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?

What's in 2012's Crystal Ball for Eastside Real Estate?

What’s on the horizon for 2012?  As I was driving to a meeting recently, I heard a piece on KPLU about the expected improvement in the Puget Sound economy.

Dick Conway, an economic forecaster. had spoken at the 40th Anniversary Economic Forecast Conference in Seattle.

Here are five reasons Conway thinks the future is bright:

1. Boeing is showing strong employment, with the 737 MAX  and the 787 being built here, the labor peace pact, and strong bonuses.  Overall, it is a very nice scenario for the Puget Sound Economy.
2. Job growth in the region is generally outpacing the nation. The strength of both Boeing and Microsoft causes a “multiplier effect,” bringing more jobs with them.
3. Retail sales numbers have been a pleasant surprise.  Conway predicts a 5.9 percent increase in 2012 and a bit more than 3 percent growth in 2013.
4. Foreign exports are leading the recovery and Washington state is the nation’s top exporter, thanks again to Boeing. (Microsoft is also a factor here.)
5. The Puget Sound is home to many strong local companies.

Matthew Gardner had a fairly optimistic view for 2012 real estate in the Seattle area:

When combined with improving economic conditions, I would not be surprised to see several markets exhibit modest price growth in 2012. That said and, as we all know, real estate is all about location; therefore I do not expect that price recovery will be equal across all markets.

He tempers this line of thinking with the two elephants in the room:  the expected supply of distressed sales that will hit the market and the difficulty of obtaining financing:

If this is actually the case, then why aren’t prices higher? Well, there are still a number of anchors that are holding us back. The first of which is the shadow inventory in the shape of distressed homes. Many foreclosures have been trading at below market value and, in some cases, below replacement cost. This naturally holds down values.

Secondly, and equally as important, are the continued issues with obtaining financing for the purchase of a new home. It remains remarkably difficult to get a mortgage, which has led to an unusually high percentage of proposed purchases falling through.

With the new year and promising economic news, we expect Seattle-eastside real estate to be the strongest since 2007.  Home sales should be steady even as inventory rises into the summer.  Prices, of course, may stay about where they are for now.  The key to pricing will be the supply of homes on the market.  The more homes, the more competition for buyers and the more flexible sellers will need to be about pricing.  With fewer homes on the market and steady demand, prices should stabilize.  If prices do go up, most likely it will be in the areas that are close-in, areas which are considered desirable locations.  Expect distressed sales to temper the pricing this year.  The number of homes for sale and pricing will vary from neighborhood to neighborhood.  The eastside is filled with real estate micro-markets and they don’t perform in the same way.

If there are any price increases, they will be minimal, but if there are increases, we will be shouting this from the rooftops!  Because we watch market trends so carefully, our sellers will be among the first to know about any price increases.  You will, however, hear us shouting that 2012 is expected to be our best market in the last 4 years.

Our predictions:

• Prices should not drop further.
• Some homes will be the “hot” ones because of price and condition.  These homes will sell quickly and some will have multiple offers.
• Other homes and neighborhoods will move more slowly because of price and location.
• Local companies, such as Amazon and Microsoft, will continue to move people to the area.
• The supply of homes for sale will increase as the year heads to spring and summer, however, there are some homeowners who will choose to hold for a number of years.  The supply should not increase as dramatically as it has in the last few years.
• Distressed sales will continue to  be a significant part of the supply and will continue to affect pricing statistics.  However, pricing will be stronger for those homes that aren’t distressed sales.
• There will be a more balanced market between buyers and sellers.
• The wide range of activity indicates a normal, active real estate market on Seattle’s eastside.

What do you think will happen real estate in cities such as Bellevue, Kirkland, and Redmond?  Will prices go up, down or stay the same?  Do you see a good market in your area? 

The Calder at Olympic Sculpture Park

Richard Serra at Seattle Olympic Sculpture Park

Next we paid a visit to Pike Place Market  which,  I’m willing to bet, was filled with people sightseeing around Seattle before they boarded one of those big ships to Alaska.  It was mobbed, but still it was wonderful to be there.  We ended up having a great lunch of gazpacho soup along with some take-out seafood appetizers.  I had Alaskan King Crab, which was to die for!  I also went to one of my favorite bakeries for dessert, 3 Girls Bakery, and had one of their rugula.   We took home a whole wheat hazelnut-currant bread.  All in all it was a pretty “tasty’ experience.

Saturday Crowds at Pike Place Market

Seattle's Pike Place Market

Gorgeous Berries

Check out these $400 truffles!  Would you pay that much for imported French truffles?  Amazing.

$400 Truffles!

