Rebound in Seattle/Eastside real estate? Wait until 2012

A rebound in Seattle real estate?  Yes, but not just yet, and it will probably be a small rebound, IMHO. Both Yahoo, via the Plugged in Finance blog and Businessweek had articles projecting a faster return to a more positive real estate market  for Seattle than for many other parts of the country.  Seattle ended up on the top 10 real estate rebound lists on both Yahoo and  Businessweek.

Why a rebound in Seattle? Seattle’s chances are among the best in the country and for the same reasons the Seattle/Eastside area was so strong for most of the last two decades.  It’s our economy and our geography.

First, the geography. (Bear with me for this brief geography lesson. This brings me back to my roots as a social studies teacher who loves geography.) There’s a lot of empty space east of Seattle, Bellevue and other parts of King County.  This is where the foothills of the Cascade Mountain range begins.  It looks like there”s lots of  open space out there, and there is, but it gets pretty steep!  It’s certainly not conducive to building a home.

Couple this with strict land use regulations, protecting salmon streams as an example, and even less land is available for development.  It’s double-edged sword.  We need to maintain a healthy balance between people and nature, to maintain our wildlife, our trees, and our quality of life.   But the natural elements of the Seattle area, Puget Sound, Lake Washington, and  the Cascade Mountains do provide a challenge to our growth.   Less land to develop=higher prices , but it  won’t happen for a few years and increases should still be modest.

The economy in the Seattle area is hurting like the rest of the country.  But there”s a strong economic base that will re-emerge as things start to turn around.  The old stand-bys, Microsoft, Starbucks, and Boeing are struggling now, but should bounce back.

Another thing to watch is the number of homes for sale, the housing inventory.  We’re still at higher numbers, but things are starting to balance out. If you look at the maps, you’ll see the Seattle real estate market of 2009 is far more balanced than the Seattle real estate market of 2008. (A balance market is when the number of homes for sale in an area is less than a 6 months supply.  Yellow on the attached maps indicates a balanced market in the area.

Builders are NOT buying land right now. Over the years, builders would have huge amounts of land tied up for future building.  This is no longer the case.  It can take a couple of years to develop a site and to start building homes. With less land available for building and less land owned by builders and ready to be built out, existing homes will be more in demand in the future.

On yesterday’s “Morning Edition” on NPR Station, KPLU, John Maynard interviewed Richard Hagar about another issue, the influx of new people moving to Washington State, the majority of whom are moving to King County. Some of these people rent and some buy condos and homes.  The in-migration of people will only help our real estate and economy over time.

The year 2012 seems like a long way off, but we’re halfway through 2009.  It’s around a really long corner and it’s not going to be an easy “walk” to get there.

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Now we’re at the end of the first month of 2012, what’s happening with Seattle-Eastside Real Estate? There are differences from what I wrote in 2009 that actually bode well for the Bellevue, Kirkland, Redmond, Sammamish, etc areas:

Builders are buying land now.  We have a client who was approached by no less than 4 builders last year when his property was not even listed for sale.  Within the same week, he received several builder solicitations.  He’s not the only homeowner with land who has been approached.  Builders are actually looking to beef up their inventory of land so they can build again.

The number of homes on the market has reached the lowest level since February, 2007.  In all of King County there are approximately 7500 homes and condos for sale.

The geography hasn’t changed and I believe it will take millions of years before it does and the economy is still performing at a far better pace in the Seattle area than in other parts of the country.  Amazon, Microsoft, and other companies are hiring.

What does your crystal ball say?

At the start of 2012, there are less than 8000 homes for sale in King County!  Compare this number to the start of the last three years:

• 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?

Here on the eastside, the market is doing well for the good homes, but not for all homes.  These are the homes that are the best of the competition in terms of price, condition, style, floor plan and location.

One reason why the good homes are selling with multiple offers:

Less than 9000 properties are for sale in King County, for the first time in years.  Supply is dwindling fast.  If you compare the number of homes for sale with this time last year,  3000 fewer homes are on the market.   As the year heads to a close, more sellers will take their homes off the market. 

I expect to see December and January be good markets for sellers because of the decrease in competition.  Quality homes will go fast, and possibly with multiple offers.

