Seattle Real Estate Market Update
Thursday, October 4, 2012 at 10:20AM
Bonnie Beddall in Market Update, Seattle Real Estate

Summer in the City! Hot Weather, Hot Home Sales

Seattle is typically known for our rain but this summer we set… well almost set to be exact, an all time record for the total number of consecutive days without rain. We had over 40 days with absolutely no rain, in Seattle. Beautiful sunny days and glorious sunsets with temperatures in the low 80’s. My two Sun Gold Tomato plants, in their own enameled clay pots, on my deck have never been so happy and rewarded me with about 30 sweet delicious orange fruits each day for over two months now.

We also had what some would say was a significant turnaround in our Seattle Real Estate Market in the first half of 2012 (January – June). Lower home inventories, the belief that the housing prices in Seattle over the last 12 months had hit the bottom and stabilized, and record low mortgage rates, were the culprits for this increase in the first half of the year. There have been some reports saying that about 35% of all home sales this year nation wide has been by investors. But what is it going to take to get the Seattle Real Estate market fired up and going again? I believe it’s the home mortgage lenders, the national economy, and a fear that the US may go back into a recession that is holding us back at this point.

It’s still difficult to qualify for a mortgage today and lenders have to soften their requirements for the housing market to really strengthen. I don’t believe that we have to go back to the day that all you and to do to qualify for a mortgage is to be able to fog a mirror. But lenders are “gun shy” you could say, because of all the bad loans they did, but they did them. 20% down worked really well for a long time and so did interest rates 7% and 9%. Today for the first time in many many years it is actually cheaper to buy a home than it is to rent in terms of monthly payments (cash flow). Prices are down in the core neighborhoods of Seattle by about 25% from the high of 2007 and mortgage rates are under 4%. Yes you can now get a 30 year fixed rate for about 3.7%. This is one of the best times to buy we have seen in the last 20 years in my opinion. This is also one of the best times for folks to move up, to buy that bigger home they really need. A $400,000 loan today at 3.7% has a principal and interest payment of $1,841.00 per month and that same loan at a 7% interest rate has a monthly payment of $2661.00. That represents a 30% lower payment.

I also believe that there is a pent up demand for people to buy homes, but there is still just too much apprehension today for most folks to get off the fence. However CNN just reported that 2012 has seen the greatest appreciation of home prices since 2006. So what will get more people off the fence and into the housing market today?

The short answer is more confidence in the national economy and raising mortgage rates. When we see mortgage rates start to increase we will see more activity in the market. You would think that would be counter-intuitive, but folks typically sit around thinking they will wait until the market or mortgage rates hit the bottom. The problem is that you never know you have hit the bottom until you are well past it. So when mortgage rates start to go up, people begin to think they’ve seen the bottom and they scurry out and buy something before they go up even higher.

“There just are not the numbers of Buyers in the market than there used to be”, says Julie Wilcox, my real estate partner. “For example, lets look at the 2007 numbers for number of Sold Homes. There were about the same number of SOLDS in the first half of 2007 (4111) than for the entire year of 2011, (4161). And recently I have heard a few prognostications that some think the national and the Seattle housing market will decline by about another 5% to 10% by 2014.” That could happen if we don’t get a firm handle on our national economy and start doing something about all the debt we are creating. But that’s for a different discussion and a different time. However Seattle typically has not followed the norm as our economy is stronger than most other areas in the county and it’s still estimated that that Seattle is experience a significant population growth over the next 10 years.

Below we have brought up number from the NWMLS showing SOLD properties for the close-in Seattle Neighborhoods from 2006 through the first half of 2012. These numbers really paint an accurate picture of our market activity since 2006. The biggest surprise however was that 2011 was actually the weakest year for sales of all of them. The SOLDS in the first half of 2012 equaled almost 70% of the total number of SOLDS in the entire year of 2011. Of course we have to see how the second half of 2012 plays out but it looks like the Seattle Real Estate Market is rebounding some.

Springtime in Seattle typically is our strongest real estate market and for July and August sales have slowed down some. Then for September, October, and November the Seattle market is usually pretty steady. However the low inventory situation still exists and while some homes continue to sit on the market the good ones that are priced correctly are still selling quickly. We need to point out here that “sold quickly” back in April meant in the first week and today “sold quickly” means in the first two or three weeks, and sometimes they will sell with more than one offer.

Yes, Seattle Real Estate is dynamic and recently difficult to predict for the long run, even for the next 6 months. However the Seattle economy is doing pretty well especially compared to the rest of the country. Seattle remains a favored destination for those looking to leave the cold winters of the Mid-West and East and we have many companies that are vibrant and hiring. Seattle has truly a diverse business base now and our population is considered the highest educated of any other city in the US. Seattle is a great place to live and more and more people are figuring that out.

Home Sale Review & Trends

Jan 1, 2012 – June 30, 2012 2793 SOLDS *
Up 60% from the first half of 2011
 
Jan 1 2011 – June 30 2011 1750 SOLDS
July 1 2011 – Dec 31, 2011 2411 SOLDS
TOTAL 4161 down 16% from 2010
 
Jan 1, 2010 – June 30, 2010 2726 SOLDS
July 1/2010 – Dec 31/2010 2228 SOLDS
TOTAL 4954 down 7% from 2009
 
Jan 1, 2009 – June 30, 2009 2271 SOLDS
July 1, 2009 – Dec 31, 2009 3045 SOLDS
TOTAL 5316 up .003% from 2008
 
Jan 1, 2008 – June 30, 2008 2871 SOLDS
July 1, 2008 – Dec 31, 2008 2430 SOLDS
TOTAL 5,301 down 32% from 2007
 
Jan 1, 2007 – June 30, 2007 4111 SOLDS
July 1, 2007 – Dec 31, 2007 3687 SOLDS
TOTAL 7,798 down .05% from 2006
 
Jan 1 2006 – June 30/2006 4031 SOLDS
July 1, 2006 – Dec 31/2006 4165 SOLDS
TOTAL 8,196

* (NWMLS areas: 390,700,705,710, 715 –the close-in Seattle neighborhoods)

Article originally appeared on Seattle's Best Real Estate (http://seattlesbestrealestate.com/).
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