Our Greater Seattle residential real estate market is jumping! But perhaps just temporarily until the tax credits expire – they only apply to transactions signed by April 30 and closed by June 30. Then we’ll see if the economy has picked up enough to keep things going.

The number of Closed Sales for both single family homes and condominiums in March was up over 50% above February’s number, and also over 50% above last March’s numbers. Prices continued to look solid, and have now spent a whole year at essentially the same stable price level. Inventory for single family homes is somewhat lower than a year ago, but condo inventory has moved a bit higher.     

Buying clearly has been stimulated by the Federal Homebuyer Tax Credits, and we should expect to see that effect continue through June, when all eligible transactions have to have been closed.     

Current Market Statistics:

The links below provide a graphical summary of Real Estate Market Statistics for the Seattle/Bellevue/King County area over the most recent 3+ years, for single-family homes and for condominiums. You can see clearly in the thumbnails and in the main charts the big jump in closed sales, which says that buyers really got busy signing contracts in February.   As might be expected, Months Supply for both houses and condos got worked down sharply from February’s high levels – to under 6 months for houses but still almost 9 months for condos.        Here’s the charts for the current stats through March:   (Required disclaimer: Statistics and graphs not compiled, reviewed or verified by the Northwest Multiple Listing Service)                                Click for Residential Market Charts                Click for Condominium Market Charts       The Fall-Out Ratio of Pending vs Closed sales continues to drop, reflecting the banks and lenders continuing to make progress on responding to short-sale offers. The new HAFA regulations which went into effect on April 5 should help this even more. HAFA is the federal Home Affordable Foreclosure Alternatives program, and you can read more about it in the Short Sale section of our blog post series titled My Mortgage is Underwater. Now What Do I Do?

The question usually comes from someone who wants to sell, but is having a hard time dealing with the fact that the value of their home is down about 20% from the peak in summer 2007 – especially if that is when they bought it.  Of course if they had bought it in early 2002, the value would have run up about 85% before it peaked, but it truly is much harder to take a loss than it is to take a gain.

The next most common person asking the question is a buyer who is trying to decide if he or she is going to make money or lose money on their investment in a home. Recent history would certainly give one cause to pause on that question.

Of course there have been all kinds of predictions about which way the housing market is headed, and many of those predictions are colored by what is going on in the writer’s home market.  But recently a friend sent me a very interesting analytical presentation of what is going on in the market, which included a map graphic showing what that analyst thought would happen.  The chart was prepared by Moody’s Analytics, a big player who has a huge interest in figuring out what is most likely to happen, so I thought it was worth sharing with you.  Here’s the chart, which is page 13 from the presentation linked at the end of this post.

This is a pretty fascinating chart.  Note that some areas near us are predicted to recover to their previous highs within the next 2 to 3 years.  And for some of the hardest hit areas, full price recovery may take 20 years.   Factor some inflation against that and I’m not sure it is a recovery.

In our own Greater Seattle / Bellevue area, it looks like their prediction is recovery to 2007 price levels in the 4 to 5 year timeframe at best.  Still, all in all it doesn’t sound too shabby – that would be about 5% a year from here, or more like 3%/yr if it stretched out to the long side.  My guess is that this recovery rate would be back-end loaded – lower appreciation rates near term, and higher rates later on as the national economy really gets rolling again.  We’ve got a lot of unemplyment to work off before that happens.

The whole presentation is linked here in the 2010 – Housing Recuperates  presentation from Moody’s Fall 2009 Economic Outlook Conference.  In the chart on mortgage default rates on page 10, the left axis is CLTV – Current Loan to Value Ratio; the chart is a little hard to understand unless you have that information set in your decoder ring.

Please also take a look at our Greater Seattle Homes Today Facebook blog, and click the fan-flag at the top if you’d like to follow along.

Best Regards,

Chuck

Our real estate market is continuing to look solid, with good statistics and increasing good press.  There is quite a bit of good news in terms of number of new purchase transactions completed, and Days-On-Market (the average time it takes to sell a home) continues its welcome decline.  However, some of that buying has been in response to the federal First-Time Homebuyer Tax Credit, which is still at this point scheduled to expire December 1.   Then we’ll see how much the move-up buyer demand picks up in the next stage of our recovery.

Current Market Statistics:

The links below provide a graphical summary of Real Estate Market Statistics for the Seattle/Bellevue/King County area over the most recent 2+ years, for single-family homes and for condominiums.  The volume of residential sales is now seasonally topping and will slow a bit through the Fall and Winter months, median prices seem to be holding steady, and the number of homes available is staying well below 2007 and 2008 levels.  Months-Supply, a key measure of market health, continues to stay slightly below the magic balance point of 6 months, and the lower price ranges are doing even better.  The large Pending-Sale backlog is continuing to run pretty high, indicating a lot of transactions hung up in escrow on financing and short-sale issues.  Here’s the charts for the current stats: (Required disclaimer: Statistics not compiled, reviewed or verified by the Northwest Multiple Listing Service)

                      Residential Sales Charts          Condominium Sales Charts

The number of sales transactions closed for single-family homes continued to run above 2008 levels, now four months running and feeling pretty solid, and continuing above year-ago levels.  Inventory of houses for sale continues to run significantly below year-ago levels, but the picture is not so rosy for condominiums.  It is true that the condominium inventory level is staying below a year ago, but Sales are still well below a year ago, and Months Supply is remaining stubbornly high for most of the market.  We’ll do more analysis on the condo market in a following letter.