The number of distressed sales, bank owned and short sales, has dropped in half from 2011. Only 13% of the real estate sales on Seattle's Eastside at the close of 2013 were distressed sales. More and more homeowners are reaping the benefits of the increase in sales prices and are no longer underwater. This is good news for the marketplace and bodes well for 2014.
Prices should continue to increase as long as the general supply is low and the demand is strong. We expect to see even fewer distressed sales this year as the market is heating up with the low inventory.
How much of the Seattle area real estate market is made up of distressed sales, sales in which the property is bank owned or a seller is required to obtain approval from the bank in order to sell?
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.
Are there a lot of distressed property sales on Seattle’s eastside? These are bank owned/foreclosed properties and “short sales,” requiring 3rd party or bank approval. A short sale is when the seller is selling the home for less than the amount owed to the bank, so the seller is “short” on what is owed to pay off the bank.
The topic of foreclosures has been in the forefront of the news lately, with talk of robo-signers, sloppy paperwork and the like. People are worried about how this affects the economy in general and, more specifically, our Seattle-eastside real estate market.
The charts below show the total percentage of distressed properties, which includes short sales and bank owned properties.
The next two charts show those sales that required 3rd party approval (short sales), and those that were bank owned.
The information covers most of the counties around Seattle and the city of Seattle itself. The charts show the percentage of distressed property sales from the 3rd quarter of 2009 through the 3rd quarter of 2010.
Not surprisingly, Seattle proper and the eastside have fared better than Pierce, Snohomish, and Kitsap counties. Although Kitsap county did have among the lowest number of short sales in some quarters of the past year. The stronger markets in Seattle and on the eastside are a direct result of the stronger and more diverse economy and job market in these areas. The area is the beneficiary of hi tech, engineering, and bio-tech jobs than some of the other counties. People who work in these fields tend to live closer to or in Seattle or on the eastside. (Although these jobs can be found all over western Washington, there is a greater concentration in the great Seattle area.)
During the first quarter of 2010, 24% of Seattle-eastside property sales were distressed properties. The second and third quarters both averaged 19% in distressed sales. Not great numbers, but the reality is in our worst quarter 75% of the sales were not distressed properties. Since so much of the news has focused on distressed properties and foreclosures, it’s good to know that most sales are not in that category.
What do you think about these numbers?