Hey Chicken Little…. the sky has not fallen!
If you believe everything you read in the press, you would think real estate values are plummeting and all of the homes on the Eastside and Seattle are short sales or foreclosures! While the incidences of these events has definitely risen – especially in South King County, don’t write the King County Real Estate Market off just yet!
The Puget Sound real estate market built inventory heavily last year which lead to the decline of the absorption rates -or- supply vs. demand. The King County absorption rates has held steady for the last 9 months at approximately 15% of the inventory going from active to pending each quarter – which translates into about 7 months of inventory. These are not great conditions, especially when looked at from the perspective of the 2004-2006 which all showed double digit gain in King County median home price. But, they are also not as terrible as some would have you believe and may mean our market is begin to bottom out.
Here are the facts: King County’s median price is off from the highs of last year and the median price is off when you compare 2008 vs. 2007 month over month, but the YTD median price has risen over 1% this year. If you look at June alone, it is up 3.3% ($435,000 to $449,700) from the start of the year. That is by no means “doom and gloom”!
Here is how King County’s Median single family home price shakes out…
In January we started with a median price of $435,000 – it was $429,495 in January 2007
By June our YTD median price has risen to $440,000 and the median price for the month alone was $449,700!
Does this mean the Seattle real estate market has reached the bottom? With the current absorption rates in King County, the buyer will remain in control which means real estate values will remain soft until the market returns to a more balanced position.
Also, the median price does not track house size in it’s number. Every study I have seen shows while the median price remains resilient, the average price per square foot is down. So if the average 2000 s.f. home on the Eastside was selling 225 per square foot last year, it is probably selling closer to 200 per square foot this year.
So the conditions are not black and white – what should you do?
Sellers looking to cash out: Unless you are moving to an area that is more challenged and/or has more opportunities… or you need the money from your home within the next year or two, it may be best to hold on.
Buyers -and- Sellers looking to move up: If you are wanting to buy and are waiting for the bottom… you may not have much longer to wait. Remember though… you will only know when the King County market has bottomed, when it is past.
Real Estate is on sale today and it not this way often! With 20 years experience, I look upon this market and only recall one other time I have seen these type of conditions and it was when I first began my career.
If you have any questions or would like take advantage of the opportunities that exist in this market, I welcome you to contact me.