After seeing all the salmon for sale at the market, we finished our day with a tour of the Ballard Locks, which were built 100  years ago to accommodate boats moving from Puget Sound to the Lake Washington Ship Canal. It’s fascinating to see the locks move the ships between the two areas.  There’s also a fish ladder where  you can view the salmon heading upstream to spawn and die.  These fish are amazing to watch as they struggle against the tide, so to speak.  The locks are one of my favorite places to visit in Seattle.

The Ballard Locks

On Sunday, we ventured out to the king of art fairs, The Bellevue Museum Art Fair, which is held in the parking garage of the mall.  I know that sounds strange, but after 25 years of attending the fair, I’ve gotten used to the fact that it’s in a parking garage.  (It’s so Bellevue!).    There’s terrific art, crafts, clothing, jewelry, sculpture, you name it, at this fair.   It’s hard to find a better art fair anywhere.

The fair also included some live performers.

Performance Art at the Bellevue Arts Museum Fair

There’s so much going on in the Seattle area and on the eastside in the summer.  If the weather cooperates, as it did last weekend, it’s a fabulous place to visit.  What are some of your favorite places to take visiting friends and family?

But most importantly, would you pay $400 to buy truffles?

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.

Recently, I made the trip to Home Depot and Seattle Eastside’s Crescent Lighting Store with one of my clients.   My goal for this home was to update it with some great looking fixtures, but in as economical way as possible. The home is in excellent condition and shows well, but some new fixtures would dress it up beautifully.  The fixtures below are great for traditional homes and work well for homes in the Seattle area that are below the $650,000 price point.  More expensive homes may command more expensive fixtures.  When you go looking for fixtures, take some photos of your spaces and the existing fixtures.  It will help you to pick out the right style for your home. 

Below are some of the plumbing and lighting fixtures we picked out:

Chrome Faucet- good for updating a bathroom

Brushed Nickel Faucets

The lighting fixtures should relate well to one another and share a similar style.  If you buy brushed nickel lights, then all of the fixtures should match with a  brushed nickel feel.    The same should happen with the shades or glass bowls.  Many of the bowls today are a smooth frosted look.  Again, all of the lighting should have the same glass look.   Talk with some of the people working in the store and have them help you to choose lighting that comes from a similar line and works well together.

Kitchen light fixture to update a home

Entry Light that will dress up a home

Dining Room Light Fixture

The total cost for this project was about $500.00.  It is $500.00 that is very well spent and will add that finishing touch to a great home.  Can you think of some other inexpensive ways to dress up a home?

There were less than 1000 condos for sale on the eastside in February! Seattle-eastside condo sales are creeping up and the number of condos for sale is creeping downward.   This is the fewest number of condos for sale since the beginning of 2008!

Besides the number of condos for sale being at the low for the last 3 years, the number of sales took a big jump up over the last two months.  The number of condos sales almost doubled in that time to 200 sales.

The condo sales market is the most positive it’s been for a long time, and I mean a long time! It’s exciting to see sales really picking up as buyers are out there on the eastside buying condos.  The best of the best are selling quickly, while the rest just stay on the market.
 

Seattle-Eastside Condo Real Estate Sales, February 2011

If you plan to sell your condo in the near future, feel free to contact me if you have questions about what you need to do to get ready to sell.  Every seller has to do a few things before putting a home on the market.   If your home is positioned properly, it can be one of the lucky few to get an offer.

View Larger Map

How well did homes sell in February, 2011 in your neighborhood?

(Click on the cities below to see real estate trends for the past 5 years.  You’ll find the median pricing for each city and whether the number of homes for sale and the number of sales went up or down.  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%)

Thirty-five percent of the homes for sale around Microsoft in Redmond and East Bellevue sold last month.  That’s an incredible number and one we haven’t seen for years.  Overall, February was the most positive month for eastside home sales in the past several years!

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

The odds of selling a home were 23%.

Median sales price dropped: $499,995 to $489,990.  Home values have been more stable here than anywhere else on the eastside.

There were 605 homes for sale.

A total of 153 homes sold.

Redmond/East Bellevue

The odds of selling a home were 35%.

Median sales price increased by 2% to $430,000 to $439,950.

157 homes were for sale

A total of 57 homes sold.

South Bellevue/Issaquah

The odds of selling a home were 25.5%.

Median price decreased from $579,990 to $500,000.

283 homes were for sale.

A total of 83 homes sold.

Woodinville/Bothell/Kenmore/Duvall/North Kirkland

The odds of selling a home were 24.5%.

Median price was down from $397,000 to $375,000.

549 homes were for sale.

A total of 150 homes sold.

Kirkland

The odds of selling a home were 20%.

Median price increased to $542,725 from $537,500, a 1% increase.