Does this mean it’s a bad market for buyers?  No, there are still a lot of good homes for sale.  Plus, it’s the most affordable market we’ve had in the Seattle area 17 years.  With the lower interest rates, a mortgage is starting to rival rental costs.

So if you snooze, you can lose.  Do you homework.  Determine what’s most important to you.  Is it the location, is it the good floor plan or a combination of many factors?  Know the prices of homes in the area. Learn what’s selling and for what price.  Know your wants and needs, study the market by visiting homes, and learn what sells well in the area.

If you do all these things.  You won’t snooze and lose.  You’ll know which homes work best for you and which are the best values.  You can then jump in and buy a good home and not lose.

Homes in East Bellevue and Redmond near Microsoft sold the fastest on Seattle’s eastside in October.  Homes sold in under 2 months, at 59 days.    Market time for the other eastside cities, ranged from 99-117 days or just shy of 4 months.  This is a reasonable market time as it shows a more of a balanced market between buyers and sellers.  It’s actually a normal market and is better for “both sides of the table.”

The odds of selling a home in the Redmond and East Bellevue areas stood at 30%, which also was the strongest absorption rate to be found on the eastside.*  Chances of selling ranged from 19-26% in the other eastside cities.

The Redmond and East Bellevue area near Microsoft comes out on top for market time and a higher absorption rate because of more affordable housing, good jobs, an easier commute and good schools.  With the main Microsoft campus in Redmond right on the Bellevue line, there are lots of jobs right there.  In addition, there’s easier freeway and bus access to Seattle than in the outlying suburbs.

The higher price point in West Bellevue means fewer buyers can afford to live there.  Affordability issues increase the market time.  Longer market time here is a function of pricing, not desirability.  West Bellevue is considered to be one of the best locations on the eastside.

Two of the areas had an increase in the median pricing, Redmond and East Bellevue and Redmond and Education Hill.  Changes in median pricing, however, need to be looked at over a period of months since the median price for this month reflects the sales for this month only.

Why is market time important?  It’s one indication of the desirability and affordability of an area.  Both are key to future growth and appreciation.  People like to live in convenient areas with good schools and affordable housing.

The cities below are grouped together to follow our MLS areas (multiple listing service) and shows how our statistical information is  reported.  How did your city do this past month?

Which Seattle-eastside city had the fastest selling homes in October, 2011?

1. Redmond/East Bellevue

The odds of selling a home were 30%.*

Median sales price increased (y-o-y)** to $435,000 from $427,000.

193 homes were for sale

A total of 58 homes sold.

Days on the market: 56

2. Kirkland

The odds of selling a home were 26%.

Median price decreased from $592,000 to $501,000.

234 homes were for sale.

A total of 60 homes sold.

Days on Market:  99

3. Redmond/Education Hill/ Carnation

The odds of selling a home were 19%

Median pricing increased from $541,000 to $580,000.

321 homes were for sale.

A total of 62 homes sold.

Days on Market: 100

4.Woodinville/Bothell/Kenmore/Duvall/North Kirkland

The odds of selling a home were 22%.

Median price was down from $377,000 to $370,000.

540 homes were for sale.

A total of 117 homes sold.

Days on Market: 101

5. South Bellevue/Issaquah

The odds of selling a home were 24%.

Median price decreased from $580,000 to $500,000.

338 homes were for sale.

A total of 81 homes sold.

Days on market: 104

6. The plateau:  Sammamish, Issaquah, North Bend, and Fall City

The odds of selling a home were 23%.

Median sales price decreased from $500,000 to $460,000.

There were 650 homes for sale.

A total of 158 homes sold.

Days on the market: 108

7. West Bellevue

The odds of selling a home were 22.5%.

Median pricing decreased from $985,000 to $878,000.

128 homes were for sale.

A total of 31 homes sold.

Days on Market: 117

So plan your Thanksgiving, Christmas and New Year’s holidays.  Don’t give the holidays up and don’t give up the idea of selling your home now if that’s what you want to do.  With fewer homes on the market, your competition for buyers is far less.  Plus, the buyers who are out during the holiday season are buyers who are serious about buying a home. They don’t have time to waste.  They’re not casually looking for a home.  They’re in a buying mode.

