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?

The Seattle-Eastside real estate market ends 2011 in better shape than we’ve seen in the last four years.  There’s a more evenly balanced market between buyers and sellers, which the market is a fairly “normal” one in which some homes sit on the market and the good ones that show well and are priced well sell quickly.  In a balanced market, there is no  “one size fits all.” We see all kinds of things happening with homes, depending on the price, condition, sellers and buyer motivation.  The supply of homes is down more than it has been for 4 years, which is helping to balance out the supply of homes with the demand from buyers.

There’s a lot of yellow on the above map, indicating a balanced market in which it takes 4-6 months for a home to sell.   Yellow is the dominant color with the usual hot spots in some Seattle neighborhoods in “red,” indicating a faster moving market.

Here on the eastside, East Bellevue and Redmond near Microsoft is the “hot” area and is shown in red.  Red means homes are selling at a faster rate,  in under 3 months.   This area finished the year with more than one third of the listed homes selling in December.  Not all that long ago there were over 200 homes for sale!  In December there were only 125 homes for sale and 42 of these homes received offers. The number of homes for sale in that area was incredibly low, prompting a faster market with a high absorption rate (supply to sales) and a short market time.

The rest of the eastside has experienced one of the better years since the market meltdown.  It’s a much more normal real estate market than 1, 2, or 3 years ago.  I expect this year to be even better!

The cities below are grouped together to follow our MLS areas (multiple listing service) because our statistics are reported in this manner.  The cities are listed in order from the highest to the lowest in demand which is determined by the number of homes sales compared to the number of homes for sale. (Again, it’s that absorption rate) If there is a greater demand, then there is a higher percentage of home sales.

How was real estate market in your Seattle-Eastside city in December, 2011?

1. Redmond/East Bellevue

The odds of selling a home were 36%*

Median sales price increased (y-o-y)**from $420,000 to $455,000

125 homes were for sale

A total of 42 homes sold

Days on the market: 104

2. Kirkland

The odds of selling a home were 19%

Median sales price increased from $498,000 to $510,000

167 homes were for sale

A total of 57 homes sold

Days on Market:  101

2. (TIE) South Bellevue/Issaquah

The odds of selling a home were 19%

Median price decreased from $560,000 to $505,000

242 homes were for sale

A total of 58 homes sold

Days on market: 123

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

The odds of selling a home were 17%

Median sales price increased from $440,000 to $463,000

There were 527 homes for sale

A total of 116 homes sold

Days on the market: 103

4.  Redmond/Education Hill/ Carnation

The odds of selling a home were 16%

Median sales price decreased from $530,000 to $515,000

207 homes were for sale

A total of 66 homes sold

Days on Market: 115

4. (TIE) Woodinville/Bothell/Kenmore/Duvall/North Kirkland

The odds of selling a home were 16%

Median sales price decreased from $393,000 to $339,000

421 homes were for sale

A total of 96 homes sold

Days on Market: 127

5. West Bellevue

The odds of selling a home were 10%.

Median sales price increased from $950,000 to $998,000

127 homes were for sale

A total of 15 homes sold

Days on Market: 95

In many of the areas where there was a higher demand, the median sales price for the month increased in December, 2011 from December 2010.  Prices did not go up last year.  When I compare 12/11 to 12/10, the median price of homes that sold in some areas was higher in 2011 than 2010.  If we take the whole year, pricing was down overall.

With the lower supply, I expect pricing to be more stable this year at the very least.  Competition is still there, but it is far less than it was in the middle of last year when more homes were for sale.

Will prices increase?  Only time will tell and if they do, it will be a minimal increase.  Read my soon to be published post about predictions for 2012.

If you’d like more specific information about your neighborhood or home, feel free to contact either Brooks or myself.

*(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.

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

Aubrey Cohen wrote an article about the fastest selling neighborhoods in Seattle, which prompted me to write this  post about the fastest selling neighborhoods on Seattle’s eastside.  What happens in Seattle, doesn’t just stay in Seattle, it also happens here on the Eastside!

Homes in East Bellevue and Redmond near Microsoft sold the fastest on Seattle’s eastside in September.  Not only did these homes sell more quickly, in 69 days, but out of the 204 homes for sale, 51 got offers.  These means that 25% of the homes in the area sold in September, among the best odds on Seattle’s eastside.  The odds of selling a home in the Woodinville, Bothell areas also stood at 25%, which means September was one of the best months to sell a home in those cities.

Why do homes in East Bellevue and Redmond sell more quickly? Because they’re close to employment centers and transportation and have a broader range of more affordable housing.  With the main Microsoft campus in Redmond and on the border of Bellevue, there’s a huge number of jobs right in the area.  In addition, there’s easier freeway and bus access to Seattle than in the outlying suburbs.

West Bellevue is the most expensive area on the eastside, although it’s proximity to Seattle, schools, and housing make it the premier location on the eastside.  The higher price point in the area means fewer buyers can afford West Bellevue, which increases the market time.  Longer market time here is a function of pricing, not desirability.

