Overall, the Seattle residential real estate market saw a decent October and November for 2009 – especially compared with 2008. We are seeing many first time home buyers taking advantage of the tax credits. Prices are still hard to determine due to a high percentage of distressed properties on the market – with condo auctions, short sales, bank owned properties and other stages of distressed sellers dominating the market place.
The number of sales has gone up and the inventory has gone down – all great factors in stabilizing the real estate market for Seattle. The biggest wild card in the Seattle residential real estate market is the number of people wanting to sell their home, but unable to sell for a variety of reasons. Many of these sellers are renting out their place, doing short sales and walking away from the property all together – it can be challenging to sell your property in the current market. We will continue to witness distressed properties negatively impacting the Seattle market throughout 2010. Things are getting better, but we still are not in a balanced marketplace. This creates a great time to be buying Seattle real estate for those holding property for 3+ years. The $1,000,000+ market continues to be very challenging in these times.
Here are some of the Real Estate Industry ways to indicate the current market conditions:
1) Housing Inventory
One of the best resources for King County Real Estate inventory data is from www.alanpope.com (click on Market Overview, then King County). You can see that in October 2009 we had (12321 / 2951) 4.1 months worth of inventory on the market. Overall this indicator is showing a strong market for selling real estate. However, the problem is there are many home/condo owners who would prefer to sell but are currently renting their properties. We think the listing inventory is artificially low right now and would spike up if prices and sales were going up in King County enough to encourage these casual landlords to list their property for sale. Generally speaking, it is ideal to see less than 6 months of inventory on the market, which would indicate a seller’s market. King County is currently showing 4.1 months of inventory on the market. Again, this number is artificially low right now.
2) National Association of Realtors (PHSI) Pending Home Sales Index
According to NAR’s latest release, pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October 2009, increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.
Basically we went from ghost town last winter to a much improved marketplace, but we still have a ways to go!
3) Mortgage Applications Four-Week Moving Average
The Mortgage Bankers Association (MBA) provides this weekly loan application data. Here is their latest press release: http://www.mbaa.org/NewsandMedia/PressCenter/71231.htm Loan application are up for both purchases and refinances due to cheap money and lots of first time home buyers taking advantage of the tax credit – in our opinion.
4) HOI: Housing Opportunity Index
The National Association of Home Builders’ HOI is an index based on the fact that an affordable house is one that can be bought with 28% or less of median family income, which translates to an HOI score of 72 or better.
Please visit www.nahb.org/hoi for tables, historic data and details.
Their current release states (http://www.nahb.org/reference_list.aspx?sectionID=135) that nationwide housing affordability, bolstered by affordable interest rates and low house prices, hovered for the third consecutive quarter near its highest level since the series was first compiled 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). This indexing is showing that homes have never been more affordable to those willing to purchase or trade up. Does this show that we are nearing the bottom?