Total Number of Distressed Real Estate Sales in the Seattle Area

In the third quarter of 2011, Seattle and the eastside suburbs were holding their own in the distressed sale market, while Pierce and Snohomish Counties had the toughest time. There’s a huge difference in how each of the 4 counties surrounding Seattle were doing with respect to distressed home sales.  Almost 50%, 47% to be exact, of the real estate sales in Snohomish County were  distressed properties.  Snohomish County is directly north of King County, which is where you’ll find Seattle.  Snohomish County is home to a Boeing plant, shipping, biotech firms, and  a navy base.  Pierce County is home to Tacoma, with its huge waterfront devoted to shipping, and Fort Lewis, the army base. 

Although each of the counties has an economic center, King County with Seattle and the eastside cities of Bellevue and Redmond is the true economic hub of the region.  These areas are home to Boeing, Amazon, Microsoft, Costco, Starbucks and a host of other companies.   Consequently, the Eastside and Seattle have the smallest number of distressed sales.    More jobs and a good commute equal less distressed sales.

View Larger Map

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.

Redmond/East Bellevue

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.

South Bellevue/Issaquah

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.

Woodinville/Bothell/Kenmore/Duvall/North Kirkland

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.

Kirkland

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.

West Bellevue

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.

View Larger Map

How many homes sold in June, 2011 in your neighborhood?

June continued to be a strong month for real estate sales on Seattle’ eastside.  In fact, June may have been the strongest month for real estate sales on Seattle’s eastside in four years.  The Puget Sound Business Journal stated more homes sold this month than in recent months.  Every area did far better than previous months and previous years.   The Redmond and Bellevue area around Microsoft led the pack with almost 40% of the homes selling.  Almost every other area had a minimum of 20% of the homes selling.  More homes are selling than we’ve seen in years, but there are still a lot of homes that are languishing on the market.  Know your competition, so your home will land in the 20%+ homes that are selling.

A past client of mine is moving back to the eastside after about 5 years.  He was really surprised to hear that the homes near Microsoft are actually more affordable than those in South Bellevue.  The Bellevue Schools are getting a lot of press because several of the high schools are landing on top 100 lists of the top high schools.  But in reality, parts of Bellevue have  been more expensive for years because of the easy I-90 access to Seattle.  This may explain why the area around Microsoft is usually the hottest real estate market.  It’s a great location, close to jobs, has good schools, and slightly more affordable housing prices.

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 23%.

Median sales price dropped: $525,000 to $494,950.

There were 765 homes for sale.

A total of 190 homes sold.

Redmond/East Bellevue

The odds of selling a home were 38%.

Median sales price decreased to $449,900 from $482,500.

193 homes were for sale

A total of 79 homes sold.

South Bellevue/Issaquah

The odds of selling a home were 21%.

Median price decreased from $599,994 to $519,000

364 homes were for sale.

A total of 91  homes sold.

Woodinville/Bothell/Kenmore/Duvall/North Kirkland

The odds of selling a home were 23%.

Median price was down from $419,973 to $369,950.

572 homes were for sale.

A total of 147 homes sold.

Kirkland

The odds of selling a home was 19.5%.

Median price decreased from $624,950 to $535,000.

286 homes were for sale.

A total of 71 homes sold.

West Bellevue

The odds of selling a home were 20%.

Median pricing decreased from $890,000 to $719,950.

181 homes were for sale.

A total of 43 homes sold.

Redmond/Education Hill/ Carnation

The odds of selling a home were 20.5%

Median pricing increased from $474,950 to $549,900.

331 homes were for sale.

A total of 77 homes sold.

Seattle-Eastside Real Estate Sales Through June, 2011

How strong were June, 2011 real estate sales on Seattle’s Eastside?  This summer’s real estate market is going to stay stronger than what we usually see during a Seattle summer. Traditionally, the highest number of homes for sale during a year comes near the end of July.  With this increased competition, it can make it more challenging to sell your home.  Although the number of eastside homes for sale has increased each month, the increase is nothing like the numbers we’ve seen during June of the last few years.

