Seattle Housing Buzz

The Seattle PI posted an article today about the lack of family-friendly living in the downtown core. Parents cite lack of larger units, developers cite lack of schools and schools cite lack of demand; an unenviable catch-22. Yet, I’m not sure there is an easy solution.

Certainly, bringing schools to the area will provide a foundation for families to consider urban living. But, should the city invest into a new school that currently would have very little demand, especially at a time when other schools are closing? Will building larger units, as some parents claim, bring them to the downtown area? Considering that 2-bedroom units at Rollin Street Flats & Escala start at $800,000, it reasons that only uber-wealthy families could afford a 3-bedroom “family-sized” condo. And, would children who live in million-dollar condos attend public rather than private schools?

The PI had an accompanying article about how downtown family living works in Vancouver, BC. The article cited downtown schools and the fact that many of those families came from areas where high-rise family living is common and that’s why it works. Which may certainly be true. But, Vancouver’s downtown area, and I’m talking about the West End (between the financial district & Stanley Park), is essentially residential with a mixture of low and high-rise residential buildings, single-family homes, parks, schools and quiet tree-lined streets. Families lived in this part of downtown long before the explosion of high-rises along False Creek and Burrard Inlet.

The fact of the matter is Seattle isn’t Vancouver and never will be. Plus, Vancouver has something Seattle doesn’t, a long-established downtown residential neighborhood with infrastructure and community services to support it. Rather than compare ourselves to Vancouver, Seattle (the city) needs to look inward to determine if the downtown area can truly support urban family living for all classes. And, if so, the city needs to develop solutions rather than rely on developers or the wait endlessly before the demographics change.

Here’s a link to the NWMLS September press release report and breakout chart (pdf) that include one month and one year change in the number of listings, pending & closed sales, as well as median prices. For Seattle the area map codes are:

• 140 - West Seattle
• 380 - Beacon Hill / SODO / Georgetown
• 385 - South Seattle
• 390 - Central Seattle/Capitol Hill
• 700 - Queen Anne/Magnolia
• 701 - Downtown/Belltown
• 705 - NW Seattle
• 710 - NE Seattle

The Seattle PI today published a nice article about a slowdown in the housing marketing saying:

The median home sold for $400,000, down from $405,000 in August and $420,000 in July, and up from $383,000 in September 2005, according to numbers the Northwest Multiple Listing Service released Friday. The number of homes on the market shot up 30 percent from a year ago, while sales were down by nearly 16 percent.

Inventory and the absorption rate have been increasing, no doubt about that. And, I expect we’ll see increasing inventory through the remainder of the year. But, is it the start of a housing crash? I don’t think so. Remember, prices are coming down and inventory shortage is turning around from historic high & low levels, respectively. The market is also cyclical and we are entering the “slow” period so that may factor in as well. Not to mention, that the Seattle area does have one of the stronger job markets in the country.

And, of course, there are sellers with unrealistic expectations about their property. Recently, one of my buyers placed an offer on a property, which after completing comps, I felt was over priced. The house was on the market for 3 months and had been reduced $40,000 over that time period, yet, it was still $15,000 over comparable properties. Now, three months ago the market supported similar style/size houses that were $40,000 more. But, (1) there were different market conditions in the Summer and (2) those houses had been upgraded and this one wasn’t…a big factor that affects value.

That said, the market is softening and buyers may see greater value in the upcoming months (relative to the recent highs). According to the article, median prices decreased 1.2% between August & September, yet it’s still 4.25% higher than the same time last year.

From The Seattle PI -

Housing prices, slumping after a five-year boom, are projected to decline in more than 100 of the nation’s metropolitan areas, with the Northeast, Florida and California among the areas hardest hit.

The forecast by Moody’s Economy.com, a private research firm, presents one of the starkest views yet of the housing slowdown that has been gathering force in recent months.

Nothing said about Seattle but I suspect we’ll see continued softening of the market place and price reductions on overzealously priced properties. Don’t think they’ll be a crash but will likely see value corrections and more stable inventory as assorbtion rates continue to rise.

There’s been hints that Seattle’s strong, seller centric, housing market is softening. Inventory has been rising for several months, the absorbtion rate while still low has been increasing and homes have been sitting on the market longer. Another sign, which I’m starting to see more frequently, or in this case hear, are listing agents calling for feedback.

When the market was stronger and multiple bids were common one would rarely ever hear from a listing agent about feedback. Now, they’re calling the next day after a showing. And, is not just resales. The sales team at a condo converstion project calls me weekly to see if I have any buyers for them.

On my Seattle Condos and Lofts blog I added a new article about a couple of construction quagmires impacting condos in the downtown area - the cement strike that’s now a month long causing sites to ground to a halt, and the impact of the viaduct decision which could close the downtown portion Highway 99 for 3-6 years rerouting traffic through the downtown street grid.

It’s not surprising as many have been anticipating a rise in foreclosures, but now it’s upon us. King5, reported that foreclosures are up 30% over the past year. And, for “most of them suffering the loss of their home, there are several investors waiting in the wings to buy them up.”

The Seattle area, despite our record hot temperatures, seems to be cooling on the housing front. Within Seattle, inventory continues to go up resulting in a 20% increase over the previous year. Additionally, Seattle saw a 12.11% decrease in pendings and a 15.55% decrease in closed sales compared to July 2005. Even with these stats, however, there are still instances of multiple offers.

Though on a positive note prices continue to rise with a 14.6% increase in median sale price from a year ago. While that appreciation may be great for current homeowners, it continues to put homeownership further out of reach for those who currently rent, especially in the first-time buyer price ranges. Within King County only 7% of the single family homes available in July were under $300,000, while 15% were over $1 million.

For the complete July Market Update, please visit the NWMLS’ public website at www.NWRealestate.com.

Posted condominium market updates for Queen Anne and Capitol Hill at Seattle Condos and Lofts.

The July condo market update has been posted at Seattle Condos And Lofts.