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

The cities below are grouped together to follow our MLS areas (multiple listing service) and shows how our statistical information is  reported.

Which Seattle-eastside city had the fastest selling homes?

1. Redmond/East Bellevue

The odds of selling a home were 25%.*

Median sales price decreased (y-o-y)** to $503,000 from $560,000.

204 homes were for sale

A total of 51 homes sold.

Days on the market: 69

2. Kirkland

The odds of selling a home was 21%.

Median price increased from $516,000 to $626,000.

270 homes were for sale.

A total of 57 homes sold.

Days on Market:  87

3. South Bellevue/Issaquah

The odds of selling a home were 18%.

Median price decreased from $533,000 to $529,000.

362  homes were for sale.

A total of 65 homes sold.

Days on market: 88

3 (tie). Woodinville/Bothell/Kenmore/Duvall/North Kirkland

The odds of selling a home were 25%.

Median price was down from $415,000 to $380,000.

558 homes were for sale.

A total of 139 homes sold.

Days on Market: 88

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

The odds of selling a home were 19%.

Median sales price increased from $486,000 to $500,000.

There were 714 homes for sale.

A total of 137 homes sold.

Days on the market: 90

5. 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

5. West Bellevue

The odds of selling a home were 19%.

Median pricing decreased from $956,000 to $936,000.

164 homes were for sale.

A total of 31 homes sold.

Days on Market: 127

Overall, market time is excellent in all of the eastside cities.  As I mentioned above, Seattle-eastside real estate is one of the bright spots in the country.  Companies in the area are hiring and people continue to want to live here because of the quality of life, the job market, and good schools.  

Seattle-eastside real estate sales results were so similar during June, July, and August I could have posted the same report with just a few exceptions each month!  Overall, 23% of the available homes sold in August, the same as June and July!

View Larger Map

The only significant change happened in West Bellevue and East Bellevue and the Microsoft area around Redmond.  Both these areas had fewer home sales in August than in July.  It was most noticeable in the neighborhoods around Microsoft where sales have been consistently strong.  In July, 38% of the homes sold and in August the sales numbers dropped back to 24%.  The area still had the best return on the eastside, but it was more in line with other eastside neighborhoods.

There’s a good real estate market out there.  The last time we saw a similar real estate market was back in the years between 1998-2002.  The market during those years was what we considered to be a “normal” market,  not a crazy market.  Once again, we see a more “normal” market today.

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

(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 21%.

Median sales price dropped: $479,895 to $475,000.

There were 725 homes for sale.

A total of 174 homes sold.

Redmond/East Bellevue

The odds of selling a home were 24%.

Median sales price decreased from $494,900 to $479,950.

207 homes were for sale

A total of 60 homes sold.

South Bellevue/Issaquah

The odds of selling a home were 22%.

Median price decreased from $550,000 to $512,225

367  homes were for sale.

A total of 94 homes sold.

Woodinville/Bothell/Kenmore/Duvall/North Kirkland

The odds of selling a home were 23%.

Median price was down from $415,000 to $381,650.

589 homes were for sale.

A total of 148 homes sold.

Kirkland

The odds of selling a home was 22%.

Median price decreased from $641,000 to $595,000.

280 homes were for sale.

A total of 73 homes sold.

West Bellevue

The odds of selling a home were 17%.

Median pricing decreased from $869,000 to $754,500.

169 homes were for sale.

A total of 40 homes sold.

Redmond/Education Hill/ Carnation

The odds of selling a home were 21%

Median pricing decreased from $549,950 to $534,900.

319 homes were for sale.

A total of 79 homes sold.

Seattle-eastside real estate sales through August, 2011

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?”

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.

Seattle Eastside Real Estate Sales Through July, 2011

The chart above speaks for itself.  July real estate sales were going strong on Seattle’s eastside.  More homes sold in July than in any  month since May, 2010. 

Will this surge in real estate sales continue?  Since the news regarding the stock market from last week, it remains to be seen if August will hold up to the sales growth we’ve seen since December of last year.

The number of properties for sale in King County still remains low compared to the last few summers when King County had over 14,000 properties for sale.   As of August 8th, there were 11,091 properties for sale in King County.  Here on the eastside, there were 2863 available properties.   If you compare the number of homes for sale on the Eastside this July to last July, there were 17% less homes and condos on the market this year.

In July there were 2863 homes for sale and 646 of these homes received offers and sold.  The absorption rate, the number of homes that sold during a month compared to the number for sale, was 22%. 

But what’s also important to note is 12% of the sales from June failed.   I had reported 661 sales in June, but this month I see only 587 of them stayed together.

The bottom line is more homes are selling than previously, but it’s also hard to keep the sales together.  Failed sales can be the result of poor inspections,  trouble with the buyer’s financing, an appraisal that does not agree with the sales price or a buyer getting cold feet and backing out.

How is the real estate market doing in your area?  Do you see similar trends?