fall City
The odds of selling a home were 20%.
Median sales price dropped: $539,950 to $519,000.
There were 771 homes for sale.
A total of 165 homes sold.
The odds of selling a home were 38%.
Median sales price increased from $422,475 to $429,950.
189 homes were for sale
A total of 85 homes sold.
The odds of selling a home were 24%.
Median price decreased from $599,475 to $578,500.
380 homes were for sale.
A total of 110 homes sold.
The odds of selling a home were 23%.
Median price was down from $499,950 to $369,475.
598 homes were for sale.
A total of 158 homes sold.
The odds of selling a home was 23%.
Median price decreased from $549,900 to $541,500.
288 homes were for sale.
A total of 76 homes sold.
The odds of selling a home were 20%.
Median pricing decreased from $1,299,000 to $1,074,475.
175 homes were for sale.
A total of 42 homes sold.
Redmond/Education Hill/ Carnation
The odds of selling a home were 20%
Median pricing increased from $548,000 to $549,000.
337 homes were for sale.
A total of 75 homes sold.
If you’d like more specific information about your neighborhood or home, feel free to contact me.