251 homes were for sale.

A total of 60 homes sold.

West Bellevue

The odds of selling a home were 18%.

Median pricing was down from $981,750 to $899,000.

174 homes were for sale.

A total of 37 homes sold.

Redmond/Education Hill/ Carnation

The odds of selling a home were 16%

Median pricing decreased from $474,950 to $450,000.

293 homes were for sale.

A total of 52 homes sold.

I keep hearing about homes selling quickly and with multiple offers in a variety of price ranges.   Since most of the eastside is a balanced real estate market,**  this only happens for the best homes.   It happens for the “red” hot homes with hot prices and in beautiful condition. There are number of other homes that take a while to sell, often with price reductions before getting the offer.

Hotter King & Snohomish County real estate markets 2-28-11

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What do the colors mean?

*Red means it’s a sellers’ market, a sellers’ advantage.  Homes take less than 3 months to sell.

**Yellow means a balanced market between buyers and sellers.  Homes on the average take 3-6 months to sell.

Green means it’s a buyers’ market.  Homes take longer than 6 months to sell.

If you take each area as shown on the map and look to the area number on the side of the map, it will tell you how long it would take to sell every home currently for sale if no other home came up on the market in that area.

What do the 3 digit numbers on the map mean?

The map is divided into the numbered areas as defined by our Northwest Multiple Listing Service (NWMLS).  Downtown Bellevue is area 520 and East Bellevue is area 530, as an example.

Can you see from the map how the real estate was doing in your city did last month?  If you’d like more specific information for your neighborhood, please feel free to contact me.

Seattle Eastside Residential Real Estate Sales Through February, 2011

Despite what the media is reporting, February Seattle-eastside real estate sales were the strongest we’ve seen in a very long time. If you look all the way back to December, 2009, there were more real estate sales in February than any other month, except March and April of last year.  More homes sold last March and April because of the tax credit.   However, this February’s higher sales numbers had nothing to do with a tax credit, but everything to do with buyers being more ready and willing to buy a home. In February there were 2446 homes for sale and 565 homes sold.

The other good news is the number of homes for sale last month was still low when compared to the other months shown on the chart. Because of this, there was a higher percentage of homes selling, 23% in fact.

So far this year, real estate sales on the eastside of Seattle are trending upward. Because of the strong economic base found in such eastside cities as Bellevue, Redmond, Kirkland, and Issaquah, I believe this trend will continue, at least for the near future.

If the number of homes for sale jumps up, it could have an impact on how quickly homes will sell. If we stay with lower levels of inventory, it should help the homes on the market  sell more quickly.  But if we end up with numbers like we often do in the summer when we have had 14000+ homes in King County on the market, sales will slow down.

Are you seeing more real estate sales in your neighborhood?

Pretty scary headlines.  Scary headlines certainly attract readers. Distressed home sales, bank repos and short sales, are out there and affecting home values, but in varying degrees depending on which neighborhood is being discussed.    If you read further down in the article:

The percentage of King County single-family homes that fit the “distressed” category in February varied widely by area, according to Windermere’s analysis.

By lumping all of King County together, it gives an inaccurate picture of Seattle real estate.  Seattle real estate is far more localized. The neighborhoods of Queen Anne and Capitol Hill are usually the strongest performing areas, while the eastside suburbs of Bellevue, Redmond, Kirkland, and others are doing better than most of King County.  The suburbs of Mercer Island and Medina have few distressed properties for sale.

The chart below gives a picture of the 2010 distressed property sales for all the counties around Seattle.  My focus is on Seattle’s eastside neighborhoods, since it’s the market where I work. The eastside data is broken out from the rest of King County, because it’s usually different than the rest of the county.   The pattern for distressed sales activity can be seen through 2010.  The eastside had less distressed properties for sale than the rest of King County. I expect a similar pattern to continue in 2011, although the numbers may be different.  When the 1st quarter numbers are released, I’ll report those numbers.

Irrespective of the distressed sales issue, homes are selling well in some areas.  Prices are less than they were, but there are fewer homes for sale in many neighborhoods.  So the old law of supply and demand is working in these neighborhoods. Near Microsoft in Redmond, there were three home sales that closed this past week.  All the homes sold in less than 8 days.  One was for full price, another for slightly over, and one sold for about 2% less than the asking price. Neighborhoods in Kirkland have a lot less homes for sale than is typical.

Distressed home sales are a part of the picture of Seattle eastside real estate, but they are not the complete picture.  Too bad the screaming headlines didn’t balance more of the good news with the bad.

2010 Distressed Properties by Seattle Area Counties

What is happening in your neighborhood?  Are homes selling?  Are there a lot of distressed sales?