This is a very common question to ask. In today’s market, there is no good and straightforward answer. The best thing we can do right now is take data points from multiple areas and make some educated predictions.   This morning, news came out here, here and here that Washington state had its first positive gain in jobs this past December to January since November 2008. Note that the job gains come from a variety of industries, including 2700 jobs in the construction industry, of which 800 were building construction related.  The full report can be found here.  This in itself is very encouraging news for our economy and is a positive data point in answering the headlining question, since…more people working means more potential spending.

For other data points, we look at the real estate market itself.  February numbers are not quite out yet so I’m relying on numbers only through January here.

Price stability relies on a good balance between supply and demand.  Much of 2008 and 2009, we had high supply and low demand which drove prices downwards. So …how are we looking now?

In November 2009, King county had about 600 more new listings than sales.  The total active listings count for the month was 11,474.   Median sale price for the month was $337,000.  In Snohomish county, there was 341 more new listings than sales.  Its active listings count for the month stood at 5063 and had a median sale price of just under $275,000.

In December 2009, we can see inventory generally getting smaller.  King county still had 219 more new listings than sales, but the total active listing count fell to 9652 and the median price rose to $350,000.   So… in one month, the county shed over 1800 listings (most were probably cancelled or expired listings since new pending sales didn’t keep pace with new listings).  Snohomish county saw similar trends only having 216 more new listings than sales and a median price increase to $280,000.  Total active listing count stood at 4436.

In January 2010, King county added 2101 more listings than there were sales (bleh) to put the total active listing count at 10,679 (a net gain of nearly 1000 homes).  The median price stayed flat at $350,000.  Snohomish county did the same thing with 975 more new listings than sales and a total active listing count growing to 4901.  Median price fell to $268,000.

This is all fine and dandy as it is, but to illustrate where we are today compared to … say …November 2006,  2007 and 2008 and threw in 2009 again for a quick comparison:

Okay…so what’s all these numbers supposed to mean.   If you see in the 2006 numbers, .. overall inventory was significantly lower than later years and sales kept pace with new listings very closely.  Basically, supply was meeting (barely) the demand and as we saw …that put the squeeze on buyers and prices went up up up.  In 2007, you suddenly see a significant drop in sales volume for both counties while listing volume went up. Prices though, stayed fairly steady.  The reality of the market … in my opinion, probably hadn’t hit most buyers/sellers yet in 2007, though you can clearly see that the signs were there.  So, going back to the original question, which way is the market going?  November and December numbers for 2009 looked promising in that sales volume went up significantly and overall inventory fell.  January’s numbers clouded things a little as month-to-month overall inventory climbed.  February’s numbers will be hopefully be very telling in how this Spring will shape up to be.  I don’t think we’re out of the woods yet, but it would appear with these figures that rock bottom is behind us, but we’re still crawling our way back up slowly.

Data compiled from Northwest MLS.