Seattle Condo Market Update

The April numbers are in and there's good news and bad news.  Let's start with the bad news.

• For the first time in a long time, median prices in Belltown dropped.  If you remember my last update in March, we saw median prices rise over 13% versus March 2007.  In April, we saw median prices drop by 7%.  We'll have to see how the next few months play out to determine if this is the adjustment we've all been waiting for so that buyers on the sidelines can come back in or if prices drop further.

The good news:

• April over Apil inventory (April 2008 as a proportion of April 2007 inventory) has come down compared to March over March numbers.  In March, Belltown inventory was 51% higher than March of 2007.  In April, Belltown inventory was 41% higher than April of 2007.  If this trend continues, it would suggest that there while we are certainly seeing more units on the market than last year, there does appear to be a ceiling in terms of how much more supply is entering the market and as a result (all else equal), we will have a floor on how low prices will ultimately go. 

So the big question: was April's price correction enough to motivate more buyers to pull the trigger or will they continue their waiting game in hopes that sellers will capitulate further?  My sense is that there's probably at least 6 months worth of potential buyers who have deferred their purchase month after month and are just waiting for the right time to get in.  I wouldn't be surprised if they started returning in the summer but it may have more to do with concerns about the national economy than any local supply and demand issues.

-Wendy

Comments

[Steph]

Wendy,
This chart looks like the same chart you had posted on April 9, 2008.

[Wendy]

Thanks for pointing that out. I've posted the chart for April.

[Amir]

Isn't it a big deal that median sale prices in Belltown dropped a whopping 25% from March '08 to April '08? Am I missing something??

[Craig]

I think year over year comparisons are the most valid since you don't want to confound the analysis with seasonal effects.

[Craig]

Also, keep in mind March 2008 was up 13% over the previous year so the 25% decline you refer to is a bit of apples and oranges.

[Amir]

I don't really get the apples and oranges point. Anyway, I still think a 25% month over month decline was worth a mention. I thought about the seasonal effects angle too, but then saw that no other area had a decrease even close to that and in fact some actually saw a median price increase.

[Craig]

What I mean is that if March 2008 was not up 13% and April 2007 was constant or up slightly, then April 2008 would not have been down 25% compared to March 2008 as you pointed out but closer to down 12%. In other words the "down 25%" you're pointing out is partly because March 2008 was an unusually strong month.

Still, I agree it's an interesting observation. I wonder if this reduction will be enough to get buyers to grow a pair.

[kent]

Reliable statistics need lots and lots of data. These are relatively small data samples. I wonder if $/sf would be a more reliable indicator of price changes. Also, what is the average age of the homes sold. A new building closing a lot of units over a short period of time is going to skew data as well. Anyway, lots of variables. It makes for interesting reading, I'm just not sure what kind of solid conclusions you can make with a couple of data points. Need more data and data points which can be trended over time.

[Da Nile]

Wow that's quite an impressive stretch for a little bit of "good news"!