Seattle Condo Market Update

August 2007 statistics came in from the Northwest Multiple Listing service. Last month's numbers show a reduction in closed sales compared to the same time last year. Pending sales went down for Queen Anne/Lake Union/Magnolia area by 34.21% compared to same time last year. Capitol Hill/Central/Madison Park are also experiencing a drop in pending sales by 19.31%. Belltown/downtown bucked the trend, showing an increase in pending sales by 11.29%.

Overall, in Seattle, pending sales went down by 7.25%. One of the big reasons is probably buyer hesitation as a result of the sub-prime mortgage news. Many home buyers are choosing to wait to play it safe and hoping prices will drop. So far, major price reductions don't seem to be happening too much, at least not in a big way. Looking at the median price for Aug 2007 compared to July 2007, prices are still holding up even though demand has decreased for the month of August. 

Median Prices

Neighborhood                     July 2007        Aug 2007

Belltown/Downtown             $420,000        $430,000

Queen Anne/Lake Union/      $360,425        $385,970
Magnolia

Capitol Hill/Central/             $270,000        $314,000    
Madison Park

Understandably, most sellers are not anxious to chase the market down. This is especially the case since it appears that many buyers are simply deferring their search till next year.  In response, a number of my selling clients are preparing to pull their properties off the market in anticipation of a more favorable environment next Spring.

Things to keep an eye out for:

• Will sellers continue to remain firm on pricing as many buyers decide to delay their entrance into the market? If yes, next year could be a balanced environment.  If sellers start a race to the bottom, buyers will benefit big time. If not, it will probably be balanced or favor sellers (if enough deferred demand hits the market at the same time early next year).
• What will Feb data look like? The slowing we see now is partly seasonal, partly sub-prime jitters, and partly fear of recession. Since the last 2 are partly speculative and occasionally self-fulfilling, whether Feb 2008 looks strong or not will be a great early indicator of whether next year will be business as usual or something worse.

-About Wendy

Comments

[market watcher]

LOL. That one guy said i was smoking something when I said Belltown condos would go negative in price growth. Where is he now?

I think the price will increase as new condos hit the market since they are selling for above the current median price, but that doesn't mean the value of a unit that was bought before should increases in value. I guess what I'm saying is that you don't include new construction, belltown condo prices will probably fall over the next 2 years, but with new construction units hitting the market it will appear that the price is still appreciating.

[Lenny]

Market Watcher: If you look at most of the properties recently sold and on the market, almost all of them are selling for a significantly higher price than their last transaction price. In fact, the new condos being flipped tend to have the least lift. So while you're right the newer condos have the highest prices, you're wrong that they are creating a false impression of appreciation for the older units. It's quite the opposite. People who bought 3-5 years ago or bought an older resale unit in the last couple of years are the ones capturing all the gains.

[Alex]

Over last couple of weeks, I think buyers are starting to come back into the market after "waiting and seeing" in August. I suspect things will pick up slightly in Sept/Oct and then ramp up in Feb/March. I agree a lot of it will depend on whether sellers start getting impatient before the buyers get comfortable again -- so far, it looks like some are dropping prices by 0.1-0.2% but not slashing and burning.

[DMiz]

I've got a condo unit on contract at the Parc belltown for $479k. 1100 sf. 1 br + den, 1 1/2 ba. I don't think I can close on it now, and the PSA is not transferrable. Any ideas on how to get out of it?

[Greg]

Just ask your agent to review the contract and talk to the seller and see what options are available to you. Out of curiosity, why can't you close on it now?

[DMiz]

Credit's in the tank. And I pretty much lost my sources for income.

[Greg]

I guess worst case scenario, you can forfeit your deposit. Seems a shame since long term, you'd likely get some appreciation but you'd need to be able to sustain the short-term cash flow situation. If your deposit was huge, I wonder if you can enter into a private contract with someone to sell the unit to them after you take ownership. Ultimately, may be easiest just to forfeit it and write it off as a loss.