This year, the number of homes for sale is increasing, but at a much slower pace than last year.  In King County as a whole, there are 11,320 properties for sale.  Last year at the end of July, there were 14,639 properties on the market. This translates to 33% fewer homes on the market in King County this year.  On the eastside, there were 15% less homes for sale in June.  Since there’s still a great selection of homes for sale, the smaller number of available homes increases the odds of a home selling.

In fact, we had multiple offers on two listings this week alone.  I find we have a lot of showings on our listings, so buyers are definitely out there more than they usually are in the summer months.

The number of sales this past month dipped a little from the previous month, but only by 12 homes.  In May, we saw the highest number of homes sell in a month so far this year.  As a reminder, in April of last year, there’s a very high number of home sales.  This was artificially high as buyers tried to “cash in” on the tax credit.  This year, the sales numbers are not inflated by any other issue.  Real estate sales are fueled by the amount of job hiring in the area and by buyers who are more willing to move on with their lives, literally.

In June 2011, there were 2880 homes for sale and 661 of these homes had offers. The absorption rate, the number of homes that sold during a month compared to the number for sale, was 23%.  Almost one quarter of the Seattle eastside homes for sale sold in June.

How is the real estate market doing in your area?  Is it as strong as what we’re seeing here or is a little slower.

Number of Properties for Sale in King County

It’s simple.  Mix one part law of supply and demand;  one part the more positive economy;  and one part more ready, willing, and able buyers.  Mix with more realistic pricing that meets the market demand.  You now have the well priced homes selling and the most positive real estate market the eastside has had since mid 2007.

The supply of King homes and condos, the number of those for sale, is shown above.    This week, near the end of the first quarter of 2011, there are about 2000 less homes and condos for sale in King County than last year at this time. This means there are 16% less homes and condos for sale.  That’s a big difference.  It’s noticeable in a lot of neighborhoods. It’s noticeable to a lot of buyers.

The eastside statistics mirror those in the county. There are pockets on the eastside where home sales are popping, because there are only a few really great homes that come on the market.  I’ve seen this happen in different price ranges and different cities all over the eastside, including Bellevue, Kirkland, and Sammamish.

Seattle Eastside Residential Real Estate Sales Through February 2011

Supply is key to the more positive eastside real estate market.  With less supply out there and more homes selling (other than March and April of 2010, which was the result of the tax credit) than any other month in a few years, this is a stronger real estate market.

With less supply, it’s a faster paced market.  It’s happening in many eastside neighborhoods, but not all.  It’s happening with some homes, but not all.  With less to choose from, the better valued homes are selling more quickly.  There are some great homes that I’ve previewed or shown over the last month and I can almost tell which homes will be sold inside of a week or two.  Almost everyday we see the number of pending sales outstrip the number of new listings coming on the market.  And yes, there are  homes still sitting on the market for a long time, are distressed sales or homes that don’t sell.  Despite this, there’s a big difference in the eastside real estate market.

Now I know you’re going to say this is not what you’re reading in the media.  Here’s the latest real estate article in The Seattle Times continuing with the same doom and gloom report about the real estate market. From the this article:

In the Seattle metropolitan area, which includes King, Snohomish and Pierce counties, prices are back where they were in September 2004, according to Case-Shiller.

Two things to consider when evaluating the above statement.  The first is Case-Shiller lumps King County statistics in with Pierce and Snohomish Counties.  King County has a far more positive economy than the other two counties. Seattle and Bellevue, the economic hubs of the region are both in King County.  The number of distressed properties is much smaller in King County than elsewhere in the region.

The second thing to remember is Case-Shiller is reporting on the past few months, not what’s happening in the market today.

I agree with Case-Shiller regarding home values, although home values may not be quite as low as 2004 pricing in some areas. Prices are down and probably will stay at these levels for a while.  I don’t anticipate prices going up any time soon.

But I do see a stronger market in many eastside neighborhoods.  People are ready to move on, literally, and they’re tired of waiting. Buyers are ready to buy and more sellers are pricing their homes to meet the current market demand. All in all, right now the Seattle-eastside has the best real estate market it’s had since 2007. It’s not the old real estate market of the past, but it’s a good, realistic market.