So How is the Market? A question I get all the time. It’s been a while since I did some in-depth analysis on how the market is, so let’s take a look. October’s sales numbers are in from the NWMLS and there are some positives as well as negatives to take from it . In the 4-County area of King, Snohomish, Pierce and Kitsap counties for single family and condo sales combined, pending sales hasn’t changed much in the last 6 months. The graph tells it best.
The gigantic drop you see from April to May was the buyer’s response to the expiration of the federal tax incentive for first time buyers. This drop off was expected (in my opinion) and the numbers for the rest of the year are all skewed because sales that were to happen throughout the year were most likely pushed into the first few months of the year in order to capitalize on the tax credit. However it is nice to see a steady demand these last few months. I fully expect to see November and Decembers numbers to drop off significantly as it does every year for the seasonal slow down.
As a side note, 2009’s numbers were also likely inflated ..especially the last half of the year. If you recall, the original expiration date for the federal tax incentive was to expire at the end of November 2009. This would help explain how demand stayed up between August and October when usually there is a seasonal decline (even in the “good” years of 2005-2006. This also explains how 2010 started off so well compared to 2009 or 2008.
Okay so what about prices? Well prices are merely a result of supply and demand. We can see how demand is (steady), so let’s take a look at supply. Supply in October for the same 4-county area was at 26,346 properties (single family and condos combined). Pending sales came in at 4376 properties. This means very little by itself so let’s break this down some more.
- King County had 3331 new listing for a total of 13,135 active listings. There was 2194 pending sales and 1589 closings with a median price of $350K.
- Snohomish County had 1301 new listings for a total of 5455 active listings. There were 968 pending sales and 579 closed with a median price of $260K.
- Pierce County had 1312 new listings for a total of 5920 active listings. There were 958 pending sales and 675 closed with a median price of $215K.
- Kitsap County had 347 new listings for a total of 1836 active listings. There were 256 pending sales and 183 closed with a median price of $245K.
Great! …but this still means very little by itself. So let’s see the last 12 months compared to the same 12 month period in 2005-2006. What you’ll see is how high inventory is right now. Activity is clearly down compared to the peak years but the supply is nearly in a different league and this is, in my opinion, what is currently and what will for a long time keep our prices down.
There was definitely more homes being put on the market in the peak years compared to now but this is good. We want fewer homes to enter the market overall because what you’ll see next is what’s keeping prices in check.
The standing market supply in King County during the peak years never went over 10,000. In comparison, there’s only been one month in the last twelve that was under 10,000.
There wasn’t too many similarities with regards to demand in the second half of this year compared to the peak years. Couple that with the supply, and you can see why prices are and will stay down for a long time. That inventory needs to go somewhere.
What this means is …as a home seller, if you’re serious about selling any time soon, you have to be extremely realistic on price and recognize how much inventory is out there. You can have the greatest house, but your price still needs to reflect the realities of the current market. There is no reason to expect demand to suddenly spike up or drop down, so it comes down to pricing the house well and knowing your competition.
*All information based on data provided by the Northwest MLS*
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